<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 30, 1996
REGISTRATION NO.
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
CLARK MATERIAL HANDLING COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 3537 61-1312827
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
OF INCORPORATION OR CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
ORGANIZATION)
</TABLE>
172 TRADE STREET
LEXINGTON, KENTUCKY 40508
(606) 288-1200
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
JOSEPH F. LINGG
VICE PRESIDENT, FINANCE AND TREASURER
CLARK MATERIAL HANDLING COMPANY
172 TRADE STREET
LEXINGTON, KENTUCKY 40508
(606) 288-1200
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
WITH COPIES TO:
BRUCE B. WOOD, ESQ.
DECHERT PRICE & RHOADS
477 MADISON AVENUE
NEW YORK, NEW YORK 10022
(212) 326-3500
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<S> <C> <C> <C> <C>
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PROPOSED MAXIMUM
PROPOSED MAXIMUM AGGREGATE
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER UNIT(1) PRICE(1) REGISTRATION FEE
- -------------------------------------------------------------------------------------------------
10 3/4% Senior Notes due
2006....................... $130,000,000 100% $130,000,000 $39,394
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</TABLE>
(1) Estimated pursuant to Rule 457(f) solely for purposes of calculating the
registration fee.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2
CLARK MATERIAL HANDLING COMPANY
CROSS REFERENCE SHEET
PURSUANT TO RULE 404(A) AND ITEM 501(B) OF REGULATION S-K
SHOWING LOCATION IN PROSPECTUS OF THE INFORMATION REQUIRED BY PART I OF FORM S-4
<TABLE>
<C> <S> <C>
1. Forepart of Registration Statement and
Outside Front Cover Page of Prospectus..... Forepart of the Registration Statement; Outside
Front Cover Page
2. Inside Front and Outside Back Cover
Pages of Prospectus........................ Inside Front Cover Page; Outside Back Cover
Page
3. Risk Factors, Ratio of Earnings to Fixed
Charges and Other Information.............. Summary; Risk Factors; Selected Historical
Financial Data
4. Terms of the Transaction..................... The Exchange Offer; Description of the Notes;
Certain Federal Income Tax Consequences; Plan
of Distribution
5. Pro Forma Financial Information.............. Summary; Selected Historical Financial Data;
Unaudited Pro Forma Combined Financial
Information
6. Material Contracts With the Company Being
Acquired................................... Not Applicable
7. Additional Information Required for
Reoffering by Persons and Parties Deemed to
be Underwriters............................ Not Applicable
8. Interests of Named Experts and Counsel....... Not Applicable
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities................................ Not Applicable
10. Information With Respect to S-3
Registrants................................ Not Applicable
11. Incorporation of Certain Information by
Reference.................................. Not Applicable
12. Information With Respect to S-2 or S-3
Registrants................................ Not Applicable
13. Incorporation of Certain Information by
Reference.................................. Not Applicable
14. Information With Respect to Registrants Other
Than S-2 or S-3 Registrants................ Available Information; Summary; Risk Factors;
The Transactions; Use of Proceeds; Pro Forma
Capitalization; Selected Historical Financial
Data; Management's Discussion and Analysis of
Financial Condition and Results of
Operations; Business; Management; Ownership
of the Company; Certain Relationships and
Related Transactions; Description of Certain
Indebtedness; Description of the Notes; Book
Entry; Delivery and Form; Plan of
Distribution; Legal Matters; Experts;
Combined Financial Statements; Unaudited Pro
Forma Combined Financial Information
15. Information With Respect to S-3 Companies.... Not Applicable
16. Information With Respect to S-2 or S-3
Companies.................................. Not Applicable
17. Information With Respect to Companies Other
Than S-2 or S-3 Companies.................. Not Applicable
18. Information if Proxies, Consents or
Authorizations Are to be Solicited......... Not Applicable
19. Information if Proxies, Consents or
Authorizations Are Not to be Solicited, or
in an Exchange Offer....................... The Exchange Offer; Management; Ownership of
the Company; Certain Relationships and Related
Transactions; Description of Certain
Indebtedness; Description of the Notes
</TABLE>
<PAGE> 3
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED DECEMBER 30, 1996
PROSPECTUS
OFFER TO EXCHANGE
10 3/4% SENIOR NOTES DUE 2006
FOR ALL OUTSTANDING
10 3/4% SENIOR NOTES DUE 2006
OF
CLARK MATERIAL HANDLING COMPANY
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME ON, 1997, UNLESS EXTENDED
CLARK Material Handling Company, a Delaware corporation ("CLARK" or the
"Company"), hereby offers to exchange an aggregate principal amount of up to
$130,000,000 of its 10 3/4% Senior Notes due 2006 (the "New Notes") for a like
principal amount of its 10 3/4% Senior Notes due 2006 (the "Existing Notes")
outstanding on the date hereof upon the terms and subject to the conditions set
forth in this Prospectus and in the accompanying letter of transmittal (the
"Letter of Transmittal" and, together with this Prospectus, the "Exchange
Offer"). The New Notes and the Existing Notes are hereinafter collectively
referred to as the "Notes." The terms of the New Notes are identical in all
material respects to those of the Existing Notes, except for certain transfer
restrictions and registration rights relating to the Existing Notes. The New
Notes will be issued pursuant to, and be entitled to the benefits of, the
Indenture (as defined) governing the Existing Notes.
The New Notes will bear interest from and including the date of consummation
of the Exchange Offer. Interest on the New Notes will be payable semi-annually
on November 15 and May 15 of each year, commencing May 15, 1997. Additionally,
interest on the New Notes will accrue from the last interest payment date on
which interest was paid on the Existing Notes surrendered in exchange therefor
or, if no interest has been paid on the Existing Notes, from the date of
original issue of the Existing Notes.
The New Notes will be senior unsecured obligations of the Company, pari
passu in right of payment with all existing and future senior indebtedness of
the Company and senior to all subordinated indebtedness of the Company. The New
Notes will be effectively subordinated to all senior secured indebtedness of the
Company, to the extent of the assets securing such indebtedness, and to all
existing and future indebtedness and other obligations of the Company's Foreign
Subsidiaries (as defined).
The New Notes are being offered hereunder in order to satisfy certain
obligations of the Company contained in the Registration Rights Agreement dated
November 27, 1996 (the "Registration Rights Agreement") by and between the
Company and Jefferies & Company, Inc. and Bear, Stearns & Co. Inc. (the "Initial
Purchasers") with respect to the initial sale of the Existing Notes.
The Company will not receive any proceeds from the Exchange Offer. The
Company will pay all the expenses incident to the Exchange Offer. Tenders of
Existing Notes pursuant to the Exchange Offer may be withdrawn at any time prior
to the Expiration Date (as defined) for the Exchange Offer. In the event the
Company terminates the Exchange Offer and does not accept for exchange any
Existing Notes with respect to the Exchange Offer, the Company will promptly
return such Existing Notes to the holders thereof. See "The Exchange Offer."
Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. The Letter of Transmittal states
that by so acknowledging and by delivery of a prospectus, a broker-dealer will
not be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"). 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 New Notes received in exchange for
Existing Notes where such Existing Notes were acquired by such broker-dealer as
a result of market-making activities or other trading activities. The Company
has agreed that, for a period of 180 days after the Expiration Date, it will
make this Prospectus available to any broker-dealer for use in connection with
any such resale. See "Plan of Distribution."
Prior to the Exchange Offer, there has been no public market for the
Existing Notes. If a market for the New Notes should develop, such New Notes
could trade at a discount from their principal amount. The Company currently
does not intend to list the New Notes on any securities exchange or to seek
approval for quotation through any automated quotation system, and no active
public market for the New Notes is currently anticipated. There can be no
assurance that an active public market for the New Notes will develop.
The Exchange Offer is not conditioned upon any minimum principal amount of
Existing Notes being tendered for exchange pursuant to the Exchange Offer.
------------------------
SEE "RISK FACTORS" COMMENCING ON PAGE 11 FOR A DISCUSSION OF CERTAIN
FACTORS THAT HOLDERS OF EXISTING NOTES SHOULD CONSIDER IN CONNECTION WITH THE
EXCHANGE OFFER.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
------------------------
The date of this Prospectus is , 1997.
<PAGE> 4
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-4 (the "Exchange Offer
Registration Statement," which term shall encompass all amendments, exhibits,
annexes and schedules thereto) pursuant to the Securities Act, and the rules and
regulations promulgated thereunder, covering the New Notes being offered hereby.
This Prospectus does not contain all the information set forth in the Exchange
Offer Registration Statement. For further information with respect to the
Company and the Exchange Offer, reference is made to the Exchange Offer
Registration Statement. Statements made in this Prospectus as to the contents of
any contract, agreement or other document referred to are not necessarily
complete. With respect to each such contract, agreement or other document filed
as an exhibit to the Exchange Offer Registration Statement, reference is made to
the exhibit for a more complete description of the document or matter involved,
and each such statement shall be deemed qualified in its entirety by such
reference. The Exchange Offer Registration Statement, including the exhibits
thereto, can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the Regional Offices of the Commission at Seven World Trade
Center, Suite 1300, New York, New York 10048 and at Northwestern Atrium Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
materials can also be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. In addition, the Commission maintains a Web site that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the Commission. The address of such Web site is:
http://www.sec.gov.
As a result of the Exchange Offer, the Company will become subject to the
informational requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and in accordance therewith will be required to file
periodic reports and other information with the Commission. In the event the
Company ceases to be subject to the informational requirements of the Exchange
Act, the Company will be required under the Indenture, for so long as any of the
Notes remain outstanding, to furnish to the Trustee (as defined), deliver or
cause to be delivered to the holders of the Notes and file with the Commission
(provided that the Commission will accept such filing) (i) 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 for each a "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and, with respect to the annual
information only, a report thereon by the Company's certified independent
accountants and (ii) all reports that would be required to be filed with the
Commission on Form 8-K if the Company were required to file such reports.
This Prospectus includes forward-looking statements which involve risks and
uncertainties as to future events. Actual events or results may differ
materially from those discussed in the forward-looking statements as a result of
various factors, including, without limitation, those set forth under "Risk
Factors".
2
<PAGE> 5
SUMMARY
The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and financial statements
(including notes thereto) included elsewhere in this Prospectus. Unless
otherwise indicated or the context otherwise requires references to the
"Company" or "CLARK" are to Clark Material Handling Company (including its
predecessors) and the other material handling operations acquired from certain
subsidiaries of Terex Corporation ("Terex") pursuant to the Acquisition (as
defined) for periods prior to the Transactions (as defined), and to CLARK
Material Handling Company and its subsidiaries for periods from and after the
Transactions, after giving effect thereto.
THE COMPANY
CLARK is a leading international designer, manufacturer and marketer of a
complete line of forklift trucks including internal combustion trucks, electric
riders, narrow aisle stackers and powered hand trucks. CLARK invented the
platform forklift truck in 1917 and has since established CLARK(R) as one of the
most recognized brand names of forklift trucks in North America. Management
believes that CLARK has the largest installed fleet in North America with over
250,000 units and has a total of approximately 350,000 units in operation
worldwide. This large installed fleet has allowed CLARK to generate significant
ongoing replacement parts sales, which typically generate substantially higher
gross margins and provide a more stable revenue base than new truck sales.
Historically, approximately 80% of CLARK's net sales have been derived from
truck sales and approximately 20% of net sales have been derived from the sale
of replacement parts. CLARK distributes its products to a diverse customer base
through a global network of 285 dealers from more than 560 locations. For the
twelve months ended September 30, 1996 ("LTM"), CLARK generated net sales of
$459.2 million.
Since 1993, CLARK has undertaken a series of initiatives aimed at reducing
fixed costs, developing a largely variable cost structure and maximizing the
Company's ability to respond to market changes. These initiatives involved (i)
elimination of 11 redundant manufacturing and distribution facilities, (ii)
head-count reductions involving termination of over 600 employees, representing
approximately 40% of the Company's workforce, (iii) elimination of three
non-core, unprofitable product lines and (iv) greater reliance on outsourcing.
The reduction in fixed costs achieved through these initiatives resulted in an
increase in pro forma EBITDA (as defined) of $21.0 million to $31.3 million in
the LTM period from $10.3 million in fiscal 1994, while net sales were
approximately the same in both periods. The flexibility of the Company's cost
structure is also evidenced by the financial results for the LTM period where,
despite a 13% decline in net sales due to lower industry activity, the Company's
pro forma EBITDA increased $7.2 million or 30% compared to pro forma EBITDA for
fiscal 1995. Management believes that the foregoing demonstrates the Company's
improved ability to sustain profitability in changing market conditions.
In addition to cost rationalization, the Company has increased its focus on
engineering and new product development since 1993. Management believes that
this emphasis has enabled CLARK to offer one of the most modern product
portfolios in the industry. CLARK's product development strategy emphasizes (i)
product innovation and improvements that meet the evolving needs of CLARK's
customer base and (ii) lowering production costs through better design, thereby
enhancing margins. In December 1994, CLARK introduced the 2-3 ton Genesis(TM)
internal combustion ("IC") forklift truck. The Genesis(TM) truck quickly gained
customer acceptance and provided an estimated seven percentage point higher
gross margin than its predecessor primarily due to its lower production cost.
Similarly, in April 1995, CLARK's European subsidiaries ("CLARK Europe")
introduced the Genesis(TM) 2-3 ton MegaStat(TM) IC, which received the "General
Lift Truck Innovation" award in 1996 from the Fork Truck Association in the
United Kingdom.
As a result of CLARK's cost reduction initiatives and higher margin new
product introductions, CLARK's pro forma EBITDA improved by $47.1 million to
$31.3 million in the LTM period from ($15.8) million in fiscal 1993.
3
<PAGE> 6
STRATEGY
Management believes that CLARK's strong brand name, extensive distribution
network, modern product portfolio and streamlined cost structure provide a
strong foundation for increased growth and profitability. The Company's
operating strategy focuses on the following key components:
Introduce New Products. Successful introduction of new products is a key
component to increasing the Company's market share. Management believes that
CLARK has introduced more new and redesigned models in the last two years than
any other major forklift truck manufacturer and plans to continue a rapid pace
of new product introduction. CLARK's new product development pipeline includes a
completely redesigned electric four wheel rider and two new IC forklift models,
each of which is expected to be introduced by early 1997. Management anticipates
that these new products will generate higher gross margins than their
predecessors due to lower production costs.
Augment the Distribution Network. Management is focusing on enhancing the
performance of its distribution network by offering various incentive packages
and support programs, replacing underperforming dealers and adding new dealers
in selected geographic areas in North America and Europe. Outside of North
America and Europe, CLARK markets and distributes its products through its
"Clarklift World Trade" division (the "World Trade Division"). The number of
units sold by the World Trade Division has more than doubled from 689 in 1993 to
1,492 in 1995. The Company intends to continue expanding the dealer base of the
World Trade Division, and management believes that the World Trade Division is
well positioned for continued growth in the Asian, African, Middle Eastern,
Caribbean and Latin American markets.
Improve Aftermarket Parts Sales. CLARK's worldwide installed fleet of
approximately 350,000 forklift trucks generates an estimated $240.0 million in
annual global aftermarket parts sales, of which CLARK has historically captured
an estimated 40% share. Management plans to increase its share of these high
margin sales by improving off-the-shelf availability at the primary parts
distribution facility in Southaven, Mississippi (the "Southaven Facility") and
through focused marketing and promotion efforts. The Southaven Facility
currently provides approximately 90% availability for aftermarket parts, and
management believes that this low availability level has resulted in lost parts
sales. The Company plans to raise such availability to over 95% primarily
through selective additions to inventory levels. In addition, the Company plans
to implement specific marketing initiatives, including increased merchandising
of fast moving parts, incentive programs for dealer personnel and coordinated
truck and parts promotions, to increase aftermarket parts sales.
Further Reduce Product Cost. Although CLARK has made significant progress
in reducing its operating costs, management believes that ongoing opportunities
exist to improve profitability by reducing material costs. In 1995, material
purchases amounted to over $350.0 million or over 70% of cost of goods sold.
Management plans to reduce the Company's material costs and increase purchasing
efficiencies, thereby enhancing its gross margins, through (i) the introduction
of new product designs that increase commonality among parts between different
lift truck models and reduce the overall number of parts and components, thereby
improving manufacturing and (ii) the reduction of the number of vendors by
approximately 50% to realize volume discounts. Management believes that these
initiatives should also result in more timely delivery from suppliers, reducing
costly manufacturing disruptions and working capital investment.
4
<PAGE> 7
THE TRANSACTIONS
The Company and CMH Holdings Corporation, a Delaware corporation
("Holdings"), were formed by Citicorp Venture Capital Ltd. ("CVC") and certain
members of management of CLARK (the "Management Investors") to effect the
acquisition (the "Acquisition") of substantially all the assets and certain
liabilities of Clark Material Handling Company, a Kentucky corporation, and all
of the outstanding capital stock of certain of its affiliates, including its
German, Korean, Brazilian and Canadian affiliates. The Acquisition was
consummated on November 27, 1996 pursuant to a Stock and Asset Purchase and Sale
Agreement dated as of November 9, 1996 among Terex and certain of its
subsidiaries, as sellers, and the Company, as buyer (the "Acquisition
Agreement"). The aggregate consideration for the Acquisition was $139.5 million,
which is subject to certain post-closing adjustments. To finance the Acquisition
(including the payment of related fees and expenses): (i) CVC, Dr. Martin M.
Dorio, President and Chief Executive Officer of the Company, and Thomas J.
Snyder, who was elected to the Board of Directors of the Company in connection
with the Acquisition, purchased, in the aggregate, $25.0 million of equity and
debt securities of Holdings for cash; (ii) Holdings contributed such $25.0
million to the Company (the "Equity Contribution") in exchange for all of the
capital stock of the Company; and (iii) the Company issued and sold the Existing
Notes to the Initial Purchasers. The foregoing transactions, together with the
application of the proceeds from the sale of the Existing Notes and the payment
of related transaction fees and expenses, are collectively referred to herein as
the "Transactions." See "The Transactions."
In connection with the Acquisition, the Company entered into a new $30.0
million revolving credit facility (the "Revolving Credit Facility"), which is
secured by the accounts receivable and inventory of the Company's domestic
operations. The Company did not draw upon the Revolving Credit Facility in
connection with the Transactions. In addition, CLARK Europe may enter into a
revolving credit facility to provide working capital for its European
operations. It is expected that any such facility will provide for up to $10.0
million of revolving credit loans and will be secured by certain assets of CLARK
Europe. See "Description of Certain Indebtedness."
5
<PAGE> 8
THE EXCHANGE OFFER
Securities Offered............... Up to $130,000,000 aggregate principal
amount of 10 3/4% Senior Notes due 2006.
The terms of the New Notes and Existing
Notes are identical in all material
respects, except for certain transfer
restrictions and registration rights
relating to the Existing Notes.
The Exchange Offer............... The New Notes are being offered in exchange
for a like principal amount of Existing
Notes. Existing Notes may be exchanged only
in integral multiples of $1,000. The
issuance of the New Notes is intended to
satisfy obligations of the Company
contained in the Registration Rights
Agreement.
Expiration Date; Withdrawal of
Tender........................... The Exchange Offer will expire at 5:00 p.m.
New York City time, on , 1997, or
such later date and time to which it may be
extended by the Company. The tender of
Existing Notes pursuant to the Exchange
Offer may be withdrawn at any time prior to
the Expiration Date. Any Existing Notes not
accepted for exchange for any reason will
be returned without expense to the
tendering holder thereof as promptly as
practicable after the expiration or
termination of the Exchange Offer.
Certain Conditions to the
Exchange Offer................... The Company's obligation to accept for
exchange, or to issue New Notes in exchange
for, any Existing Notes is subject to
certain customary conditions relating to
compliance with any applicable law or any
applicable interpretation by the staff of
the Commission, the receipt of any
applicable governmental approvals and the
absence of any actions or proceedings of
any governmental agency or court which
could materially impair the Company's
ability to consummate the Exchange Offer.
The Company currently expects that each of
the conditions will be satisfied and that
no waivers will be necessary. See "The
Exchange Offer -- Certain Conditions to the
Exchange Offer."
Procedures for Tendering Existing
Notes............................ Each holder of Existing Notes wishing to
accept the Exchange Offer must complete,
sign and date the Letter of Transmittal, or
a facsimile thereof, in accordance with the
instructions contained herein and therein,
and mail or otherwise deliver such Letter
of Transmittal, or such facsimile, together
with such Existing Notes and any other
required documentation, to the Exchange
Agent (as defined) at the address set forth
herein. See "The Exchange
Offer -- Procedures for Tendering Existing
Notes."
Use of Proceeds.................. The Company will not receive any proceeds
from the
Exchange Offer.
Exchange Agent................... United States Trust Company of New York
(the "Exchange Agent") is serving as the
Exchange Agent in connection with the
Exchange Offer.
Federal Income Tax
Consequences..................... The exchange of Notes pursuant to the
Exchange Offer should not be a taxable
event for federal income tax purposes. See
"Certain Federal Income Tax
Considerations."
6
<PAGE> 9
CONSEQUENCES OF EXCHANGING EXISTING NOTES PURSUANT TO THE EXCHANGE OFFER
Based on certain interpretive letters issued by the staff of the Commission
to third parties in unrelated transactions, the Company is of the view that
holders of Existing Notes (other than any holder who is an "affiliate" of the
Company within the meaning of Rule 405 under the Securities Act) who exchange
their Existing Notes for New Notes pursuant to the Exchange Offer generally may
offer such New Notes for resale, resell such New Notes and otherwise transfer
such New Notes without compliance with the registration and prospectus delivery
provisions of the Securities Act, provided such New Notes are acquired in the
ordinary course of the holders' business and such holders have no arrangement
with any person to participate in a distribution of such New Notes. Each
broker-dealer that receives New Notes for its own account in exchange for
Existing Notes must acknowledge that it will deliver a prospectus in connection
with any resale of such New Notes. See "Plan of Distribution." In addition, to
comply with the securities laws of certain jurisdictions, if applicable, the New
Notes may not be offered or sold unless they have been registered or qualified
for sale in such jurisdictions or in compliance with an available exemption from
registration or qualification. The Company has agreed, pursuant to the
Registration Rights Agreement and subject to certain specified limitations
therein, to register or qualify the New Notes for offer or sale under the
securities or blue sky laws of such jurisdictions as any holder of the Notes
reasonably requests in writing. If a holder of Existing Notes does not exchange
such Existing Notes for New Notes pursuant to the Exchange Offer, such Existing
Notes will continue to be subject to the restrictions on transfer contained in
the legend thereon. In general, the Existing Notes may not be offered or sold,
unless registered under the Securities Act, except pursuant to an exemption
from, or in a transaction not subject to, the Securities Act and applicable
state securities laws. Holders of Existing Notes do not have any appraisal or
dissenters' rights under the Delaware General Corporation Law in connection with
the Exchange Offer. See "The Exchange Offer -- Consequences of Failure to
Exchange; Resales of New Notes."
The Existing Notes are currently eligible for trading in the Private
Offerings, Resales and Trading through Automated Linkages ("PORTAL") market.
Following commencement of the Exchange Offer but prior to its consummation, the
Existing Notes may continue to be traded in the PORTAL market. Following
consummation of the Exchange Offer, the New Notes will not be eligible for
PORTAL trading.
THE NEW NOTES
The terms of the New Notes are identical in all material respects to the
Existing Notes, except for certain transfer restrictions and registration rights
relating to the Existing Notes.
Securities Offered............... $130,000,000 aggregate principal amount of
10 3/4% Senior Notes due 2006.
Maturity Date.................... November 15, 2006.
Interest Rate and Payment
Dates............................ The New Notes will bear interest at a rate
of 10 3/4% per annum. Interest on the New
Notes will be payable semi-annually in cash
in arrears on November 15 and May 15 of
each year, commencing May 15, 1997.
Ranking.......................... The New Notes will be senior unsecured
obligations of the Company, pari passu in
right of payment with all existing and
future senior indebtedness of the Company
and senior to all subordinated indebtedness
of the Company. The New Notes will be
effectively subordinated to all senior
secured indebtedness of the Company,
including indebtedness under the Revolving
Credit Facility, to the extent of the
assets securing such indebtedness, and to
all existing and future indebtedness and
other obligations of the Company's Foreign
Subsidiaries. See "Description of
Notes -- Ranking." As of September 30,
1996, on a pro forma basis after giving
effect to the Transactions, the Company
would have had no senior
7
<PAGE> 10
secured indebtedness outstanding (exclusive
of unused commitments of $30.0 million
under the Revolving Credit Facility).
Optional Redemption.............. The New Notes (and any outstanding Existing
Notes) will be redeemable at the option of
the Company, in whole or in part, on or
after November 15, 2001, at the redemption
prices set forth herein, plus accrued and
unpaid interest, if any, to the date of
redemption. Notwithstanding the foregoing,
at any time or from time to time prior to
November 15, 1999, the Company may redeem
up to one-third of the original principal
amount of the Notes at the redemption price
of 110.75% of the principal amount thereof,
plus accrued and unpaid interest, if any,
through the date of redemption, with the
net cash proceeds of one or more Public
Equity Offerings, provided that at least
$86.7 million aggregate principal amount of
the Notes remain outstanding immediately
thereafter. See "Description of
Notes -- Redemption."
Mandatory Redemption............. None.
Guarantors....................... Repayment of the New Notes will be
unconditionally and irrevocably guaranteed
on a senior basis by all Restricted
Subsidiaries (as defined) of the Company
that are not Foreign Subsidiaries. On the
date of initial issuance of the Existing
Notes (the "Issue Date") the Company did
not, and on the date hereof the Company
does not, have any subsidiaries other than
Foreign Subsidiaries. Accordingly, there
are no Guarantors (as defined).
Change of Control................ Upon the occurrence of a Change of Control,
the Company will be required to offer to
repurchase all of the outstanding Notes at
101% of the principal amount thereof,
together with accrued and unpaid interest,
if any, to the date of repurchase. See
"Description of Notes -- Repurchase Upon
Change of Control."
Certain Covenants................ The Indenture relating to the Notes
contains certain covenants, including
covenants which limit the ability of the
Company and its Restricted Subsidiaries to:
(i) incur additional indebtedness; (ii)
make restricted payments; (iii) issue and
sell capital stock of subsidiaries; (iv)
enter into certain transactions with
affiliates; (v) create certain liens; (vi)
sell certain assets; and (vii) merge,
consolidate or sell substantially all of
the Company's assets. All of these
limitations are subject to various
qualifications. See "Description of
Notes -- Certain Covenants."
For a more detailed discussion of the terms of the New Notes, see
"Description of Notes."
RISK FACTORS
Holders of Existing Notes should carefully consider all of the information
set forth in this Prospectus and, in particular, should evaluate the specific
factors under "Risk Factors" beginning on page 11 in connection with the
Exchange Offer.
8
<PAGE> 11
SUMMARY HISTORICAL AND PRO FORMA COMBINED FINANCIAL INFORMATION
The summary historical financial data for each of the years in the three
year period ended December 31, 1995 were derived from the audited combined
financial statements of the Company included elsewhere in this Prospectus. The
summary historical financial data for the nine month periods ended September 30,
1995 and 1996 were derived from the unaudited combined financial statements of
the Company included elsewhere in this Prospectus. The summary pro forma
financial data for the year ended December 31, 1995, and as of and for the nine
month period ended September 30, 1996 and the LTM period, were derived from the
"Unaudited Pro Forma Combined Financial Information" included elsewhere in this
Prospectus. The summary pro forma financial data for each of the years in the
two year period ended December 31, 1994 and the nine month period ended
September 30, 1995 were derived from historical data and adjusted as described
in Note (2) below. The pro forma financial data are presented for informational
purposes only and do not purport to represent what the Company's financial
position or results of operations would actually have been if the Transactions
had occurred on the assumed dates or to project the Company's financial position
or results of operations at any future date or for any future periods. The
information contained in this table should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," "Unaudited Pro Forma Combined Financial Information" and the
historical combined financial statements of the Company, including the notes
thereto, included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED LAST TWELVE
YEAR ENDED DECEMBER 31, SEPTEMBER 30, MONTHS ENDED
---------------------------- ----------------- SEPTEMBER 30,
1993 1994 1995 1995 1996 1996
------ ------ ------ ------ ------ -------------
<S> <C> <C> <C> <C> <C> <C>
($ IN MILLIONS)
OPERATING DATA:
Net Sales....................... $395.6 $472.7 $528.8 $404.4 $334.9 $ 459.2
Gross Profit.................... 22.3 42.9 44.7 31.9 37.6 50.4
Engineering, Selling and
Administrative Expenses....... 46.5 41.7 31.2 24.5 22.0 28.7
Adjusted Income (Loss) from
Operations(1)................. (24.2) 1.2 13.5 7.4 15.6 21.7
Income (Loss) from Operations... (28.6) (14.0) 3.1 (1.5) 10.9 15.4
OTHER DATA:
Pro Forma EBITDA(2)............. $(15.8) $ 10.3 $ 24.1 $ 15.6 $ 22.7 $ 31.3
Depreciation and
Amortization(3)............... 9.9 10.6 12.3 9.4 8.5 11.4
Capital Expenditures............ 8.1 6.6 5.3 4.0 2.5 3.8
Ratio of Pro Forma EBITDA to Net
Interest Expense(4)........... 1.7x 2.1x 2.3x
</TABLE>
<TABLE>
<CAPTION>
AT SEPTEMBER 30, 1996
------------------------
ACTUAL PRO FORMA(5)
------ -------------
<S> <C> <C>
($ IN MILLIONS)
BALANCE SHEET DATA:
Cash and Cash Equivalents(6)............................................. $ 2.4 $ 12.3
Working Capital(7)....................................................... 50.0 49.6
Net Property, Plant and Equipment........................................ 51.4 51.9
Total Assets............................................................. 180.7 291.8
Debt(8).................................................................. 145.2(9) 130.0
Stockholder's Equity (Deficit)........................................... (101.9) 25.0
</TABLE>
(footnotes on following page)
9
<PAGE> 12
- ---------------
(1) Excludes corporate charges allocated to the Company by Terex of (a) $4.4
million, $8.5 million, $7.0 million and $6.3 million in the years ended
December 31, 1993, 1994 and 1995, and the LTM period, respectively, and (b)
$5.4 million and $4.7 million in the nine months ended September 30, 1995
and 1996, respectively. Also excludes severance and exit charges of (a) $6.7
million and $3.5 million in the years ended December 31, 1994 and 1995,
respectively, and (b) $3.5 million in the nine month period ended September
30, 1995. See the Company's historical combined financial statements
included elsewhere herein.
(2) Pro forma EBITDA represents Income (Loss) from Operations plus Depreciation
and Amortization, severance and exit charges, and corporate charges
allocated to the Company by Terex, less the addition of certain legal,
accounting and administrative expenses to replace such services previously
provided by Terex (estimated to be $1.5 million for each of 1993, 1994 and
1995 and the LTM period and $1.1 million for each of the nine month periods
ended September 30, 1995 and 1996). See "Risk Factors -- Lack of Independent
Operating History." In addition, for the year ended December 31, 1995, the
nine month periods ended September 30, 1995 and 1996, and the LTM period,
pro forma EBITDA has been adjusted to eliminate amortization of deferred
gain relating to the predecessor's sale leaseback of certain facilities and
eliminate rental and related costs of an abandoned facility, net of the
incremental costs at other facilities for relocated employees. See
"Unaudited Pro Forma Combined Financial Information" included elsewhere
herein. The Company has included information concerning pro forma EBITDA
herein because it understands that such information is used by certain
investors as one measure of an issuer's historical ability to service debt.
Pro forma EBITDA should not be considered as an alternative to, or more
meaningful than, earnings from operations or other traditional indications
of the Company's operating performance.
(3) Excludes amortization of historical debt issuance costs of $1.0 million,
$0.8 million, $0.5 million, $0.4 million, $0.3 million and $0.5 million for
the years ended December 31, 1993, 1994 and 1995, for the nine months ended
September 30, 1995 and 1996 and for the LTM period, respectively, which have
not been deducted from Income (Loss) from Operations.
(4) Net interest expense is defined as interest expense less interest income.
Includes interest on the Notes but excludes interest on capital lease
obligations. These capital leases represent forklift trucks sold to
financial institutions in Europe and leased back by the Company and then
leased to customers. The related income and interest expense are reflected
in Income (Loss) from Operations and pro forma EBITDA.
(5) The Acquisition has been accounted for under the purchase method of
accounting. The purchase price for the Acquisition, including the related
fees and expenses, has been allocated to the tangible and identifiable
intangible assets or liabilities of the acquired business based upon the
Company's preliminary estimates of their fair value with the remainder
allocated to goodwill. The allocation of purchase price for the Acquisition
is subject to revision when additional information concerning asset and
liability valuation becomes available.
(6) Includes cash, cash equivalents and cash securing letters of credit.
(7) Calculated as net trade receivables plus net inventories less trade
payables.
(8) Excludes capital lease obligations of $6.2 million discussed in Note 4
above.
(9) Includes Due to Parent of $93.6 million which was eliminated in connection
with the Acquisition.
10
<PAGE> 13
RISK FACTORS
Holders of Existing Notes should carefully consider the specific factors
set forth below as well as the other information included in this Prospectus in
connection with the Exchange Offer. The risk factors set forth below are
generally applicable to the Existing Notes as well as the New Notes.
SIGNIFICANT LEVERAGE
The Company is highly leveraged. At September 30, 1996, on a pro forma
basis after giving effect to the Transactions, the Company's debt and
stockholder's equity would have been $130.0 million and $25.0 million,
respectively. The Company would also have had borrowing availability under the
Revolving Credit Facility of $30.0 million, subject to the borrowing conditions
contained therein. For the year ended December 31, 1995 and the nine month
period ended September 30, 1996, the ratio of pro forma EBITDA to net interest
expense would have been 1.7 to 1 and 2.1 to 1, respectively, after giving pro
forma effect to the Transactions as if they had occurred on January 1, 1995.
The Company's high level of debt and debt service requirements will have
several important consequences, including the following: (i) a substantial
portion of the Company's cash flow from operations will be dedicated to
servicing its indebtedness; (ii) the covenants contained in the Company's
indebtedness will impose certain restrictions on the Company which, among other
things, will limit its ability to borrow additional funds; (iii) the Company's
ability to obtain additional financing in the future for working capital,
capital expenditures, acquisitions, general corporate purposes or other purposes
may be impaired; and (iv) the Company's ability to withstand competitive
pressures, adverse economic conditions and adverse changes in governmental
regulations may be negatively affected.
The Company's ability to meet its debt service obligations and to reduce
its total indebtedness will depend upon its future performance, which will be
subject to general economic conditions, its ability to achieve cost savings and
other financial, business and other factors affecting the operations of the
Company, many of which are beyond its control. If the Company cannot generate
sufficient cash flow from operations in the future to service its debt, it may
be required to refinance all or a portion of such debt (including the Notes),
sell assets or obtain additional financing. There can be no assurance that any
such refinancing or asset sales would be possible or that any additional
financing could be obtained.
SECURED INDEBTEDNESS; SUBSIDIARY OPERATIONS
The New Notes, like the Existing Notes, will be effectively subordinated to
all senior secured indebtedness of the Company, including indebtedness under the
Revolving Credit Facility, to the extent of the assets securing such
indebtedness. As of September 30, 1996, on a pro forma basis after giving effect
to the Transactions, the Company would not have had any secured indebtedness
outstanding, exclusive of unused commitments of $30.0 million which may be
borrowed by the Company under the Revolving Credit Facility.
Although the Company's North American operations are owned directly, its
foreign operations are conducted through the Foreign Subsidiaries. The Foreign
Subsidiaries have not guaranteed or otherwise become obligated with respect to
the Notes. The Notes will therefore be effectively subordinated to all existing
and future liabilities, including indebtedness, of the Foreign Subsidiaries. As
of September 30, 1996, on a pro forma basis after giving effect to the
Transactions, the Foreign Subsidiaries would have had liabilities of
approximately $40.4 million reflected on the Company's combined balance sheet.
Claims of creditors of the Foreign Subsidiaries, including trade creditors, will
generally have priority as to the assets of such subsidiaries over the claims of
the Company and the holders of the Company's indebtedness, including the Notes.
GUARANTEES
The repayment of the New Notes, like the Existing Notes, will be
unconditionally and irrevocably guaranteed on a senior basis by all Restricted
Subsidiaries of the Company that are not Foreign Subsidiaries. On the Issue
Date, the Company did not have any subsidiaries other than the Foreign
Subsidiaries and, accordingly, there were no Guarantors on the Issue Date. The
guarantees of any future Guarantors may be
11
<PAGE> 14
subject to legal challenge under applicable provisions of the United States
Bankruptcy Code or comparable provisions of state fraudulent transfer or
conveyance laws. If such a challenge were upheld, the guarantees of such
Guarantors would be invalidated and unenforceable, and it is possible that the
holders of the Notes would be ordered by a court to turn over to other creditors
of such Guarantors or to their trustees in bankruptcy all or a portion of the
payments made to them pursuant to the guarantees.
HISTORICAL OPERATING LOSSES
The Company experienced operating losses of $28.6 million and $14.0 million
for the years ended December 31, 1993 and 1994, respectively. These losses were
largely due to high operating expenses and cash constraints which resulted in a
shortage of materials and curtailed production. The Company has a Revolving
Credit Facility of $30.0 million. However, such facility will be subject to the
borrowing conditions contained therein, and there can be no assurance that such
cash constraints or operating losses will not recur.
PRODUCT LIABILITY AND OTHER CLAIMS
From time to time product liability claims are asserted against the Company
for various injuries alleged to have resulted from defects in the manufacture
and/or design of its products. As of September 30, 1996, the Company had
approximately 120 pending lawsuits relating to claims arising from accidents
involving its products. Most of these lawsuits are in various stages of pretrial
completion, and certain plaintiffs are seeking punitive as well as compensatory
damages. The Company is self-insured, up to certain limits, for these product
liability claims, as well as certain exposures related to general workers'
compensation and automobile liability. The Company has recorded and maintains on
its balance sheet reserves relating to the estimated liability, based in part
upon actuarial determinations, of the Company's aggregate exposure for such
self-insured risks. There can be no assurance that these reserves are adequate.
The Company also has certain other contingent liabilities or uncertainties
for other obligations, including contingent liabilities relating to the
Company's guarantees of certain floor plan obligations and its obligation to
repurchase equipment from certain dealers and customers upon the occurrence of
certain events. The unfavorable resolution of product liability claims or any
other contingencies or uncertainties in the future could have a material adverse
effect on the Company. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Contingencies and Uncertainties" and
"Business -- Legal Proceedings."
INDUSTRY CYCLICALITY AND SUBSTANTIAL COMPETITION
Sales of products manufactured and sold by the Company have historically
been subject to substantial cyclical variation based, among other things, on
general economic conditions. The Company has been experiencing a softening in
the demand for forklift trucks in North America and Europe. It is expected that
there will be a further decline in such demand in 1997 with a modest improvement
thereafter. There can be no assurance as to the magnitude or timing of such
decline or recovery, or that such decline will not have a material adverse
effect on the Company. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
The truck market in which the Company competes is highly competitive. The
Company encounters significant competition particularly from lower cost foreign
competitors, including manufacturers located in Japan and Korea. The Company
competes on the basis of quality, price, on-time delivery, product line, ease of
use, safety, comfort and customer service. Many of the Company's competitors
have greater financial resources than the Company. Additionally, certain of the
Company's products are subject to changing technology which could place the
Company at a competitive disadvantage relative to product innovations by
competitors. There can be no assurance that the Company will be able to achieve
the technological advances that may be necessary to remain competitive.
12
<PAGE> 15
DEPENDENCE ON SOLE SOURCE SUPPLIERS
The Company does not currently have multiple vendors for all parts and
supplies critical to the Company's manufacturing processes. The Company depends
exclusively upon certain suppliers of key parts used in its lift trucks and has
experienced supply disruptions in the past causing it temporarily to curtail
production in certain product lines. For example, an exclusive supplier to the
Company of certain uprights, which is a key component in the Company's
production of forklifts, has recently been unable to meet the Company's
requirements. The Company's future success will depend, in part, on its ability
to maintain continuity of supply of critical parts and to develop alternative
supply arrangements as needed. The failure of a key supplier to meet the
Company's requirements on a timely basis or the loss of a key supplier could
lead to delays in the Company's manufacturing operations and have a material
adverse effect on the Company.
FOREIGN OPERATIONS
The Company's products are sold in more than 50 countries worldwide.
Accordingly, a substantial portion of the sales of the Company are generated in
foreign currencies, while the costs associated with these sales are only
partially incurred in the same currencies. Consequently, the Company's financial
performance and results of operations are affected by fluctuations between the
U.S. dollar and such foreign currencies. In addition, currency fluctuations
could improve the competitive position of the Company's foreign competitors if
the value of the U.S. dollar rises in relation to the local currencies of such
competitors. The Company is also subject to other risks associated with
operating in foreign countries, including imposition of limitations on
conversion of foreign currencies into dollars or remittance of dividends and
other payments by foreign subsidiaries, imposition or increase of withholding
and other taxes on remittances and other payments by foreign subsidiaries,
hyperinflation in certain foreign countries and imposition or increase of
investment and other restrictions by foreign governments. No assurance can be
given that the risks associated with operating in foreign countries will not
have a material adverse effect on the Company in the future.
GOVERNMENT REGULATION
The Company's facilities and operations are required to comply with and are
subject to federal, state, local and foreign environmental and worker health and
safety laws, regulations and ordinances, including those relating to air
emissions, wastewater discharges and the management and disposal of certain
materials, substances and wastes ("Environmental Laws"). The nature of the
Company's operations and the history of industrial uses at some of its
facilities expose the Company to the risk of liabilities or claims with respect
to environmental and worker health and safety matters. The Company may also have
contingent responsibility for liabilities with respect to environmental matters
arising in connection with the prior operations of the material handling
business of Clark Equipment Company, a predecessor of the Company ("CEC"). There
can be no assurance that material costs will not be incurred in connection with
such liabilities or claims.
Future events, such as changes in existing laws and regulations or their
interpretations, may give rise to additional compliance costs or liabilities
that could have a material adverse effect on the Company's business, financial
condition or results of operations. Compliance with more stringent laws or
regulations, as well as more vigorous enforcement policies of regulatory
agencies or stricter or different interpretations of existing laws, may require
additional expenditures by the Company which may be material. See "Business --
Environmental Matters."
DEPENDENCE ON MANAGEMENT AND KEY PERSONNEL
Certain of the executive officers of the Company, including among others
Dr. Martin M. Dorio, President and Chief Executive Officer of the Company, are
key to the management and direction of the Company. The loss of the services of
such persons could have a material adverse effect on the Company, and there can
be no assurance that the Company would be able to find replacements for such
persons with equivalent business experience and skills.
13
<PAGE> 16
LABOR DISPUTES
The Southaven Facility, which the Company shares with Terex, experienced a
labor dispute beginning in 1995, which had a short term effect on the Company's
distribution operations at the facility but had no appreciable effect on the
conduct of business or results of operations. There can be no assurance that
similar labor disputes will not occur in the future which, depending upon the
timing and duration of such disputes, could have a material adverse effect on
the Company. See "Business -- Employees."
LACK OF INDEPENDENT OPERATING HISTORY
Prior to the consummation of the Transactions, the business of the Company
had been conducted through subsidiaries of Terex. During the year ended December
31, 1995, Terex allocated a $7.0 million corporate charge to the Company for
certain legal, accounting and administrative services provided to the Company.
Terex no longer allocates these charges to the Company, and the Company no
longer relies on Terex to provide these services. The pro forma financial
information contained herein assumes that the Company would have incurred
expenses of $1.5 million to obtain comparable services on an annual basis.
However, there can be no assurance that the Company will be able to obtain such
services for such amounts and on other acceptable terms in the future. In
addition, Terex had allocated certain expenses (for example, workers'
compensation) to the Company, which the Company now obtains separately. There
can be no assurance that such expenses will not exceed the historical charges
allocated to the Company.
In connection with the Acquisition, the Company entered into a Service
Agreement with Terex pursuant to which the Company shares space in the Southaven
Facility, and obtains certain services, for three years. See "Certain
Relationships and Related Transactions -- Service Agreement." There can be no
assurance that charges under the Service Agreement will not exceed historical
charges or that upon termination of such agreement the Company will be able to
obtain similar facilities and services on acceptable terms.
OWNERSHIP OF HOLDINGS AND THE COMPANY
CVC, Dr. Martin M. Dorio, President and Chief Executive Officer of the
Company, and Thomas J. Snyder, who was elected to the Board of Directors of the
Company in connection with the Acquisition, own all of the outstanding voting
stock of Holdings, which owns all of the outstanding capital stock of the
Company. By virtue of such stock ownership, such persons have the power to
direct the affairs of the Company and are able to determine the outcome of all
matters required to be submitted to stockholders for approval, including the
election of a majority of the Company's directors and amendment of the Company's
certificate of incorporation. See "The Transactions" and "Ownership of the
Company."
LACK OF PUBLIC MARKET
The Existing Notes are currently eligible for trading in the PORTAL Market.
The New Notes are new securities for which there is no established market. The
Company does not intend to list the New Notes on any national securities
exchange or to seek the admission thereof to trading in the National Association
of Securities Dealers Automated Quotation System. The Initial Purchasers have
advised the Company that they currently intend to make a market in the New
Notes. However, the Initial Purchasers are not obligated to do so and any market
making may be discontinued at any time without notice. There can be no assurance
as to the development of any market or the liquidity of any market that may
develop for the New Notes. See "Description of Notes."
14
<PAGE> 17
THE TRANSACTIONS
The Company and Holdings were formed by CVC and the Management Investors to
effect the Acquisition of substantially all of the assets and certain
liabilities of Clark Material Handling Company and all of the outstanding
capital stock of certain of its affiliates. The Acquisition was consummated on
November 27, 1996 pursuant to the Acquisition Agreement. The aggregate
consideration for the Acquisition was $139.5 million, which is subject to
certain post-closing adjustments to reflect changes in the Adjusted Working
Capital (as defined in the Acquisition Agreement) of the Company between
September 30, 1996 and November 27, 1996. To finance the Acquisition (including
the payment of related fees and expenses): (i) CVC, Dr. Martin M. Dorio,
President and Chief Executive Officer of the Company, and Thomas J. Snyder, who
was elected to the Board of Directors of the Company in connection with the
Acquisition, purchased $17.0 million of preferred stock (the "Holdings Preferred
Stock"), $1.0 million of voting common stock (the "Holdings Class A Stock") and
non-voting common stock (the "Holdings Class B Stock" and, together with the
Holdings Class A Stock, the "Holdings Common Stock"), and $7.0 million of junior
subordinated debentures (the "Holdings Debentures") from Holdings for $25.0
million in cash; (ii) Holdings contributed the $25.0 million Equity Contribution
to the Company in exchange for all of the capital stock of the Company; and
(iii) the Company issued and sold the Existing Notes to the Initial Purchasers.
CVC invested $24.9 million and received $16.9 million of Holdings Preferred
Stock, $991,000 of Holdings Common Stock and $7.0 million of Holdings
Debentures. Dr. Martin M. Dorio invested $100,000 and received $96,000 of
Holdings Preferred Stock and $4,000 of Holdings Class A Stock. Thomas J. Snyder
invested $5,000 for Holdings Common Stock of equivalent value.
The Holdings Preferred Stock, Holdings Common Stock and Holdings Debentures
are held as follows: (i) CVC holds approximately 99.4% of the Holdings Preferred
Stock, 48.8% of the Holdings Class A Stock, 99.5% of the Holdings Class B Stock
and $7.0 million of the Holdings Debentures; (ii) Dr. Martin M. Dorio holds
approximately 0.6% of the Holdings Preferred Stock and 48.8% of the Holdings
Class A Stock; and (iii) Thomas J. Snyder holds approximately 2.4% of the
Holdings Class A Stock and 0.5% of Holdings Class B Stock. It is currently
contemplated that certain Management Investors will purchase approximately
$900,000 of Holdings Preferred Stock, Holdings Common Stock and Holdings
Debentures. In addition, certain members of the Company's management are
expected to participate in an Employee Stock Purchase Plan pursuant to which
management will be offered the opportunity to acquire Holdings Class A Stock
which would equal in the aggregate up to an additional 10.0% of the Holdings
Class A Stock outstanding. See "Ownership of the Company" and "Description of
Certain Indebtedness -- Holdings Debentures."
In connection with the Acquisition, the Company entered into the $30.0
million Revolving Credit Facility, which is secured by the accounts receivable
and inventory of the Company's domestic operations. The Company did not draw
upon the Revolving Credit Facility in connection with the Transactions. In
addition, CLARK Europe may enter into a revolving credit facility to provide
working capital for its European operations. It is expected that any such
facility will provide for up to $10.0 million of revolving credit loans and will
be secured by certain assets of CLARK Europe. See "Description of Certain
Indebtedness."
15
<PAGE> 18
USE OF PROCEEDS
The Company will not receive any proceeds from the Exchange Offer. The
gross proceeds to the Company from the sale of the Existing Notes of $130.0
million, together with the $25.0 million Equity Contribution, were used (i) to
finance the Acquisition, (ii) to pay fees and expenses relating to the
Transactions and (iii) for general corporate purposes.
PRO FORMA CAPITALIZATION
The following table sets forth the capitalization of the Company as of
September 30, 1996 on a pro forma basis after giving effect to the Transactions.
This table should be read in conjunction with "Management's Discussion and
Analysis of Financial Conditions and Results of Operation -- Contingencies and
Uncertainties," the Company's historical combined financial statements and
"Unaudited Pro Forma Combined Financial Information," and the respective notes
thereto, included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
AT SEPTEMBER 30,
1996
----------------
($ IN MILLIONS)
<S> <C>
Debt:
Revolving Credit Facility(1)................................ $ --
The Notes................................................... 130.0
------
Debt(2)............................................. 130.0
Stockholder's Equity(3)....................................... 25.0
------
Total Capitalization................................ $155.0
======
</TABLE>
- ---------------
(1) Borrowings of up to $30.0 million under the Revolving Credit Facility are
available to the Company for working capital and general corporate purposes,
subject to the borrowing conditions contained therein. The Company did not
draw upon the Revolving Credit Facility in connection with the Transactions.
In addition, CLARK Europe may enter into a revolving credit facility to
provide working capital for its European operations. It is expected that any
such facility will provide up to $10.0 million of revolving credit loans.
See "The Transactions" and "Description of Certain Indebtedness."
(2) Excludes capital lease obligations of $6.2 million, including a current
portion of $2.4 million. These capital leases represent forklift trucks sold
to financial institutions in Europe and leased back by the Company and then
leased to customers. The related income and interest expense are reflected
in the Company's Income (Loss) from Operations and pro forma EBITDA.
(3) The Acquisition will be accounted for under the purchase method of
accounting. The purchase price for the Acquisition, including the related
fees and expenses, has been allocated to the tangible and identifiable
intangible assets or liabilities of the acquired business based upon the
Company's preliminary estimates of their fair value with the remainder
allocated to goodwill. The allocation of purchase price for the Acquisition
is subject to revision when additional information concerning asset and
liability valuation becomes available.
16
<PAGE> 19
SELECTED HISTORICAL FINANCIAL DATA
On July 31, 1992, Terex acquired the Company from CEC. The selected
historical financial data as of and for the year ended December 31, 1991 were
derived from the audited combined financial statements of the predecessor
company. The selected historical financial data as of and for the five months
ended December 31, 1992 were derived from the unaudited combined financial
statements of the Company. The selected historical financial data as of and for
each of the years in the three-year period ended December 31, 1995 were derived
from the audited combined financial statements of the Company, which (except for
the Balance Sheet of the Company as of December 31, 1993) are included elsewhere
in this Prospectus. The selected historical financial data as of and for the
nine-month periods ended September 30, 1995 and 1996 were derived from the
unaudited combined financial statements of the Company, which (except for the
Balance Sheet of the Company as of September 30, 1995) are included elsewhere in
this Prospectus. The information contained in this table should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the Company's historical combined financial
statements, including the notes thereto, included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
THE COMPANY
PREDECESSOR ---------------------------------------------------------
--------------------------- NINE MONTHS
SEVEN MONTHS FIVE YEAR ENDED DECEMBER 31, ENDED SEPTEMBER
YEAR ENDED ENDED MONTHS ENDED 30,
DECEMBER 31, JULY 31, DECEMBER 31, ------------------------ ---------------
1991 1992 1992 1993 1994 1995 1995 1996
------------ ------------ ------------ ------ ------ ------ ------ ------
(DOLLARS IN MILLIONS) (DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Net Sales.......................... $502.7 N/A(1) $240.9 $395.6 $472.7 $528.8 $404.4 $334.9
Gross Profit....................... 30.6 N/A(1) 22.5 22.3 42.9 44.7 31.9 37.6
Engineering, Selling and
Administrative Expenses.......... 60.6 N/A(1) 19.3 46.5 41.7 31.2 24.5 22.0
Adjusted Income (Loss) from
Operations(2).................... (30.0) N/A(1) 3.3 (24.2) 1.2 13.5 7.4 15.6
Income (Loss) from Operations...... (37.2) N/A(1) 2.2 (28.6) (14.0) 3.1 (1.5) 10.9
Loss Before Extraordinary Items and
Cumulative Effect of Change in
Accounting(3)(4)................. (37.6) N/A(1) (5.1) (44.9) (25.3) (17.4) (17.4) (2.9)
BALANCE SHEET DATA (AT END OF PERIOD):
Working Capital(5)................. 74.7 N/A(1) 59.1 50.8 41.4 46.4 50.6 50.0
Net Property, Plant & Equipment.... 50.0 N/A(1) 92.9 75.3 60.7 58.2 63.4 51.4
Total Assets....................... 208.2 N/A(1) 270.2 208.0 194.7 192.7 198.6 180.7
Long-Term Obligations(6)........... --(1) N/A(1) 93.4 120.0 125.9 143.0 146.0 148.6
</TABLE>
- ---------------
(1) The Company was included as part of CEC's consolidated financial statements
prior to August 1, 1992. The selected historical financial data as of and
for the seven months ended July 31, 1992, and the amount of long-term
obligations as of December 31, 1991, are not presently available to the
Company. The Company has requested such data and amount from CEC, but has
not been provided with the requested information.
(2) Excludes corporate charges allocated to the Company by Terex of (a) $1.1
million for the five months ended December 31, 1992; (b) $4.4 million, $8.5
million and $7.0 million in the years ended December 31, 1993, 1994 and
1995, respectively; and (c) $5.4 million and $4.7 million in the nine months
ended September 30, 1995 and 1996, respectively. Also excludes severance and
exit charges of (a) $7.2 million, $6.7 million and $3.5 million in the years
ended December 31, 1991, 1994 and 1995, respectively, and (b) $3.5 million
in the nine months ended September 30, 1995.
(3) Earnings were insufficient to cover fixed charges by $37.7 million, $4.9
million, $44.8 million, $24.5 million, $17.3 million, $17.3 million and $2.9
million for the year ended December 31, 1991, the five months ended December
31, 1992, the years ended December 31, 1993, 1994 and 1995 and the nine
months ended September 30, 1995 and 1996, respectively. The ratio and such
amounts have been calculated including interest expense allocated to the
Company by Terex.
(4) In 1991, the Company adopted Statement of Financial Accounting Standards No.
106 "Employers' Accounting for Post-Retirement Benefits other than Pension."
(5) Calculated as net trade receivables plus net inventories less trade
payables.
(6) Includes Due to Parent of $40.2 million, $68.5 million, $87.6 million, $90.2
million and $93.6 million as of December 31, 1993, 1994 and 1995, and
September 30, 1995 and 1996, respectively. Also includes long-term portion
of capital lease obligations.
17
<PAGE> 20
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
CLARK is a leading international designer, manufacturer and marketer of a
complete line of forklift trucks, which it markets through a global network of
285 dealers. CLARK's large installed base, which management estimates to be
approximately 350,000 units in operation worldwide, provides for substantial
ongoing replacement parts sales, which typically generate significantly higher
gross margins than new product sales. In 1995, CLARK derived approximately 82%
and 18% of its net sales from new products and replacement parts, respectively.
In 1995, CLARK's North American operations accounted for approximately 72% of
its net sales and CLARK Europe accounted for the remaining 28%. For the LTM
period, CLARK generated net sales of $459.2 million.
CLARK experienced operating losses for the years ended December 31, 1993
and 1994 which were largely due to high operating expenses and cash constraints.
Since 1993, CLARK has undertaken a series of initiatives aimed at reducing fixed
costs, developing a largely variable cost structure and maximizing the Company's
ability to respond to market changes. These initiatives involved (i) elimination
of 11 redundant manufacturing and distribution facilities, (ii) head-count
reductions involving termination of over 600 employees, representing
approximately 40% of the Company's workforce, (iii) elimination of three
non-core, unprofitable product lines and (iv) greater reliance on outsourcing.
In addition to cost rationalization, the Company has redesigned a significant
portion of its product portfolio. The Company's new and redesigned products have
earned higher gross margins due to their lower production costs. As a result of
CLARK's cost reduction initiatives and its higher margin new product
introductions, CLARK's pro forma EBITDA improved by $47.1 million to $31.3
million in the LTM period from ($15.8) million in fiscal 1993.
The Company has been experiencing a softening in the demand for forklift
trucks in North America and Europe. It is expected that there will be a further
decline in such demand in 1997 with a modest improvement thereafter. Despite a
13% decline in net sales due to lower industry activity for the LTM period, pro
forma EBITDA increased by $7.2 million or 30% compared to pro forma EBITDA for
fiscal 1995. Management believes the foregoing demonstrates the Company's
improved ability to sustain profitability in changing market conditions. There
can be no assurance, however, as to the magnitude or timing of any decline or
recovery, or that any future decline will not have a material adverse effect on
the Company's business.
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, NINE MONTHS ENDED SEPTEMBER 30,
------------------------------------------------ -------------------------------
1993 1994 1995 1995 1996
-------------- -------------- -------------- -------------- --------------
($) (%) ($) (%) ($) (%) ($) (%) ($) (%)
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Truck and Related Sales................. $301.6 76.2% $382.6 80.9% $433.1 81.9% $333.0 82.3% $265.3 79.2%
Net Aftermarket Part Sales.................. 94.0 23.8% 90.1 19.1% 95.7 18.1% 71.4 17.7% 69.5 20.8%
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Total Net Sales..................... $395.6 100.0% $472.7 100.0% $528.8 100.0% $404.4 100.0% $334.9 100.0%
Gross Profit................................ 22.3 5.6% 42.9 9.1% 44.7 8.5% 31.9 7.9% 37.6 11.2%
Engineering, Selling and Administrative
Expenses.................................. 46.5 11.8% 41.7 8.8% 31.2 5.9% 24.5 6.1% 22.0 6.6%
Adjusted Income (Loss) from Operations(1)... (24.2) (6.1%) 1.2 0.3% 13.5 2.6% 7.4 1.8% 15.6 4.7%
Income (Loss) from Operations............... (28.6) (7.2%) (14.0) (3.0%) 3.1 0.6% (1.5) (0.4%) 10.9 3.3%
</TABLE>
- ---------------
(1) Excludes corporate charges allocated to the Company by Terex of (a) $4.4
million, $8.5 million and $7.0 million in the years ended December 31, 1993,
1994 and 1995, respectively, and (b) $5.4 million and $4.7 million in the
nine months ended September 30, 1995 and 1996, respectively. Also excludes
severance and exit charges of (a) $6.7 million and $3.5 million in the years
ended December 31, 1994 and 1995, respectively, and (b) $3.5 million in the
nine month period ended September 30, 1995.
18
<PAGE> 21
Nine Months Ended September 30, 1996 Compared to Nine Months Ended September 30,
1995
Net Sales
Net sales were $334.9 million for the nine months ended September 30, 1996
compared to $404.4 million for the same period in 1995, a decrease of $69.5
million or 17.2%. This decrease was primarily due to reduced demand by CLARK's
customers, which management believes was related to lower industry activity
beginning in the last quarter of 1995. Net truck sales decreased $67.7 million,
or 20.3%, primarily due to a softening in the demand for lift trucks in North
America, while parts sales declined 2.7%. As a result, approximately 20.8% of
net sales were derived from aftermarket parts in the nine months ended September
30, 1996, up from approximately 17.7% for the same period in 1995. CLARK derived
70.1% and 29.9% of its net sales from its North American operations and CLARK
Europe, respectively, in the nine months ended September 30, 1996, and 72.9% and
27.1%, respectively, in the nine months ended September 30, 1995.
Gross Profit
Gross profit increased $5.6 million, or 17.9%, to $37.6 million for the
nine months ended September 30, 1996, compared to $31.9 million for the same
period in 1995, despite the 17.2% decline in net sales. As a percentage of net
sales, gross profit was 11.2% and 7.9% for the nine months ended September 30,
1996 and 1995, respectively. Cost reduction efforts and production improvements
accounted for most of this increase. Factory overhead expenses were reduced by
$7.6 million. Other significant areas of cost decreases included lower product
liability costs, lower freight costs and lower material costs from improved
outsourcing. These improvements were partially offset by lower absorption of
fixed costs due to lower production levels and by lower margins for aftermarket
parts due to a change in product mix.
Engineering, Selling and Administrative Expenses
For the nine months ended September 30, 1996, engineering, selling and
administrative expenses decreased $2.5 million to $22.0 million from $24.5
million for the same period in 1995, primarily due to the rationalization of
staff levels, facilities and support costs in response to lower industry
activity. Engineering, selling and administrative expenses as a percentage of
net sales were 6.6% and 6.1% in the nine months ended September 30, 1996 and
1995, respectively.
Income (Loss) from Operations
Income from operations increased $12.4 million to $10.9 million for the
nine months ended September 30, 1996, compared to a loss of $1.5 million during
the same period in 1995. This increase was primarily due to the cost reduction
efforts described above and occurred despite the decline in net sales. In
addition, CLARK had $3.5 million of severance and exit charges related to
workforce rationalization in Europe and termination of certain leases in 1995
which did not recur in 1996. Terex allocated corporate charges to CLARK of $4.7
million and $5.4 million in 1996 and 1995, respectively. Income (loss) from
operations expressed as a percentage of net sales was 3.3% and (0.4%) in 1996
and 1995, respectively.
Fiscal Year Ended December 31, 1995 Compared to Fiscal Year Ended December 31,
1994
Net Sales
Net sales were $528.8 million in 1995, an increase of $56.1 million or
11.9% from $472.7 million in 1994. Truck sales increased $50.5 million and parts
sales increased $5.6 million. As a result, aftermarket parts sales were
approximately 18.1% of net sales in 1995 compared to 19.1% in 1994. The increase
in truck sales was primarily due to improved market conditions, more efficient
manufacturing operations during 1995 and shipments of the new Genesis(TM) line
of IC trucks, introduced in December 1994. The light IC forklift market, in
which this product competes, represents approximately 60% of the rider forklift
truck industry. Parts sales increased 6.2% because of improved parts inventory
availability, the impact of which was partially offset by the adverse effects of
a labor dispute at the Southaven Facility, the primary effect of which occurred
in March and April 1995. CLARK derived 71.6% and 28.4% of its net sales in 1995
from its North American operations
19
<PAGE> 22
(which include sales of trucks manufactured in Korea primarily for sale in North
America) and CLARK Europe, respectively, compared to 74.8% and 25.2%,
respectively, in 1994.
Gross Profit
Gross profit increased $1.8 million to $44.7 million in 1995 from $42.9
million in 1994. As a percentage of net sales, gross profit was 8.5% and 9.1%
for 1995 and 1994, respectively. Favorable efficiencies due to higher production
and sales volumes, combined with the effects of 1994 severance actions, resulted
in this gross profit increase. This increase was partially offset by additional
costs associated with the commencement of production of the new Genesis(TM)
product line and manufacturing inefficiencies arising from the difficulties in
key suppliers meeting CLARK's demand requirements.
Engineering, Selling and Administrative Expenses
Engineering, selling and administrative expenses decreased by $10.5 million
to $31.2 million for 1995 from $41.7 million for 1994, primarily as a result of
severance actions taken by management during the second half of 1994. As a
consequence of such action, staff levels primarily for CLARK's North American
operations were reduced from approximately 330 employees as of December 31, 1994
to approximately 230 employees as of December 31, 1995, resulting in savings of
approximately $3.0 million for the year ended December 31, 1995. Promotional
expenses and facility costs were also reduced during this period. Engineering,
selling and administrative expenses expressed as a percentage of sales were 5.9%
and 8.8%, respectively, in 1995 and 1994, respectively.
Income (Loss) from Operations
Income from operations increased $17.1 million from a $14.0 million loss
from operations for the year ended December 31, 1994 to $3.1 million for the
year ended December 31, 1995. In addition to the increased sales and
manufacturing efficiencies noted above, the increase in income from operations
was due in part to a $3.3 million reduction in severance, legal and exit charges
and a $1.5 million reduction in corporate charges allocated in 1995 from 1994.
CLARK incurred $3.5 million of severance charges in 1995 as compared to $6.7
million of such charges in 1994. In 1994, CLARK implemented personnel reductions
in plant supervision, engineering, marketing and administration in its North
American and European operations. In addition, in 1994, CLARK implemented
additional personnel reductions in conjunction with the closing of the Korean
plant and a certain branch sales office in France. Terex also allocated
corporate charges to CLARK of $7.0 million and $8.5 million for the years ended
December 31, 1995 and 1994, respectively. Income (loss) from operations as a
percentage of net sales was 0.6% and (3.0)% for the years ended December 31,
1995 and 1994, respectively.
Fiscal Year Ended December 31, 1994 Compared to Fiscal Year Ended December 31,
1993
Net Sales
Net sales were $472.7 million for 1994, an increase of $77.0 million, or
19.5%, from $395.6 million for the prior year. Truck sales increased $81.0
million and parts sales decreased $3.9 million. As a result, parts sales were
approximately 19.1% of net sales in 1994, compared to 23.8% of net sales in
1993. Truck sales improved due to increased industry demand and increased output
resulting from production improvements and the easing of capital constraints.
Cash constraints in the second half of 1993 resulted in production problems
caused by a shortage of supplies and materials during the last half of 1993 and
the first quarter of 1994. Production improved in 1994 because of reorganization
of work flows and other actions taken by management and because a working
capital contribution in December 1993 allowed management to improve relations
and schedule payment terms with its key suppliers. Parts sales were affected by
cash constraints and by difficulties in assimilating CLARK's parts business into
the Southaven Facility during the first half of 1994, leading to decreased parts
availability. Parts sales improved during the last half of 1994 as these
difficulties eased. CLARK derived 74.8% and 25.2% of its net sales in 1994 from
its North American operations (which include
20
<PAGE> 23
sales of trucks manufactured in Korea primarily for sale in North America) and
CLARK Europe, respectively, compared to 72.6% and 27.4%, respectively, in 1993.
Gross Profit
Gross profit increased $20.6 million to $42.9 million in 1994 compared to
$22.3 million in 1993. As a percentage of net sales, gross profit was 9.1% and
5.6% for 1994 and 1993, respectively, reflecting cost reduction initiatives and
production improvements in the second through fourth quarters of 1994, partially
offset by comparatively lower equipment and replacement part sales and decreased
manufacturing efficiency due to shortages in manufacturing supplies and
materials during the first quarter of 1994.
Engineering, Selling and Administrative Expenses
Engineering, selling and administrative expenses decreased to $41.7 million
in 1994 from $46.5 million in 1993 as a result of various cost reduction
initiatives. Engineering, selling and administrative expenses expressed as a
percentage of net sales was 8.8% and 11.8% for the years ended December 31, 1994
and 1993, respectively.
Income (Loss) from Operations
CLARK incurred a loss from operations of $14.0 million for 1994 compared to
a loss from operations of $28.6 million for 1993. Loss from operations as a
percentage of net sales was (3.0%) and (7.2%) for 1994 and 1993, respectively.
The reduction in loss from operations resulted from the improved gross profit
and engineering, selling and administrative expenses noted above. This
improvement was partially offset by a $4.1 million increase in corporate charges
allocated by the parent and a $6.7 million severance charge in 1994 as discussed
above. There were no severance charges ($0) in 1993.
BACKLOG
The Company's backlog orders for the nine months ended September 30, 1996,
and years ended December 31, 1995, 1994 and 1993 were $77.0 million, $78.9
million, $135.9 million and $130.3 million, respectively. Substantially all of
the Company's backlog orders are expected to be filled within one year, although
there can be no assurance that all such orders will be filled within that time
period. The cancellation or delay of certain orders could have a material
adverse effect on the Company.
CAPITAL RESOURCES, LIQUIDITY AND FINANCIAL CONDITION
The Company's business is capital intensive and requires funding for
purchases of production and replacement parts inventories, capital expenditures
for repair, replacement and upgrading of existing facilities as well as
financing of accounts receivables from customers and dealers. The Company will
continue to have significant debt service requirements. On a pro forma basis, on
September 30, 1996 the Company had $12.3 million of cash, cash equivalents and
cash securing letters of credit, $130.0 million of debt and $6.2 million of
capital lease obligations. The Company's ability to incur additional
indebtedness is restricted by the covenants set forth in the Indenture and the
Revolving Credit Facility.
In connection with the Acquisition, the Company entered into the Revolving
Credit Facility. The Revolving Credit Facility has an aggregate undrawn
availability of $30.0 million, subject to the borrowing conditions contained
therein. Management believes that it has adequate available borrowing capacity
under the Revolving Credit Facility to cover its foreseeable working capital
requirements. In addition, CLARK Europe may enter into a revolving credit
facility to provide working capital for its European operations. It is expected
that any such facility will provide up to $10.0 million of revolving credit
loans. See "Description of Certain Indebtedness."
The Company estimates that it will have $2.5 million and $7.5 million of
capital expenditures, including tooling and new product development
expenditures, for the three months ending December 31, 1996 and for the year
ending December 31, 1997, respectively. The Company has no major capital
expenditure plans in the
21
<PAGE> 24
near term and believes that its operating cash flow and the Revolving Credit
Facility will be sufficient to cover its near term capital requirements.
For the period from January 1993 through September 30, 1996, the aggregate
Due to Parent increased by a total of $112.3 million, primarily due to (i) $60.4
million of interest on allocated debt; (ii) allocated corporate charges of $24.5
million; and (iii) $26.2 million of charges related to the use of the Southaven
Facility.
Net Cash Provided by (Used in) Operating Activities
Net cash provided by operating activities for the nine months ended
September 30, 1996 was $5.3 million, compared to $5.7 million for the nine
months ended September 30, 1995. The Company experienced a $15.9 million
improvement in net income and a $3.0 million reduction in CLARK's funds used for
operating assets and liabilities for the nine months ended September 30, 1996,
which were offset primarily by a lower increase in Due to Parent ($21.1 million
for the nine months ended September 30, 1995 compared to $6.0 million for the
comparable period in 1996). Net cash provided by operating activities for the
year ended December 31, 1995 was $7.2 million, representing a $1.8 million, or
20.2%, decrease from $9.0 million for the year ended December 31, 1994. This
decrease was due primarily to $4.5 million of funds used for operating assets
and liabilities in 1995, compared to $11.6 million source of funds from
operating assets and liabilities in 1994. In addition, there was a $19.2 million
increase in Due to Parent in 1995 compared to a $28.3 million increase in 1994.
These decreases were offset in part by improved operating results from a $25.8
million net loss in 1994 compared to an $18.8 million net loss in 1995. In 1993,
CLARK had $3.5 million of net cash provided by operating activities. During this
period, CLARK had a net loss of $45.2 million, $0.7 million of funds used for
operating assets and liabilities and a $58.9 million increase in Due to Parent.
Net Cash Provided by (Used in) Investing Activities
Net cash used in investing activities for the nine months ended September
30, 1996 was $2.4 million compared to $3.6 million for the nine months ended
September 30, 1995. In 1996, CLARK made $2.5 million of capital expenditures
compared to $4.0 million in 1995. Net cash used in investing activities in 1995
was $4.8 million compared to $16.7 million and $1.8 million of cash provided by
investing activities in 1994 and 1993, respectively. CLARK made $5.3 million,
$6.6 million and $8.1 million of capital expenditures, respectively, for the
years ended 1995, 1994 and 1993. These capital expenditures were made primarily
for tooling and new product development. In 1994, CLARK's capital expenditures
were offset by the proceeds from (i) the sale of assets of $3.0 million, (ii)
the sale of its Drexel business for $10.3 million, and (iii) the sale and
leaseback of its Saarn property for $10.0 million. In 1993, CLARK's capital
expenditures were offset by the proceeds from the sale of assets of $10.0
million relating to the sale of certain properties and assets in Germany.
Net Cash Provided by (Used in) Financing Activities
Net cash used in financing activities were $0.9 million and $1.7 million
for the nine months ended September 30, 1996 and 1995, respectively. CLARK's
financial statements include allocations of Terex's senior secured notes and
related interest expense; such expenses have been eliminated following the
consummation of the Transactions. Net cash used in financing activities in 1995
was $2.1 million compared to $29.2 million and $7.2 million in 1994 and 1993,
respectively. In May 1995, CLARK's allocated portion of Terex's outstanding
senior secured notes, $51.8 million, was refinanced with the proceeds of the
allocated portion of new senior secured notes issued by Terex. In 1994 and 1993,
$23.3 million and $10.0 million, respectively, of allocated Terex debt was
repaid.
CONTINGENCIES AND UNCERTAINTIES
CLARK is contingently liable as a guarantor for certain customer floor plan
obligations with financial institutions pursuant to which it is obligated to
purchase repossessed new and unused equipment based upon the unamortized
principal balance outstanding. Management estimates that the guarantee under the
floor plan
22
<PAGE> 25
obligations aggregated approximately $25.0 million at September 30, 1996.
Historically, the Company has incurred only minimal losses relating to these
arrangements.
CLARK is contingently liable for a portion of the related value of machines
sold to and leased by a third party to users for terms generally ranging from
three to five years. CLARK repurchases certain machines leased under this
program and then sells or leases such machines to other users. At September 30,
1996, the maximum contingent liability under this program was $9.9 million.
CLARK has historically recorded profits on the sale of repurchased machines.
Pursuant to certain dealer sales agreements, CLARK has agreed to repurchase
certain new and unused equipment in the event of the termination of the dealer.
Similar repurchase obligations exist under certain dealer operating agreements
in the event of the dealer's default under the dealer's financing agreements
with financial institutions. CLARK has historically incurred minimal losses from
the foregoing arrangements.
For additional information on contingencies and uncertainties, see Note J
to the audited combined financial statements of the Company and Note E to the
unaudited combined financial statements of the Company included elsewhere in
this Prospectus, and "Business -- Environmental and Certain Other Regulatory
Matters" and " -- Legal Proceedings."
23
<PAGE> 26
THE EXCHANGE OFFER
TERMS OF THE EXCHANGE OFFER; PERIOD FOR TENDERING EXISTING NOTES
Upon the terms and subject to the conditions set forth in this Prospectus
and in the accompanying Letter of Transmittal (which together constitute the
Exchange Offer), the Company will accept for exchange Existing Notes which are
properly tendered on or prior to the Expiration Date and not withdrawn as
permitted below. As used herein, the term "Expiration Date" means 5:00 p.m., New
York City time, on , 1997; provided, however, that if the Company
has extended the period of time for which the Exchange Offer is open, the term
"Expiration Date" means the latest time and date to which the Exchange Offer is
extended.
As of the date of this Prospectus, $130.0 million aggregate principal
amount of the Existing Notes are outstanding. This Prospectus, together with the
Letter of Transmittal, is first being sent on or about , 1997 to all
holders of Existing Notes known to the Company. The Company's obligation to
accept Existing Notes for exchange pursuant to the Exchange Offer is subject to
certain conditions as set forth under "-- Certain Conditions to the Exchange
Offer" below.
The Company expressly reserves the right, at any time or from time to time,
to extend the period of time during which the Exchange Offer is open, and
thereby delay acceptance for any exchange of any Existing Notes, by giving
notice of such extension to the holders thereof. During any such extension, all
Existing Notes previously tendered will remain subject to the Exchange Offer and
may be accepted for exchange by the Company. Any Existing Notes not accepted for
exchange for any reason will be returned without expense to the tendering holder
thereof as promptly as practicable after the expiration or termination of the
Exchange Offer.
The Company expressly reserves the right to amend or terminate the Exchange
Offer, and not to accept for exchange any Existing Notes not theretofore
accepted for exchange, upon the occurrence of any of the conditions of the
Exchange Offer specified below under "-- Certain Conditions to the Exchange
Offer." The Company will give notice of any extension, amendment, non-acceptance
or termination to the holders of the Existing Notes as promptly as practicable,
such notice in the case of any extension to be issued no later than 9:00 a.m.,
New York City time, on the next business day after the previously scheduled
Expiration Date.
Holders of Existing Notes do not have any appraisal or dissenters' rights
under the Delaware General Corporation Law in connection with the Exchange
Offer.
PROCEDURES FOR TENDERING EXISTING NOTES
The tender to the Company of Existing Notes by a holder thereof as set
forth below and the acceptance thereof by the Company will constitute a binding
agreement between the tendering holder and the Company upon the terms and
subject to the conditions set forth in this Prospectus and in the accompanying
Letter of Transmittal. Except as set forth below, a holder who wishes to tender
Existing Notes for exchange pursuant to the Exchange Offer must transmit a
properly completed and duly executed Letter of Transmittal, including all other
documents required by such Letter of Transmittal, to United States Trust Company
of New York at one of the addresses set forth below under "Exchange Agent" on or
prior to the Expiration Date. In addition, either (i) certificates for such
Existing Notes must be received by the Exchange Agent along with the Letter of
Transmittal, or (ii) a timely confirmation of a book-entry transfer (a
"Book-Entry Confirmation") of such Existing Notes, if such procedure is
available, into the Exchange Agent's account at The Depository Trust Company
(the "Book-Entry Transfer Facility") pursuant to the procedure for book-entry
transfer described below, must be received by the Exchange Agent prior to the
Expiration Date, or the holder must comply with the guaranteed delivery
procedure described below. THE METHOD OF DELIVERY OF EXISTING NOTES, LETTER OF
TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE
HOLDER. IF SUCH DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL,
PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED, BE USED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY. NO LETTERS OF
TRANSMITTAL OR EXISTING NOTES SHOULD BE SENT TO THE COMPANY.
24
<PAGE> 27
Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed unless the Existing Notes surrendered for
exchange pursuant thereto are tendered (i) by a registered holder of the
Existing Notes who has not completed the box entitled "Special Issuance
Instruction" or "Special Delivery Instruction" on the Letter of Transmittal or
(ii) for the account of an Eligible Institution (as defined below). In the event
that signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, are required to be guaranteed, such guarantees must be by a firm
which is a member of a registered national securities exchange or a member of
the National Association of Securities Dealers, Inc. or by a commercial bank or
trust company having an office or correspondent in the United States
(collectively, "Eligible Institutions"). If Existing Notes are registered in the
name of a person other than a signer of the Letter of Transmittal, the Existing
Notes surrendered for exchange must be endorsed by, or be accompanied by a
written instrument or instruments of transfer or exchange, in satisfactory form
as determined by the Company in its sole discretion, duly executed by, the
registered holder with the signature thereon guaranteed by an Eligible
Institution.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of Existing Notes tendered for exchange will be
determined by the Company in its sole discretion, which determination shall be
final and binding. The Company reserves the absolute right to reject any and all
tenders of any particular Existing Notes not properly tendered or to not accept
any particular Existing Notes which acceptance might, in the judgment of the
Company or its counsel, be unlawful. The Company also reserves the absolute
right to waive any defects or irregularities or conditions of the Exchange Offer
as to any particular Existing Notes either before or after the Expiration Date
(including the right to waive the ineligibility of any holder who seeks to
tender Existing Notes in the Exchange Offer). The interpretation of the terms
and conditions of the Exchange Offer as to any particular Existing Notes either
before or after the Expiration Date (including the Letter of Transmittal and the
instructions thereto) by the Company shall be final and binding on all parties.
Unless waived, any defects or irregularities in connection with tenders of
Existing Notes for exchange must be cured within such reasonable period of time
as the Company shall determine. Neither the Company, the Exchange Agent nor any
other person shall be under any duty to give notification of any defect or
irregularity with respect to any tender of Existing Notes for exchange, nor
shall any of them incur any liability for failure to give such notification.
If the Letter of Transmittal or any Existing 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, such persons should so indicate when signing, and, unless waived by
the Company, proper evidence satisfactory to the Company of their authority to
so act must be submitted.
By tendering, each broker-dealer holder will represent to the Company that,
among other things, the New Notes acquired pursuant to the Exchange Offer are
being obtained in the ordinary course of business of the holder and any
beneficial holder, that neither the holder nor any such beneficial holder has an
arrangement or understanding with any person to participate in the distribution
of such New Notes and that neither the holder nor any such other person is an
"affiliate," as defined under Rule 405 of the Securities Act, of the Company. If
the holder is not a broker-dealer, the holder must represent that it is not
engaged in nor does it intend to engage in a distribution of the New Notes.
ACCEPTANCE OF EXISTING NOTES FOR EXCHANGE; DELIVERY OF NEW NOTES
For each Existing Note accepted for exchange, the holder of such Existing
Note will receive a New Note having a principal amount equal to that of the
surrendered Existing Note. For purposes of the Exchange Offer, the Company shall
be deemed to have accepted properly tendered Existing Notes for exchange when,
as and if the Company has given oral and written notice thereof to the Exchange
Agent.
In all cases, issuance of New Notes for Existing Notes that are accepted
for exchange pursuant to the Exchange Offer will be made only after timely
receipt by the Exchange Agent of certificates for such Existing Notes or a
timely Book-Entry Confirmation of such Existing Notes into the Exchange Agent's
account at the
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<PAGE> 28
Book-Entry Transfer Facility, a properly completed and duly executed Letter of
Transmittal and all other required documents. If any tendered Existing Notes are
not accepted for any reason set forth in the terms and conditions of the
Exchange Offer or if Existing Notes are submitted for a greater principal amount
than the holder desires to exchange, such unaccepted or non-exchanged Existing
Notes will be returned without expense to the tendering holder thereof (or, in
the case of Existing Notes tendered by book-entry transfer into the Exchange
Agent's account at the Book-Entry Transfer Facility pursuant to the book-entry
transfer procedures described below, such non-exchanged Existing Notes will be
credited to an account maintained with such Book-Entry Transfer Facility) as
promptly as practicable after the expiration of the Exchange Offer.
BOOK-ENTRY TRANSFER
Any financial institution that is a participant in the Book-Entry Transfer
Facility's systems may make book-entry delivery of Existing Notes by causing the
Book-Entry Transfer Facility to transfer such Existing Notes into the Exchange
Agent's account at the Book-Entry Transfer Facility in accordance with such
Book-Entry Transfer Facility's procedures for transfer. However, although
delivery of Existing Notes may be effected through book-entry transfer at the
Book-Entry Transfer Facility, the Letter of Transmittal or facsimile thereof
with any required signature guarantees and any other required documents must, in
any case, be transmitted to and received by the Exchange Agent at one of the
addresses set forth below under "Exchange Agent" on or prior to the Expiration
Date or the guaranteed delivery procedures described below must be complied
with.
GUARANTEED DELIVERY PROCEDURES
If a registered holder of the Existing Notes desires to tender such
Existing Notes and the Existing Notes are not immediately available, or time
will not permit such holder's Existing Notes or other required documents to
reach the Exchange Agent before the Expiration Date, or the procedure for
book-entry transfer cannot be completed on a timely basis, a tender may be
effected if (i) the tender is made through an Eligible Institution, (ii) prior
to the Expiration Date, the Exchange Agent received from such Eligible
Institution a properly completed and duly executed Letter of Transmittal (or a
facsimile thereof) and Notice of Guaranteed Delivery, substantially in the form
provided by the Company (by telegram, telex, facsimile transmission, mail or
hand delivery), setting forth the name and address of the holder of Existing
Notes and the amount of Existing Notes tendered, stating that the tender is
being made thereby and guaranteeing that within five New York Stock Exchange
("NYSE") trading days after the date of execution of the Notice of Guaranteed
Delivery, the certificates for all physically tendered Existing Notes, in proper
form for transfer, or a Book-Entry Confirmation, as the case may be, and any
other documents required by the Letter of Transmittal will be deposited by the
Eligible Institution with the Exchange Agent and (iii) the certificates for all
physically tendered Existing Notes, in proper form for transfer, or a Book-Entry
Confirmation, as the case may be, and all other documents required by the Letter
of Transmittal are received by the Exchange Agent within five NYSE trading days
after the date of execution of the Notice of Guaranteed Delivery.
WITHDRAWAL RIGHTS
Tenders of Existing Notes may be withdrawn at any time prior to the
Expiration Date. For a withdrawal to be effective, a written notice of
withdrawal must be received by the Exchange Agent at one of the addresses set
forth below under "Exchange Agent." Any such notice of withdrawal must specify
the name of the person having tendered the Existing Notes to be withdrawn,
identify the Existing Notes to be withdrawn (including the principal amount of
such Existing Notes), and (where certificates for Existing Notes have been
transmitted) specify the name in which such Existing Notes are registered, if
different from that of the withdrawing holder. If certificates for Existing
Notes have been delivered or otherwise identified to the Exchange Agent then,
prior to the release of such certificates, the withdrawing holder must also
submit the serial numbers of the particular certificates to be withdrawn and a
signed notice of withdrawal with signatures guaranteed by an Eligible
Institution unless such holder is an Eligible Institution. If Existing Notes
have been tendered pursuant to 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
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<PAGE> 29
withdrawn Existing Notes and otherwise comply with the procedures of such
facility. All questions as to the validity, form and eligibility (including time
of receipt) of such notices will be determined by the Company, whose
determination shall be final and binding on all parties. Any Existing Notes so
withdrawn will be deemed not to have been validly tendered for exchange for
purposes of the Exchange Offer. Any Existing Notes which have been tendered for
exchange but which are not exchanged for any reason will be returned to the
holder thereof without cost to such holder (or, in the case of Existing Notes
tendered by book-entry transfer into the Exchange Agent's account at the
Book-Entry Transfer Facility pursuant to the book-entry transfer procedures
described above, such Existing Notes will be credited to an account maintained
with such Book-Entry Transfer Facility for the Existing Notes) as soon as
practicable after withdrawal, rejection of tender or termination of the Exchange
Offer. Properly withdrawn Existing Notes may be retendered by following one of
the procedures described under "-- Procedures for Tendering Existing Notes"
above at any time on or prior to the Expiration Date.
CERTAIN CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provision of the Exchange Offer, the Company
shall not be required to accept for exchange, or to issue New Notes in exchange
for, any Existing Notes and may terminate or amend the Exchange Offer if at any
time before the acceptance of such Existing Notes for exchange or the exchange
of New Notes for such Existing Notes, the Company determines that (i) the
Exchange Offer does not comply with any applicable law or any applicable
interpretation of the staff of the Commission, (ii) the Company has not received
all applicable governmental approvals or (iii) any actions or proceedings of any
governmental agency or court exist which could materially impair the Company's
ability to consummate the Exchange Offer.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances giving rise to any such
condition or may be waived by the Company in whole or in part at any time and
from time to time in its reasonable discretion. The failure by the Company at
any time to exercise any of the foregoing rights shall not be deemed a waiver of
such right and each such right shall be deemed an ongoing right which may be
asserted at any time and from time to time.
In addition, the Company will not accept for exchange any Existing Notes
tendered, and no New Notes will be issued in exchange for any such Existing
Notes, if at such time any stop order shall be threatened or in effect with
respect to the Registration Statement of which this Prospectus constitutes a
part or the qualification of the Indenture under the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act"). In any such event the Company is
required to use every reasonable effort to obtain the withdrawal of any stop
order at the earliest possible time.
EXCHANGE AGENT
United States Trust Company of New York has been appointed as the Exchange
Agent for the Exchange Offer. All executed Letters of Transmittal should be
directed to the Exchange Agent at one of the addresses set forth below.
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 should be directed to the Exchange Agent addressed as
follows:
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<PAGE> 30
<TABLE>
<S> <C> <C>
By Hand: By Registered or Certified By Overnight Courier:
United States Trust Company Mail: United States Trust Company
of New York United States Trust Company of New York
111 Broadway of New York 770 Broadway
Lower Level P.O. Box 844 New York, New York 10003
Corporate Trust Window Cooper Station Attn: Corporate Trust
New York, New York 10006 New York, New York
10276-0844
</TABLE>
By Facsimile:
United States Trust Company of New York
(212) 420-6152
Attn: Corporate Trust
Confirm by Telephone:
(800) 548-6565
Delivery other than as set forth above will not constitute a valid delivery.
FEES AND EXPENSES
The Company will not make any payments to brokers, dealers or others
soliciting acceptances of the Exchange Offer. The principal solicitation is
being made by mail; however, additional solicitations may be made in person or
by telephone by officers and employees of the Company.
The expenses to be incurred in connection with the Exchange Offer will be
paid by the Company. Such expenses include fees and expenses of the Exchange
Agent and Trustee, accounting and legal fees and printing costs, among others.
ACCOUNTING TREATMENT
The New Notes will be recorded at the same carrying value as the Existing
Notes, which is the principal amount as reflected in the Company's accounting
records on the date of the exchange. Accordingly, no gain or loss for accounting
purposes will be recognized. The debt issuance costs will be capitalized for
accounting purposes.
TRANSFER TAXES
Holders who tender their Existing Notes for exchange will not be obligated
to pay any transfer taxes in connection therewith, except that holders who
instruct the Company to register New Notes in the name of, or request that
Existing 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 tax thereon.
CONSEQUENCES OF FAILURE TO EXCHANGE; RESALES OF NEW NOTES
Holders of Existing Notes who do not exchange their Existing Notes for New
Notes pursuant to the Exchange Offer will continue to be subject to the
restrictions on transfer of such Existing Notes as set forth in the legend
thereon as a consequence of the issuance of the Existing Notes pursuant to the
exemptions from, or in transactions not subject to, the registration
requirements of, the Securities Act and applicable state securities laws.
Existing Notes not exchanged pursuant to the Exchange Offer will continue to
accrue interest at 10 3/4% per annum and will otherwise remain outstanding in
accordance with their terms. Holders of Existing Notes do not have any appraisal
or dissenters' rights under the Delaware General Corporation Law in connection
with the Exchange Offer. In general, the Existing Notes may not be offered or
sold unless registered under the Securities Act, except pursuant to an exemption
from, or in a transaction not subject to, the Securities Act and applicable
state securities laws. The Company does not currently anticipate that it will
register the Existing Notes under the Securities Act. However, (i) if the
Initial Purchasers so request with respect to Existing Notes not eligible to be
exchanged for New Notes in the Exchange Offer and held by them
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<PAGE> 31
following consummation of the Exchange Offer but prior to November 27, 1997 or
(ii) if any holder of Existing Notes is not permitted to participate in the
Exchange Offer or, in the case of any holder of Existing Notes that participates
in the Exchange Offer, does not receive New Notes in exchange for Existing Notes
that may be sold without restriction under state and federal securities laws
(other than due solely to the status of such holder as an affiliate of the
Company within the meaning of the Securities Act), the Company is obligated to
file a shelf registration statement on the appropriate form under the Securities
Act relating to the Existing Notes held by such persons.
Based on certain interpretive letters issued by the staff of the Commission
to third parties in unrelated transactions, the Company is of the view that New
Notes issued pursuant to the Exchange Offer may be offered for resale, resold or
otherwise transferred by holders thereof (other than (i) any such holder which
is an "affiliate" of the Company within the meaning of Rule 405 under the
Securities Act or (ii) any broker-dealer that purchases Notes from the Company
to resell pursuant to Rule 144A or any other available exemption) without
compliance with the registration and prospectus delivery provisions of the
Securities Act, provided that such New Notes are acquired in the ordinary course
of such holders' business and such holders have no arrangement or understanding
with any person to participate in the distribution of such New Notes. If any
holder has any arrangement or understanding with respect to the distribution of
the New Notes to be acquired pursuant to the Exchange Offer, such holder (i)
could not rely on the applicable interpretations of the staff of the Commission
and (ii) must comply with the registration and prospectus delivery requirements
of the Securities Act in connection with a secondary resale transaction. A
broker-dealer who holds Existing Notes that were acquired for its own account as
a result of market-making or other trading activities may be deemed to be an
"underwriter" within the meaning of the Securities Act and must, therefore,
deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of New Notes. Each such broker-dealer that receives
New Notes for its own account in exchange for Existing Notes, where such
Existing Notes were acquired by such broker-dealer as a result of market-making
activities or other trading activities, must acknowledge in the Letter of
Transmittal that it will deliver a prospectus in connection with any resale of
such New Notes. See "Plan of Distribution."
In addition, to comply with the securities laws of certain jurisdictions,
if applicable, the New Notes may not be offered or sold unless they have been
registered or qualified for sale in such jurisdictions or an exemption from
registration or qualification is available and is complied with. The Company has
agreed, pursuant to the Registration Rights Agreement and subject to certain
specified limitations therein, to use its best efforts to register or qualify
the New Notes for offer or sale under the securities or blue sky laws of such
jurisdictions in the United States as any selling holder of the Notes reasonably
requests in writing.
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<PAGE> 32
BUSINESS
GENERAL
CLARK is a leading international designer, manufacturer and marketer of a
complete line of forklift trucks including internal combustion trucks, electric
riders, narrow aisle stackers and powered hand trucks. The Company invented the
platform truck in 1917, the tow tractor in 1924 and the forklift in 1928, and
produced the first electric forklift in 1942. As a result of this history of
innovation, management believes CLARK(R) is one of the most recognized brand
names of forklift trucks in North America.
Management believes that CLARK has the largest installed fleet in North
America with over 250,000 units, and has a total of approximately 350,000 units
in operation worldwide. This large installed fleet has allowed CLARK to generate
significant ongoing replacement parts sales, which typically generate
substantially higher gross margins and provide a more stable revenue base than
new truck sales. Historically, approximately 80% of CLARK's net sales have been
derived from truck sales and approximately 20% of net sales have been derived
from the sale of replacement parts. In 1995, CLARK's North American operations
accounted for approximately 72% of its net sales and its European operations
accounted for the remaining 28%. CLARK distributes its products to a diverse
customer base through a global network of 285 dealers, which sold over 21,000
units in 1995, from more than 560 locations. CLARK generated net sales in the
LTM period of $459.2 million.
Since 1993, CLARK has undertaken a series of initiatives aimed at reducing
fixed costs, developing a largely variable cost structure and maximizing the
Company's ability to respond to market changes. These initiatives involved (i)
elimination of 11 redundant manufacturing and distribution facilities, (ii)
head-count reductions involving termination of over 600 employees, representing
approximately 40% of the Company's workforce, (iii) elimination of three
non-core, unprofitable product lines and (iv) greater reliance on outsourcing.
The reduction in fixed costs achieved through these initiatives resulted in an
increase in pro forma EBITDA of $21.0 million to $31.3 million in the LTM period
from $10.3 million in fiscal 1994, while net sales in both periods were
approximately the same. The flexibility of the Company's cost structure is also
evidenced by the financial results for the LTM period where, despite a 13%
decline in net sales due to lower industry activity, the Company's pro forma
EBITDA increased by $7.2 million or 30% compared to pro forma EBITDA for fiscal
1995. Management believes that the foregoing demonstrates the Company's improved
ability to sustain profitability in changing market conditions.
The Company's principal business office and headquarters in North America
is located at 172 Trade Street, Lexington, Kentucky 40508 and its telephone
number is (606) 288-1200. The Company's principal business office and
headquarters in Europe is located at 45478 Rheinstrass, Mulheim, Germany, and
its telephone number is 011-49-208-588-1320.
PRODUCTS
CLARK currently offers over 100 truck designs within five major product
lines: light IC trucks (with a capacity of 1.0 to 5.0 tons), heavy IC trucks
(with a capacity of 5.5 to 17.5 tons), narrow-aisle stackers (with a capacity of
1.5 to 2.5 tons), electric riders (with a capacity of 1.3 to 6.0 tons) and
powered hand trucks (with a capacity of 2.0 to 4.0 tons).
Light IC trucks are used for general warehousing needs and are generally
powered by liquid propane. Such trucks are well suited for manufacturing and
distribution applications which require a high degree of maneuverability. Heavy
IC trucks are specialty products designed for use in more demanding situations
such as heavy manufacturing or container handling applications. Narrow-aisle
stackers provide solutions for high density storage needs and operate in six to
eight foot aisles and reach heights of more than 30 feet. Electric riders are
designed for indoor use in warehousing, manufacturing, distribution and other
applications and are powered by a rechargeable electric battery. As a result of
the increasing focus on the environment, electric riders have become
increasingly popular. Management estimates that light IC trucks, heavy IC
trucks, narrow-aisle stackers and electric riders represent approximately 58%,
3%, 15% and 24% of the unit volume of
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the forklift truck industry, respectively. Powered hand trucks are generally
used in the transportation and order-selecting businesses.
CLARK tailors its products to meet customers' particular material handling
needs. To further meet these needs, CLARK adds attachments such as container
handlers, side shifters, roll clamps, block handlers, carton clamps, push-pulls
(slip-sheet) and fork positioners.
New and Redesigned Products. Rapid development and introduction of new and
redesigned products incorporating the latest materials handling technology is a
key component of CLARK's strategy. Management believes that CLARK has introduced
more new and redesigned models in the last two years than any other major
forklift truck manufacturer and plans to continue a rapid pace of new product
introduction. CLARK maintains an engineering staff which is responsible for
designing new products and improving existing product lines. The primary
objectives of the engineering effort are (i) developing new products with
leading edge functionality that meet the evolving needs of CLARK's customer base
and (ii) reducing manufacturing and product costs through creating better
product designs that enhance manufacturing and purchasing efficiencies,
maximizing parts commonality across product lines and reducing the number of
components. To continue its tradition of product innovation and modern
engineering, CLARK recently entered into an agreement to purchase and/or lease
software and hardware for an estimated $1.0 million for the Master Series
CAD/CAM/CAE software from Structural Dynamics Research Corporation. The
software, which is utilized in the design of forklift trucks, provides CLARK
with state-of-the-art technology similar to that used by major automobile and
aircraft manufacturers for modeling, drafting, assembling and simulating
production process and equipment.
Since 1993, CLARK has redesigned a substantial portion of its product line.
In December 1994, CLARK introduced the 2-3 ton Genesis(TM) IC truck targeting
the light IC market. CLARK invested approximately $15.0 million to develop the
Genesis(TM) truck. The Genesis(TM) truck provides improved ergonomics,
performance, reliability and serviceability, and provided an estimated seven
percentage point higher gross margin than its predecessor primarily due to its
lower production cost.
CLARK Europe introduced the Genesis(TM) 2-3 ton gas and diesel MegaStat(TM)
model in April 1995. The Genesis(TM) 2-3 ton MegaStat(TM) IC received the
"General Lift Truck Innovation" award in 1996 from the Fork Truck Association in
the United Kingdom. In August 1996, CLARK continued to expand its Genesis(TM)
family with the addition of a 4-5.5 ton CGP ("CGP") lift truck. Also, in 1995,
CLARK made significant additions to its narrow aisle stackers product line which
was expanded to include double reach and straddle models.
CLARK's new product development pipeline includes a completely redesigned
electric four wheel rider and two new IC forklift models, all of which are
expected to be introduced by early 1997. Management anticipates that these new
products will generate higher gross margins than their predecessor models due to
lower unit production costs. In November 1996, CLARK expects to commence
production in North America of the new electric truck which will be the first to
carry the Genesis(TM) designation. This 1.75-3 ton electric four wheel rider
incorporates Genesis(TM) type controls along with the ergonomic benefits of
Genesis(TM). In addition, CLARK plans to introduce the hydrostatic version of
the CGP in North America. Building on its introduction of MegaStat(TM) in
Europe, CLARK Europe currently plans to introduce the 1-2 ton and the CGP
hydrostatic MegaStat(TM) models in late 1996. CLARK Europe also plans to
introduce in 1996 its MegaValve(TM) forklift trucks that are electronically
controlled and allow for "joystick" operation.
AFTERMARKET PARTS
Management estimates that since the Company's inception nearly one million
forklift trucks have been manufactured by CLARK and its predecessors and that it
currently has in service approximately 350,000 trucks worldwide, with
approximately 250,000 in North America, 70,000 in Europe and 30,000 in other
international markets, generating a substantial aftermarket parts business for
CLARK. CLARK's worldwide installed fleet of approximately 350,000 forklift
trucks generates an estimated $240.0 million in annual global aftermarket parts
sales, of which CLARK has historically captured an estimated 40% share.
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CLARK's parts distribution operation undertakes purchasing and customer
services for aftermarket parts. CLARK distributes its aftermarket parts in North
America through the Southaven Facility, in Europe through a warehouse located in
Saarn, Germany and for the World Trade Division through two sales and
distribution facilities located in Seoul, Korea and the State of San Paulo,
Brazil, respectively. CLARK shares the Southaven Facility with Terex and,
pursuant to the Acquisition, CLARK and Terex will enter into a Service Agreement
(as defined) providing for the continued use by CLARK of such facility. For
information regarding the Service Agreement, see "Certain Relationships and
Related Transactions."
Management plans to increase its share of the sales of these high margin
parts by improving off-the-shelf availability at its Southaven Facility and
through focused marketing and promotion efforts. The Southaven Facility
currently provides approximately 90% availability for aftermarket parts, and
management believes that this low availability level has resulted in lost parts
sales. The Company plans to raise such availability to over 95% primarily
through selective additions to inventory levels. In addition, the Company plans
to implement specific marketing initiatives, including increased merchandising
of fast moving parts, incentive programs for dealer personnel and coordinated
truck and parts promotions to increase aftermarket parts sales.
MANUFACTURING OPERATIONS
CLARK's Lexington plant produces both IC and electric forklifts with lift
capacities ranging from 1-17.5 tons and is equipped with five assembly lines and
two heavy IC assembly bays. The Lexington plant is primarily an assembly
operation with welding and painting capabilities, operates one shift per day and
produces an average of 50 lift trucks per day.
CLARK Europe's Mulheim manufacturing facility produces both IC forklifts
(Diesel, LP gas and natural gas) with hydrodynamic as well as electronically
controlled hydrostatic drive (MegaStat(TM)) and electric powered forklifts
equipped with D/C as well as frequency-controlled A/C motors (MegaAC(TM)) in the
capacity range of 1-5 tons. The Mulheim facility is equipped with four assembly
lines, one for electric trucks, two for IC trucks and one for uprights. The
manufacturing process includes pre-production and welding production of frames
and uprights and a powder dry paint system was recently installed to ensure
high-quality painting of frames and uprights. CLARK Europe's plant currently
operates one shift per day and produces an average of 20 lift trucks per day.
The Mulheim plant has been awarded ISO 9001 certification, indicating that the
Company has achieved and sustained a high degree of quality and consistency with
respect to its products.
DEALER NETWORK
CLARK markets both original equipment and parts through a worldwide dealer
network. CLARK currently has approximately 100 independent dealers in each of
North America and Europe and owns three dealers in Europe. In addition, outside
of North America and Europe, CLARK markets and distributes its products through
the World Trade Division. The World Trade Division markets its products through
95 distributors operating in the Asian, African, Middle Eastern, Caribbean and
Latin American markets. CLARK's dealers and distributors generally market the
full CLARK product line and maintain comprehensive service capabilities. CLARK's
sales organization coordinates sales and promotional activities, provides
ongoing dealer training and facilitates dealer communications. CLARK sells to a
diversified customer base, with no single customer accounting for more than 5%
of total sales.
Management is focusing on enhancing the performance of its dealer network
by offering various incentive packages and support programs, replacing
underperforming dealers and adding new dealers in selected geographic areas in
North America and Europe. The number of units sold by the World Trade Division
has more than doubled from 689 in 1993 to 1,492 in 1995. The Company intends to
continue expanding the dealer base of the World Trade Division and management
believes the World Trade Division is well positioned for continued growth in the
Asian, African, Middle Eastern, Caribbean and Latin American markets.
SUPPLIERS
The Company strategically relies upon outside suppliers for a vast majority
of the individual components of a lift truck. Management believes that such
outsourcing allows CLARK greater flexibility in varying its cost
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structure in response to changing market conditions. Consequently, in 1995
material purchases amounted to over $350.0 million or over 70% of cost of goods
sold.
Management believes that significant opportunities exist to improve
profitability through reducing its material costs. CLARK is consolidating its
vendor base to realize volume discounts and purchasing efficiencies. The Company
regularly evaluates its relationship with current and potential suppliers on the
basis of their ability to meet CLARK's requirements and standards. Since January
1995, CLARK has reduced the number of its regular suppliers from approximately
800 to 435 and intends to further reduce this number by approximately 50% by
1998.
Principal materials used by CLARK in its various manufacturing processes
include steel, castings, engines, tires, electric controls, uprights, transaxles
and motors, and a variety of other fabricated or manufactured items. While
substantially all such materials are typically available from multiple
suppliers, CLARK depends exclusively upon certain suppliers of key parts used in
its lift trucks. From time to time, certain of CLARK's suppliers have
experienced difficulties in meeting CLARK's production schedules. See "Risk
Factors -- Dependence on Sole Source Suppliers."
COMPETITION
The material handling business is highly competitive. CLARK produces one of
the leading forklift truck brands in North America, although NACCO Industries,
Inc., ("NACCO"), through its Hyster and Yale divisions, produces more forklift
trucks annually. In addition to NACCO, other major North American competitors
include Toyota Lift, Inc., Mitsubishi Caterpillar Forklift America Inc., Nissan
Forklift Corp. North America, Komatsu Forklift USA Inc. and Daewoo in both IC
trucks and electric riders, and Crown Equipment Corp. and Raymond Corporation in
electric riders alone. In Europe, CLARK competes with Linde AG, the European
market leader, as well as Jungheinreich AG, Toyota Lift, Inc. and NACCO. CLARK
also competes with a number of specialty manufacturers. See "Risk
Factors -- Industry Cyclicality and Substantial Competition."
INTELLECTUAL PROPERTY
The Company relies on a combination of trademarks, service marks, trade
names, patents, licensing arrangements, trade secrets, know-how and proprietary
technology to secure and protect its intellectual property rights. In
particular, the Company's CLARK(R), Clarklift(R), Powrworker(R) and Genesis(TM)
trademarks are of particular importance to the Company's business. The Company
is currently undertaking to obtain trademark registrations for its Genesis(TM),
MegaValve(TM), MegaStat(TM), MegaPro(TM) and MegaAC(TM) marks. The loss of the
Company's rights under one or more of the Company's trademarks could have a
material adverse effect on the Company's business.
There can be no assurance that the Company will be successful in obtaining
approval of any present or future patent or trademark applications; that any
patents, patent applications and patent licenses will adequately cover the
Company's technologies or protect the Company from potential infringements by
third parties; that any nondisclosure and confidentiality agreements will
provide meaningful protection for the Company's trade secrets, know-how or
proprietary technology in the event of any unauthorized use or disclosure of
such information; or that others will not obtain access to, or independently
develop technologies or know-how similar to, that of the Company. There also can
be no assurance that future litigation by the Company will not be necessary to
enforce its trademark, patent and other proprietary rights, or to defend the
Company against claimed infringement of the rights of others, adverse
determinations in which could have a material adverse effect on the Company.
EMPLOYEES
As of September 30, 1996, CLARK's total North American work force consisted
of approximately 550 salaried, hourly and temporary employees, all of whom were
non-union. In addition, approximately 30 employees of Terex at the Southaven
Facility who are responsible for aftermarket customer service and administration
became employees of CLARK following the consummation of the Acquisition pursuant
to the
33
<PAGE> 36
provisions of the Service Agreement. There has not been a union at CLARK's North
American manufacturing operations for the past nine years since moving to
Kentucky. The union employees of Terex at the Southaven Facility filed a
petition with the National Labor Relations Board in May 1996 for decertification
of the union. See "Risk Factors -- Labor Disputes."
As of September 30, 1996, CLARK's total work force outside of North America
consisted of approximately 450 employees. The Mulheim facility at Saarn is
represented by the German Metal Workers (Industrie Gewerkschaft Metal) and the
aftermarket parts facility at Saarn is represented by the German Union for
Trading, Banking and Insurance (Gewerkschaft Handel, Banken und Versicherungen).
The Mulheim facility has a total work force of approximately 350, of which
approximately 200 are members of the German Metal Workers, and the aftermarket
parts facility at Saarn has a total workforce of approximately 65, of which
approximately 20 are members of the German Union for Trading, Banking and
Insurance. There are no contracts between CLARK and the unions, but CLARK
follows standard practices by complying with contracts between the unions and
the employers' association.
Management believes that its relationships with its employees and unions
are good.
PROPERTIES
The Company is headquartered in Lexington, Kentucky. The Company currently
owns or leases 10 facilities in North America, Europe, Brazil and Korea which
are used for manufacturing, distribution, sales, warehousing and service center
activities.
The following table outlines the principal facilities owned or leased by
CLARK or its subsidiaries:
<TABLE>
<CAPTION>
FACILITY LOCATION TYPE OF FACILITY
------------------------------------------ ----------------------------------------------
<S> <C>
Lexington, Kentucky....................... Manufacturing, warehouse and office
Lexington, Kentucky*...................... Sales, training and engineering
Lexington, Kentucky....................... Warehouse
Mulheim-Ruhr, Germany..................... Manufacturing, engineering, power generation,
maintenance and office
Saarn, Germany............................ Warehouse
Barcelona, Spain.......................... Sales branch
Paris, France............................. Sales branch
Lyon, France.............................. Sales branch
State of San Paolo, Brazil................ Parts distribution
Seoul, Korea.............................. Parts distribution and office
</TABLE>
- ---------------
* Owned.
CLARK also owns a manufacturing facility in Banwael, Korea which was closed
in the fourth quarter of 1994 and is presently held for sale. CLARK Europe also
presently leases unoccupied office space in Mulheim-Ruhr, Germany.
Management believes that the Company's facilities are suitable for its
operations and provide sufficient capacity to meet the Company's requirements
for the foreseeable future.
ENVIRONMENTAL MATTERS
As with most industrial companies, the Company's facilities and operations
are required to comply with and are subject to a wide variety of Environmental
Laws. Certain of these Environmental Laws hold owners or operators of land or
businesses liable for their own and for previous owners' or operators' releases
of hazardous or toxic substances, materials or wastes, pollutants or
contaminants, including, in some instances, petroleum and petroleum products.
Compliance with Environmental Laws also may require the acquisition of permits
or other authorizations for certain activities and compliance with various
standards or procedural requirements. The nature of the Company's operations and
the history of industrial uses at some of its facilities expose the Company to
the risk of liabilities or claims with respect to environmental and worker
health and safety matters. The Company may also have contingent responsibility
for liabilities with respect to environmental
34
<PAGE> 37
matters arising in connection with the prior operations of CEC's material
handling business. There can be no assurance that material costs or liabilities
will not be incurred in connection with such liabilities or claims.
In connection with the Acquisition, the Company agreed to indemnify Terex
for certain environmental losses with respect to or arising out of the Company's
business and assets. Terex retained responsibility for and agreed to indemnify
the Company with respect to all environmental losses arising from or in
connection with any real property, business entities or assets, whether domestic
or foreign, not acquired as part of the Acquisition. The environmental
indemnities are subject to certain deductibles, caps and time limitations
depending on the nature of the environmental claim.
Based upon the Company's experience to date and the indemnities obtained in
connection with the Acquisition, the Company believes that the future cost of
compliance with existing Environmental Laws (or liability for known
environmental liabilities or claims) should not have a material adverse effect
on the Company's business, financial condition or results of operations.
Compliance with such laws has, and will, require expenditures by the Company on
a continuing basis. Future events, such as changes in existing laws and
regulations or their interpretation, may give rise to additional compliance
costs or liabilities that could have a material adverse effect on the Company's
business, financial condition or results of operations. Compliance with more
stringent laws or regulations, as well as more vigorous enforcement policies of
regulatory agencies or stricter or different interpretations of existing laws,
may require additional expenditures by the Company that may be material. See
"Risk Factors -- Government Regulation."
LEGAL PROCEEDINGS
From time to time product liability claims are asserted against the Company
for various injuries alleged to have resulted from defects in the manufacture
and/or design of its products. As of September 30, 1996, the Company had
approximately 120 pending lawsuits relating to claims arising from accidents
involving its products. Most of these lawsuits are in various stages of pretrial
completion, and certain plaintiffs are seeking punitive as well as compensatory
damages. The Company is self-insured, up to certain limits, for these product
liability claims, as well as certain exposures related to general workers'
compensation and automobile liability. The Company has recorded and maintains on
its balance sheet reserves relating to the estimated liability, based in part
upon actuarial determinations, of the Company's aggregate exposure for such
self-insured risks. The Company is involved in various other legal proceedings
which have arisen in the normal course of its operations. The Company has
recorded provisions for estimated losses in circumstances where a loss is
probable and the amount or range of possible amounts of the loss is estimable.
There can be no assurance that any of the foregoing reserves are adequate. See
"Risk Factors -- Product Liability and Other Claims" and "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Contingencies and Uncertainties."
35
<PAGE> 38
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
persons who are members of the Board of Directors or executive officers of the
Company. Directors serve for a term of one year or until their successors are
elected and qualified; officers serve at the discretion of the Board of
Directors. The directors of the Company also serve as the directors of Holdings.
<TABLE>
<CAPTION>
NAME AGE POSITION
- --------------------------------- --- --------------------------------------------------------
<S> <C> <C>
Dr. Martin M. Dorio.............. 50 President, Chief Executive Officer and Director
Dr. J. Frithjof Timm............. 54 Managing Director and President, CLARK Europe
Joseph F. Lingg.................. 51 Vice President, Finance and Treasurer
Kevin M. Reardon................. 52 Vice President, Sales and Marketing, North America
Michael J. Grossman.............. 46 Vice President, General Counsel and Secretary
Jeffrey J. Kirk.................. 49 Vice President, Human Resources and Purchasing
Thomas J. Snyder................. 51 Director
Michael A. Delaney............... 42 Director
James A. Urry.................... 42 Director
</TABLE>
Dr. Martin M. Dorio, President, Chief Executive Officer and Director. Dr.
Dorio joined the Company in June 1995 as President and Chief Executive Officer.
From 1990 until he joined the Company, Dr. Dorio served in various positions
with Case Corporation, a manufacturer of tractors and construction equipment,
including Vice President, Corporate Planning and Development. Dr. Dorio has over
20 years' experience in manufacturing and has served in key management positions
of FMC Corp. and General Electric Co.
Dr. J. Frithjof Timm, Managing Director and President, CLARK Europe. Dr.
Timm joined the Company in May 1995 as Managing Director and President of CLARK
Europe. From 1992 to 1995, he was President of Komatsu Europe and, prior to
that, he was Managing Director of Sales of the Hydraulic Mobile Crane Division
of Krupp A.G.
Joseph F. Lingg, Vice President, Finance and Treasurer. Mr. Lingg joined
the Company in January 1996 as Vice President, Finance and Treasurer. In 1995,
Mr. Lingg served as Vice President and Chief Financial Officer of RBC Company of
America, a manufacturer of bearings, and for more than five years prior thereto
he served as Vice President and Chief Financial Officer of Mosler Inc., a
manufacturer and servicer of security products.
Kevin M. Reardon, Vice President, Sales and Marketing, North America. Mr.
Reardon joined the Company in 1984 and has been Vice President of Sales and
Marketing, North America since 1995. Previously, Mr. Reardon served as Director
of Marketing and National Sales Manager for the Company.
Michael J. Grossman, Vice President, General Counsel and Secretary. Mr.
Grossman joined the Company in 1985 as Assistant General Counsel. Since 1991 he
has served as Vice President, General Counsel and Assistant Secretary of the
Company.
Jeffrey J. Kirk, Vice President, Human Resources and Purchasing. Mr. Kirk
joined the Company in 1995 as Vice President of Human Resources and Purchasing
of the Company. From 1993 to 1994, Mr. Kirk was a consultant in Human Resources
Management, and from 1988 to 1993, he was Vice President of Human Resources and
an officer of OHM Corporation, an environmental remediation firm.
Thomas J. Snyder, Director. Mr. Snyder has been President, Chief Operating
Officer and a director of Delco Remy International, Inc. since 1994. From 1962
to 1994, Mr. Snyder held several executive positions with the Delco Remy
Division of General Motors, most recently as Product Manager, Heavy Duty
Systems. He is also a director of St. John's Health Systems.
Michael A. Delaney, Director. Mr. Delaney has been a Vice President of CVC
since 1989. From 1986 through 1989, he was Vice President of Citicorp Mergers
and Acquisitions. Mr. Delaney is a director of Aetna Industries, Inc.,
AmeriSource Health Corporation, CORT Business Services Corporation, Delco Remy
36
<PAGE> 39
International, Inc., Enterprise Media Inc., GVC Holdings, IKS Corporation, JAC
Holdings, Palomar Technologies, Inc., SC Processing, Inc., Sybron Chemicals,
Inc. and Triumph Holdings, Inc.
James A. Urry, Director. Mr. Urry has been with Citibank, N.A. since 1981,
serving as a Vice President since 1986. He has been a Vice President of CVC
since 1989. He is a director of AmeriSource Health Corporation, CORT Business
Services Corporation, Hancor Holding Corporation, IKS Corporation and York
International Corporation.
Pursuant to the Stockholders' Agreement (as defined), CVC has the
contractual right to designate an additional director who shall not be an
employee of CVC to the Company's Board of Directors, subject to the right of the
holders of a majority of the outstanding shares of Holdings Class A Stock to
veto the election of such director. See "Ownership of the
Company -- Stockholders' Agreement."
DIRECTOR COMPENSATION AND ARRANGEMENTS
It is not currently contemplated that directors of the Company will receive
compensation for their services as directors. Members of the Board of Directors
are elected pursuant to certain voting agreements among Holdings and its
stockholders. See "Ownership of the Company -- Stockholders' Agreement."
EXECUTIVE COMPENSATION
The compensation of executive officers of the Company will be determined by
the Board of Directors of the Company. None of the historical benefit or
compensation plans of Terex are described herein because they were not assumed
by the Company in connection with the Acquisition. The Company intends to adopt
a 401(k) retirement plan and an employee stock purchase plan. See "-- 401(k)
Plan" and "Ownership of the Company -- Employee Stock Purchase Plan".
The following table sets forth certain information concerning the
compensation received by the Chief Executive Officer and the four most highly
compensated officers of the Company for services rendered in 1995. Information
concerning restricted stock awards and stock options relates to the capital
stock of Terex and not to the Company's capital stock.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
----------------------
ANNUAL COMPENSATION AWARDS
------------------------------------ ----------------------
OTHER RESTRICTED STOCK
ANNUAL STOCK OPTIONS(3) ALL OTHER
SALARY BONUS COMPENSATION(1) AWARDS(2) (# SHARES) COMPENSATION(4)
-------- ------- --------------- --------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Dr. Martin M. Dorio............. $116,667 $60,000 $27,419 $75,000 25,000 $ 1,929
President and Chief Executive
Officer(5)
Dr. J. Frithjof Timm............ 133,333 66,667 -- 15,938 5,000 --
President, CLARK Europe(6)
Kevin M. Reardon................ 100,750 7,900 -- -- 2,000 2,221
Vice President of Sales and
Marketing
Michael J. Grossman............. 110,004 11,000 -- -- 4,000 3,525
Vice President and General
Counsel
Jeffrey J. Kirk................. 91,538 10,500 35,772 6,500 6,000 1,732
Vice President, Human Resources
and Purchasing
(footnotes on following page)
</TABLE>
37
<PAGE> 40
- ---------------
(1) Relocation expense reimbursement, including related gross-up payments, and
for Dr. Dorio $480 representing the discount received on purchases of stock
through the Terex Employee Stock Purchase Plan.
(2) Awards of Restricted Stock made in 1995, valued on date of grant. Awards
vest 25% on the anniversary of the date of grant. On December 31, 1995,
Messrs. Reardon and Grossman each held 1,000 shares of restricted stock (of
which 250 shares for each had vested) representing a value of $4,750, based
on the closing price for unrestricted shares on December 29, 1995. On
December 31, 1995 the aggregate holdings and valuation of restricted stock
held by the other three officers (none of which shares had vested) were as
follows: for Dr. Dorio, 12,500 shares valued at $59,375; for Dr. Timm 2,500
shares valued at $11,875; for Mr. Kirk 1,000 shares valued at $4,750.
Dividends are payable only with respect to shares which have vested.
(3) Options have an exercise price per share equal to the closing price on the
date of the grant and vest 25% each year on the anniversary of such date.
Exercise prices for options granted in 1995 are: $6/share for Dr. Dorio;
$6.375/share for Dr. Timm; $4.25/share for Messrs. Reardon and Grossman, and
for 4,000 of Mr. Kirk's option shares; and $6.50/share for the remaining
2,000 of Mr. Kirks's option shares.
(4) Company 401(k) contributions and payment of life insurance premiums.
(5) Dr. Dorio became the President and Chief Executive Officer of the Company in
June 1995 and therefore his salary reflects 7/12ths of his annual
compensation, which is the amount of compensation actually received by Dr.
Dorio during 1995.
(6) Dr. Timm's salary and bonus are calculated from Deutsche Marks using a
conversion rate of 1.5 DM/$. Dr. Timm joined the Company in May 1995. Dr.
Timm's salary reflects two-thirds of his annual compensation, which is the
amount of compensation actually received by Dr. Timm during 1995.
EMPLOYMENT AGREEMENT
Concurrent with the consummation of the Transactions, Holdings entered into
a three-year employment contract with Dr. Martin M. Dorio pursuant to which Dr.
Dorio is employed as the President and Chief Executive Officer of Holdings and
the Company. The agreement provides for an annual base salary of $225,000, which
is subject to annual merit increases, and an annual performance bonus. The
Company has agreed that, in the event that Holdings is unable to pay Dr. Dorio
any amounts due to him with respect to annual bonuses, the Company will pay such
amounts. In addition, the agreement provides for the receipt by Dr. Dorio of
standard company benefits. The agreement is terminable by Holdings with or
without cause. In the event the agreement is terminated without cause or as a
result of the total disability of Dr. Dorio, Dr. Dorio will be entitled to
continue to receive his base salary and certain other benefits for specified
periods. Following any termination of Dr. Dorio's employment, he will be subject
to a non-competition covenant for up to two years.
401(K) PLAN
The Company intends to adopt a qualified 401(k) retirement plan for certain
of its employees who were entitled to participate in a 401(k) retirement plan
maintained by Terex prior to the Acquisition. Subject to certain statutory
limitations, eligible employees will be able to contribute a percentage of their
compensation to the plan on a pre-tax basis ("elective deferrals"). For 1996,
the maximum amount of elective deferrals that may be made by any employee is
$9,500. Employees are fully vested in their elective deferrals at all times.
Generally, employees may not receive a distribution of their account balances
prior to their death, disability, termination of employment or retirement, and
their account balances cannot be assigned or alienated.
38
<PAGE> 41
OWNERSHIP OF THE COMPANY
All of the outstanding capital stock of the Company is currently owned by
Holdings. The following table sets forth certain information with respect to the
beneficial ownership of the Holdings Preferred Stock and Holdings Common Stock
by (i) each person or entity who owns five percent or more thereof, (ii) each
director of the Company who is a stockholder, (iii) the Chief Executive Officer
of the Company and the other executive officers named in the "Summary
Compensation Table" above who are stockholders, and (iv) the directors and
officers of the Company as a group. Unless otherwise specified, all shares are
directly held.
<TABLE>
<CAPTION>
NUMBER AND PERCENT OF SHARES
----------------------------------------------------------------
HOLDINGS
PREFERRED HOLDINGS CLASS A HOLDINGS CLASS B
STOCK STOCK(1) STOCK(2)
---------------- ------------------- -------------------
NAME OF BENEFICIAL OWNER NUMBER PERCENT NUMBER PERCENT NUMBER PERCENT
- ---------------------------------- ------ ----- ---------- ----- -------- -------
<S> <C> <C> <C> <C> <C> <C>
16,904 99.4% 4,000 48.8% 987,000 99.5%
Citicorp Venture Capital Ltd......
399 Park Avenue
New York, New York 10043
96 0.6% 4,000 48.8% -- --
Dr. Martin M. Dorio(3)............
172 Trade Street
Lexington, Kentucky 40508
-- -- 196.7 2.4% 4,803.3 0.5%
Thomas J. Snyder..................
All directors and officers as a
group
96 0.6% 10,196.7 51.2% 4,803.3 0.5%
(9 persons)(3)..................
</TABLE>
- ---------------
(1) Does not include shares of Holdings Class A Stock issuable upon conversion
of Holdings Class B Stock. See "-- Holdings Common Stock."
(2) Does not include shares of Holdings Class B Stock issuable upon conversion
of Holdings Class A Stock. See "-- Holdings Common Stock."
(3) It is currently contemplated that certain Management Investors will purchase
additional Holdings Preferred Stock and Holdings Common Stock. See "The
Transactions." In addition, certain members of the Company's management are
also expected to participate in an Employee Stock Purchase Plan pursuant to
which management will be offered the opportunity to acquire Holdings Class A
Stock which would equal in the aggregate up to an additional 10.0% of the
Holdings Class A Stock outstanding. See "-- Employee Stock Purchase Plan."
The table does not include any such securities that may be acquired.
HOLDINGS PREFERRED STOCK
The Holdings Certificate of Incorporation provides that Holdings may issue
20,000 shares of Holdings Preferred Stock, all of which are designated as Series
A Cumulative Compounding Preferred Stock. Holdings Preferred Stock has a stated
value of $1,000 per share and is entitled to annual dividends when, as and if
declared, which dividends will be cumulative, whether or not earned or declared,
and will accrue at a rate of 12%, compounding. The vote of a majority of the
outstanding shares of the Holdings Preferred Stock, voting as a separate class,
is required to (i) create, authorize or issue any other class or series of stock
entitled to a preference prior to the Holdings Preferred Stock upon any dividend
or distribution or any liquidation, distribution of assets, dissolution or
winding up of Holdings, or increase the authorized amount of any such other
class or series, or (ii) amend Holdings' Certificate of Incorporation if such
amendment would adversely affect the relative rights and preferences of the
holders of the Holdings Preferred Stock. Except as described in the immediately
preceding sentence or as otherwise required by law, the Holdings Preferred Stock
is not entitled to vote. Holdings may not pay any dividend upon (except for a
dividend payable in Junior Stock, as defined below), or redeem or otherwise
acquire shares of, capital stock junior to the Holdings Preferred Stock
(including the Holdings Common Stock) ("Junior Stock") unless all cumulative
dividends on the Holdings Preferred Stock have been paid in full. Upon
liquidation, dissolution or winding up of Holdings, holders of Holdings
Preferred Stock are entitled to receive out of the legally available assets of
Holdings, before any amount shall be paid to holders of Junior Stock, an amount
equal to $1,000 per share of Holdings Preferred Stock, plus all accrued and
unpaid dividends to the date of final distribution. If such available assets are
39
<PAGE> 42
insufficient to pay the holders of the outstanding shares of Holdings Preferred
Stock in full, such assets, or the proceeds thereof, will be distributed ratably
among such holders. The Holdings Preferred Stock is not mandatorily redeemable
prior to the maturity of the Notes. Holdings may optionally redeem, in whole or
in part, the Holdings Preferred Stock at any time at a price per share of
$1,000, plus accrued and unpaid dividends to the date of redemption.
HOLDINGS COMMON STOCK
The Certificate of Incorporation of Holdings provides that Holdings may
issue 2,500,000 shares of Holdings Common Stock, divided into two classes
consisting of 1,250,000 shares of Holdings Class A Stock and 1,250,000 shares of
Holdings Class B Stock. The holders of Holdings Class A Stock are entitled to
one vote for each share held of record on all matters submitted to a vote of the
stockholders. Except as required by law, the holders of Holdings Class B Stock
have no voting rights. Under the Certificate of Incorporation of Holdings, a
holder of either class of Holdings Common Stock may convert any or all of his
shares into an equal number of shares of the other class of Holdings Common
Stock; provided that in the case of a conversion from Holdings Class B Stock,
which is nonvoting, into Holdings Class A Stock, which is voting, the holder of
shares to be converted would be permitted under applicable law to hold the total
number of shares of Holdings Class A Stock which would be held after giving
effect to the conversion.
STOCKHOLDERS' AGREEMENT
In connection with the Transactions, the stockholders of Holdings entered
into a Securities Purchase and Holders Agreement (the "Stockholders' Agreement")
containing certain agreements among such stockholders with respect to the
capital stock and corporate governance of Holdings and the Company. The
following is a summary description of the principal terms of the Stockholders'
Agreement, a copy of which is available upon request to the Company.
Pursuant to the Stockholders' Agreement, the Board of Directors of Holdings
and the Company shall be composed at all times of five directors as follows: the
President of the Company, Dr. Martin M. Dorio (so long as he continues to serve
as President); two individuals designated by CVC; and two additional directors
who shall not be employees of CVC but who shall be designated by CVC, subject to
the right of holders of the majority of the outstanding shares of Holdings Class
A Stock to veto the election of either of such additional directors.
The Stockholders' Agreement contains certain provisions which, with certain
exceptions, restrict the ability of the stockholders from transferring any
Holdings Common Stock, Holdings Preferred Stock or Holdings Debentures except
pursuant to the terms of the Stockholders' Agreement. So long as Holdings has
not consummated a public offering of Holdings Common Stock resulting in
aggregate net proceeds of $30.0 million or more, if holders of at least 50% of
the Holdings Common Stock then outstanding approve the sale of the Company (an
"Approved Sale"), each stockholder has agreed to consent to such sale and, if
such sale includes the sale of stock, each stockholder has agreed to sell all of
such stockholder's Holdings Common Stock on the terms and conditions approved by
holders of a majority of the Holdings Common Stock then outstanding. In the
event Holdings proposes to issue and sell (other than in a public offering
pursuant to a registration statement) any shares of Holdings Common Stock and/or
Holdings Preferred Stock or any securities containing options or rights to
acquire any shares of Holdings Common Stock and/or Holdings Preferred Stock or
any securities convertible into Holdings Common Stock and/or Holdings Preferred
Stock to CVC or its corporate affiliates, Holdings must first offer to each of
the other shareholders a pro rata portion of such shares. Such preemptive rights
are not applicable in certain circumstances including the issuance of shares of
Holdings Common Stock and/or Holdings Preferred Stock upon the conversion of
shares of one class of Holdings Common Stock and/or Holdings Preferred Stock
into shares of the other class or upon an initial public offering.
The Stockholders' Agreement also provides for certain additional
restrictions on transfer of shares by Management Investors, including the right
of Holdings to repurchase shares upon termination of such
40
<PAGE> 43
stockholder's employment prior to 2001, at a formula price, and the grant of a
right of first refusal in favor of Holdings in the event a Management Investor
elects to transfer shares of Holdings Common Stock.
REGISTRATION RIGHTS AGREEMENT
In connection with their entry into the Stockholders' Agreement, Holdings,
CVC, Dr. Martin M. Doro and Thomas J. Snyder entered into a Registration Rights
Agreement (the "Holdings Registration Rights Agreement"). Pursuant to the
Holdings Registration Rights Agreement, upon the written request of CVC,
Holdings has agreed to (subject to certain exceptions) prepare and file a
registration statement with the Commission concerning the distribution of all or
part of the shares held by CVC and use its best efforts to cause such
registration statement to become effective. If at any time Holdings files a
registration statement for the Holdings Common Stock pursuant to a request by
CVC or otherwise (other than a registration statement of Form S-8, Form S-4 or
any similar form, a registration statement filed in connection with a share
exchange or an offering solely to Holdings' employees or existing stockholders,
or a registration statement registering a unit offering), Holdings will use its
best efforts to allow the other parties to the Holdings Registration Rights
Agreement to have their shares of Holdings Common Stock (or a portion of their
shares under certain circumstances) included in such offering of Holdings Common
Stock if the registration form proposed to be used may be used to register such
shares. Registration expenses of the selling stockholders (other than
underwriting fees, brokerage fees and transfer taxes applicable to the shares
sold by such stockholders or the fees and expenses of any accountants or other
representatives retained by a selling stockholder) are to be paid by Holdings.
EMPLOYEE STOCK PURCHASE PLAN
It is currently contemplated that Holdings will adopt an Employee Stock
Purchase Plan (the "Plan") pursuant to which members of the Company's management
("Participants") will be offered the opportunity to purchase Holdings Class A
Stock. The Participants will be given the opportunity to acquire or be granted
options to acquire an aggregate of up to 10.0% of Holdings Class A Common Stock
outstanding on a fully-diluted basis.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
SERVICE AGREEMENT
In connection with the Acquisition, the Company entered into a Service
Agreement with Terex pursuant to which the Company shares space in the Southaven
Facility with the Terex Distribution Center, a division of Terex ("TDC"). In
addition, pursuant to such agreement the Company hired approximately 30
employees of TDC who are responsible for aftermarket customer support and
administration. The Company pays an aggregate annual fee to TDC under such
agreement of approximately $6.0 million (the "Base Fee"), payable in monthly
installments. The term of the agreement is for three years. See "Risk
Factors -- Lack of Independent Operating History" and Note K to the Company's
audited combined financial statements. In addition to the Base Fee, certain
provisions of the Service Agreement may require each of TDC and CLARK to share
the responsibility for additional costs and savings resulting from, among other
things, changes or increases in the provision of services or the implementation
of certain cost savings.
TAX SHARING AGREEMENT
Holdings and the Company will be included in the consolidated United States
federal income tax return of Holdings. Holdings and the Company entered into a
tax sharing agreement (the "Tax Sharing Agreement") whereby the Company will pay
Holdings (or Holdings will pay the Company) its pro rata share of the total tax
liability, as set out in the tax sharing agreement. In the event the Company is
included in a joint, combined, consolidated or unitary state or local income or
franchise tax return with Holdings, the Company shall make payments to Holdings,
and Holdings shall make payments to the Company, in a manner consistent with
that described above for federal tax purposes.
41
<PAGE> 44
DESCRIPTION OF CERTAIN INDEBTEDNESS
The following is a summary of certain indebtedness of the Company and
Holdings. To the extent such summary contains descriptions of the Revolving
Credit Facility and other loan documents, such descriptions do not purport to be
complete and are qualified in their entirety by reference to such documents.
REVOLVING CREDIT FACILITY
In connection with the Acquisition, the Company entered into the $30.0
million Revolving Credit Facility with Congress Financial Corporation (the
"Bank"). Borrowings under the Revolving Credit Facility are available for
working capital and general corporate purposes, including letters of credit. The
Revolving Credit Facility is secured by first priority liens on all accounts
receivable and inventory of the Company's domestic operations. The Company did
not draw upon the Revolving Credit Facility in connection with the consummation
of the Transactions.
The Revolving Credit Facility expires three years from the date of closing,
unless extended. The interest rate per annum applicable to the Revolving Credit
Facility is the prime rate, as announced by CoreStates Bank N.A., plus 0.50% or,
at the Company's option, the adjusted Eurodollar rate plus 2.50%. The Revolving
Credit Facility permits the Company to prepay loans and to permanently reduce
revolving credit commitments or letters of credit, in whole or in part, at any
time in certain minimum amounts. The Company is required to pay certain fees in
connection with the Revolving Credit Facility, including a closing fee of 0.75%
of the total commitment and a commitment fee of 0.25% on the undrawn portion of
the revolving credit commitment.
The Revolving Credit Facility contains customary representations,
warranties and events of default as well as certain covenants.
SUBSIDIARY CREDIT FACILITIES
CLARK Europe may enter into a revolving credit facility to provide working
capital for its European operations. It is expected that any such facility will
provide up to $10.0 million of revolving credit loans and will be secured by
certain assets of CLARK Europe.
The Company's Korean subsidiary maintains a $420,000 working capital credit
line bearing interest at a rate of 13.75%. This credit line is currently fully
drawn upon. It is expected that such borrowings will be repaid in connection
with certain anticipated post-closing adjustments to the consideration for the
Acquisition. The Company's Brazilian subsidiary is in the process of obtaining a
working capital credit facility, which is currently expected to be in the amount
of approximately $300,000.
HOLDINGS DEBENTURES
In connection with the Transactions, Holdings issued an aggregate of $7.0
million original principal amount of Holdings Debentures, designated as Junior
Subordinated Notes. The Holdings Debentures mature on 2007 and bear interest at
a rate of 12% per annum. All interest due on the Holdings Debentures prior to
their maturity shall be paid by adding such interest to the then outstanding
principal amount of the Holdings Debentures. Such amount shall accrue interest
as a portion of the principal amount of the Holdings Debentures from the
applicable interest payment date. The Holdings Debentures contain certain
covenants in favor of the holders of the Holdings Debentures (the "Holdings
Debenture Holders") including, but not limited to: (i) restrictions on the
payment by Holdings of dividends and the purchase, redemption or prepayment by
Holdings and its subsidiaries of its capital stock or indebtedness which is, by
its terms or by operation of law, junior in right of payment to the Holdings
Debentures, and (ii) restrictions on subsidiaries entering into agreements
(other than with respect to the Notes) restricting their ability to pay
dividends or make certain other distributions to Holdings or any subsidiary of
Holdings.
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<PAGE> 45
DESCRIPTION OF NOTES
GENERAL
The Existing Notes were issued under the Indenture dated as of November 27,
1996 between the Company and United States Trust Company of New York, as trustee
(the "Trustee"). The terms of the Indenture apply to the Existing Notes and to
the New Notes to be issued in exchange therefor pursuant to the Exchange Offer
(all such Notes being referred to herein collectively as the "Notes"). The terms
of the Notes include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act. The following summary of
certain provisions of the Indenture does not purport to be complete and is
qualified in its entirety by reference to the Indenture, including the
definitions therein of certain terms used below. The definitions of certain
terms used in the following summary are set forth below under "-- Certain
Definitions."
The Notes are senior unsecured obligations of the Company and rank senior
in right of payment to all subordinated Indebtedness of the Company and pari
passu in right of payment with all senior Indebtedness.
The Notes are effectively subordinated to all senior secured indebtedness
of the Company, including indebtedness under the Revolving Credit Facility, to
the extent of the assets securing such debt. As of September 30, 1996, on a pro
forma basis after giving effect to the Transactions, the Company would not have
had any secured indebtedness outstanding, exclusive of unused commitments of
$30.0 million which may be borrowed by the Company under the Revolving Credit
Facility.
Although the Company's U.S. operations are owned directly, its foreign
operations are conducted through the Foreign Subsidiaries. The Foreign
Subsidiaries have not guaranteed or otherwise become obligated with respect to
the Notes. The Notes are therefore effectively subordinated to all existing and
future liabilities, including indebtedness, of the Foreign Subsidiaries. As of
September 30, 1996, on a pro forma basis after giving effect to the
Transactions, the Foreign Subsidiaries would have had liabilities of
approximately $40.4 million reflected on the Company's combined balance sheet.
Claims of creditors of the Foreign Subsidiaries, including trade creditors, will
generally have priority as to the assets of such subsidiaries over the claims of
the Company and the holders of the Company's indebtedness, including the Notes.
The Notes may be issued only in registered form, without coupons, and in
denominations of $1,000 and integral multiples thereof.
PRINCIPAL MATURITY AND INTEREST
The Notes are limited in aggregate principal amount to $130,000,000 and
will mature on November 15, 2006. Interest on the Notes is payable semi-annually
on November 15 and May 15 of each year, commencing on May 15, 1997, to holders
of record on the immediately preceding November 1 and May 1, respectively. The
Notes bear interest at 10 3/4% per annum. Interest on the Notes accrues from the
most recent date to which interest has been paid or, if no interest has been
paid, from November 27, 1996. Interest is computed on the basis of a 360-day
year comprised of twelve 30-day months. The Notes are payable both as to
principal and interest at the office or agency of the Company maintained for
such purpose within the City of New York or, at the option of the Company,
payment of interest may be made by check mailed to the holders of the Notes at
their respective addresses set forth in the register of holders of Notes. Until
otherwise designated by the Company, the Company's office or agency will be the
office of the Trustee maintained for such purpose. If a payment date is a Legal
Holiday, payment may be made at that place on the next succeeding day that is
not a Legal Holiday, and no interest shall accrue for the intervening period.
REDEMPTION
The Notes are not redeemable at the Company's option prior to November 15,
2001. Thereafter, the Notes are subject to redemption at the option of the
Company, in whole or in part, upon not less than 30 nor more than 60 days'
notice, at the redemption prices (expressed as percentages of principal amount)
set forth
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<PAGE> 46
below plus accrued and unpaid interest thereon, if any, to the applicable date
of redemption, if redeemed during the 12-month period beginning on November 15
of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
-------------------------------------------------- ----------
<S> <C>
2001.............................................. 105.375%
2002.............................................. 102.688
2003 and thereafter............................... 100.000
</TABLE>
Notwithstanding the foregoing, at any time or from time to time prior to
November 15, 1999, the Company may, at its option, redeem up to one-third of the
original principal amount of the Notes, at a redemption price of 110.75% of the
principal amount thereof, plus accrued and unpaid interest, if any, to the
applicable redemption date, with the net cash proceeds of one or more Public
Equity Offerings; provided, that (a) such redemption shall occur within 90 days
of the date of closing of such public offering and (b) at least $86.7 million
aggregate principal amount of Notes remains outstanding immediately after giving
effect to each such redemption.
If less than all of the Notes are to be redeemed at any time, selection of
Notes for redemption will be made by the Trustee in compliance with the
requirements of the principal national securities exchange, if any, on which the
Notes are listed, or, if the Notes are not so listed, on a pro rata basis, by
lot or by such other method as the Trustee deems to be fair and appropriate,
provided, that Notes of $1,000 or less may not be redeemed in part. Notice of
redemption will be mailed by first-class mail at least 30 but not more than 60
days before the redemption date to each holder of Notes to be redeemed at such
holder's registered address. If any Note is to be redeemed in part only, the
notice of redemption that relates to such Note will state the portion of the
principal amount thereof to be redeemed. A new Note in principal amount equal to
the unredeemed portion thereof will be issued in the name of the holder thereof
upon cancellation of the original Note. On and after the date of redemption,
interest will cease to accrue on Notes or portions thereof called for
redemption.
The Notes are not entitled to any mandatory redemption or sinking fund.
REPURCHASE UPON CHANGE OF CONTROL
Upon the occurrence of a Change of Control, the Company will be required to
offer to repurchase all the Notes then outstanding (the "Change of Control
Offer") at a purchase price equal to 101% of the aggregate principal amount
thereof plus accrued and unpaid interest, if any, to the date of repurchase (the
"Change of Control Payment"). Within 30 days following any Change of Control,
the Company must mail or cause to be mailed a notice to each holder stating,
among other things: (i) that the Change of Control Offer is being made pursuant
to this provision and that all Notes tendered will be accepted for payment, (ii)
the purchase price and the purchase date, which will be no earlier than 30 days
nor later than 60 days from the date such notice is mailed (the "Change of
Control Payment Date"), (iii) that any Note not tendered will continue to accrue
interest, (iv) that, unless the Company defaults in the payment of the Change of
Control Payment, all Notes accepted for payment pursuant to the Change of
Control Offer will cease to accrue interest on the Change of Control Payment
Date, (v) that any holder electing to have Notes purchased pursuant to a Change
of Control Offer will be required to surrender the Notes, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Notes completed, to
the paying agent with respect to the Notes (the "Paying Agent") at the address
specified in the notice prior to the close of business on the third business day
preceding the Change of Control Payment Date, (vi) that any holder will be
entitled to withdraw such election if the Paying Agent receives, not later than
the close of business on the second business day preceding the Change of Control
Payment Date, a telegram, telex, facsimile transmission or letter setting forth
the name of the holder, the principal amount of Notes delivered for purchase,
and a statement that such holder is withdrawing his election to have such Notes
purchased, and (vii) that a holder whose Notes are being purchased only in part
will be issued new Notes equal in principal amount to the unpurchased portion of
the Notes surrendered, which unpurchased portion must be equal to $1,000 in
principal amount or an integral multiple thereof.
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
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<PAGE> 47
with the repurchase of the Notes in connection with a Change of Control. To the
extent that the provisions of any securities laws or regulations conflict with
the "Change of Control" provisions of the Indenture, the Company will 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.
On the Change of Control Payment Date, the Company will, to the extent
lawful, (i) accept for payment the Notes or portions thereof tendered pursuant
to the Change of Control Offer, (ii) deposit with the Paying Agent an amount
equal to the Change of Control Payment in respect of all Notes or portions
thereof so tendered and not withdrawn, and (iii) deliver or cause to be
delivered to the Trustee the Notes so accepted together with an Officer's
Certificate stating that the Notes or portions thereof tendered to the Company
are accepted for payment. The Paying Agent will promptly mail to each holder of
Notes so accepted payment in an amount equal to the purchase price for such
Notes, and the Trustee will authenticate and mail to each holder a new Note
equal in principal amount to any unpurchased portion of the Notes surrendered,
if any, provided, that each such new Note will be in principal amount of $1,000
or an integral multiple thereof. The Company will announce the result of the
Change of Control Offer on or as soon as practicable after the Change of Control
Payment Date.
Except as described above with respect to a Change of Control, the
Indenture does not contain provisions that permit the holders of the Notes to
require that the Company repurchase or redeem the Notes in the event of a
takeover, recapitalization or similar restructuring.
There can be no assurance that sufficient funds will be available at the
time of any Change of Control Offer to make required repurchases.
"Change of Control" means (i) the transfer (in one transaction or a series
of transactions) of all or substantially all of the Company's assets to any
Person or group (as such term is used in Section 13(d)(3) of the Exchange Act)
other than to one or more Existing Holders, (ii) the liquidation or dissolution
of the Company or the adoption of a plan by the stockholders of the Company
relating to the dissolution or liquidation of the Company, (iii) the acquisition
by any Person or group (as such term is used in Section 13(d)(3) of the Exchange
Act), except for one or more Existing Holders, of beneficial ownership, directly
or indirectly, of more than 50% of the voting power of the total outstanding
Voting Stock of Holdings, (iv) after the consummation of an initial public
offering of any class of common stock of the Company or Holdings, during any
period of two consecutive years, individuals who at the beginning of such period
constituted the Board of Directors of the Company or Holdings (together with any
new directors who have been appointed by CVC, Citicorp N.A., or any Affiliate of
CVC or whose nomination for election by the stockholders of the Company was
approved by a vote of at least 66 2/3% of the directors then still in office who
were either directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the Board of Directors of the Company or Holdings, as
the case may be, then still in office or (v) the failure by Holdings to own more
than 50% of the voting power of the total outstanding Voting Stock of the
Company.
"Existing Holders" shall mean (i) CVC, (ii) Citicorp N.A. or any other
Affiliate of CVC, (iii) any officer, employee or director of CVC, (iv) the
Management Investors and (v) in the case of any natural Person specified in the
foregoing clauses, any spouse or lineal descendant (including by adoption) of
such Person; provided, that in no event shall the Persons specified in clauses
(iii) through (v) be deemed "Existing Holders" with respect to more than 30% of
the voting power of the total outstanding Voting Stock of the Company or
Holdings.
CERTAIN COVENANTS
LIMITATION ON RESTRICTED PAYMENTS. The Company will not, and will not
permit any of its Restricted Subsidiaries to, directly or indirectly (i) declare
or pay any dividend or make any distribution on account of any Equity Interests
of the Company or any of its Subsidiaries (other than dividends or distributions
payable in Equity Interests (other than Disqualified Stock) of the Company or
dividends or distributions payable to the Company or any Wholly Owned
Subsidiary), (ii) purchase, redeem or otherwise acquire or retire for value any
Equity Interest of the Company, any Subsidiary or any other Affiliate of the
Company (other than any
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<PAGE> 48
such Equity Interest owned by the Company or any Wholly Owned Subsidiary), (iii)
make any principal payment on, or purchase, redeem, defease or otherwise acquire
or retire for value any Indebtedness of the Company or any Guarantor that is
subordinated in right of payment to the Notes or such Guarantor's Guarantee
thereof, as the case may be, prior to any scheduled principal payment, sinking
fund payment or other payment at the stated maturity thereof, or (iv) make any
Restricted Investment (all such payments and other actions set forth in clauses
(i) through (iv) above being collectively referred to as "Restricted Payments")
unless, at the time of such Restricted Payment:
(a) no Default or Event of Default has occurred and is continuing or would
occur as a consequence thereof,
(b) immediately after giving effect thereto on a pro forma basis, the
Company could incur at least $1.00 of additional Indebtedness under the
Interest Coverage Ratio test set forth in the covenant described under
"-- Limitation on Incurrence of Indebtedness," and
(c) such Restricted Payment (the value of any such payment, if other than
cash, being determined in good faith by the Board of Directors and
evidenced by a resolution set forth in an Officers' Certificate
delivered to the Trustee), together with the aggregate of all other
Restricted Payments made after the date of the Indenture (including
Restricted Payments permitted by clauses (i) and (ii) of the next
following paragraph and excluding Restricted Payments permitted by the
other clauses therein), is less than the sum of (1) 50% of the
Consolidated Net Income of the Company for the period (taken as one
accounting period) from the beginning of the first quarter commencing
immediately after the date of the Indenture to the end of the Company's
most recently ended fiscal quarter for which internal financial
statements are available at the time of such Restricted Payment (or, if
such Consolidated Net Income for such period is a deficit, 100% of such
deficit), plus (2) 100% of the aggregate net cash proceeds (or of the
net cash proceeds received upon the conversion of non-cash proceeds
into cash) received by the Company from the issuance or sale, other
than to a Subsidiary, of Equity Interests of the Company (other than
Disqualified Stock) after the date of the Indenture and on or prior to
the time of such Restricted Payment, plus (3) 100% of the aggregate net
cash proceeds (or of the net cash proceeds received upon the conversion
of non-cash proceeds into cash) received by the Company from the
issuance or sale, other than to a Subsidiary, of any convertible or
exchangeable debt security of the Company that has been converted or
exchanged into Equity Interests of the Company (other than Disqualified
Stock) pursuant to the terms thereof after the date of the Indenture
and on or prior to the time of such Restricted Payment (including any
additional net cash proceeds received by the Company upon such
conversion or exchange) plus (4) 100% of the aggregate after-tax net
cash proceeds (or of the after-tax net cash proceeds received upon the
conversion of non-cash proceeds into cash) received by the Company or a
Restricted Subsidiary from the sale or other disposition of any
Investment constituting a Restricted Payment that was made after the
date of the Indenture; provided, that the gain on such sale or
disposition, if any, shall be excluded in determining Consolidated Net
Income for purpose of clause (1) above.
The foregoing provisions do not prohibit (i) the payment of any dividend
within 60 days after the date of declaration thereof, if at said date of
declaration such payment would not have been prohibited by the provisions of the
Indenture, (ii) the redemption, purchase, retirement or other acquisition of any
Equity Interests of the Company in exchange for, or out of the proceeds of the
substantially concurrent sale (other than to a Subsidiary) of, other Equity
Interests of the Company (other than Disqualified Stock), (iii) the redemption,
repurchase or payoff of any Indebtedness (1) with proceeds of any Refinancing
Indebtedness permitted to be incurred pursuant to the provision described under
"-- Limitation on Incurrence of Indebtedness" or (2) solely in exchange for, or
out of the proceeds of the substantially concurrent sale (other than to a
Subsidiary) of, any Equity Interests of the Company (other than Disqualified
Stock), (iv) Investments by the Company or any Restricted Subsidiary, in an
aggregate amount not to exceed $5.0 million, in an Unrestricted Subsidiary
formed primarily for the purpose of financing purchases and leases of inventory
manufactured by the Company or any of its Restricted Subsidiaries, (v) payments
by the Company to Holdings pursuant to the Tax Sharing Agreement, (vi)
distributions, loans or advances to Holdings in an
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<PAGE> 49
aggregate amount not to exceed $500,000 per fiscal year; provided, that such
amounts are used by Holdings to pay ordinary operating expenses (including,
without limitation, reasonable directors' fees and expenses, indemnification
obligations and professional fees and expenses) and certain CLARK management
compensation expenses, (vii) (A) payments to, and promptly used by, Holdings to
repurchase Capital Stock or Indebtedness of Holdings from directors, officers
and employees of the Company and its Subsidiaries, including Management
Investors, who have died or whose employment has been terminated, and (B) loans
or advances to employees of the Company or any of its Subsidiaries; provided
that the aggregate amount of such payments, loans and advances in any fiscal
year shall not exceed the lesser of (x) $500,000 plus any amount available for
such payments pursuant to this clause (x) since the date of the Indenture that
have not been used for such purpose and (y) $2.0 million, (viii) Permitted
Transactions or (ix) other Restricted Payments in an aggregate amount not to
exceed $3.0 million; provided, that with respect to clauses (iv), (vii) and (ix)
above, no Default or Event of Default shall have occurred and be continuing at
the time, or shall occur as a consequence thereof.
Not later than the date of making each Restricted Payment, the Company will
deliver to the Trustee an Officers' Certificate stating that such Restricted
Payment is permitted and setting forth the basis upon which the calculations
required by this covenant were computed, which calculations may be based upon
the Company's latest available financial statements.
LIMITATION ON INCURRENCE OF INDEBTEDNESS. The Company will not, and will
not permit any of its Restricted Subsidiaries to, directly or indirectly, (1)
create, incur, issue, assume, guaranty or otherwise become directly or
indirectly liable, contingently or otherwise, (collectively, "incur"), with
respect to any Indebtedness (including Acquired Debt) or (2) issue any
Disqualified Stock; provided, that the Company may incur Indebtedness (including
Acquired Debt) or issue shares of Disqualified Stock and any Restricted
Subsidiary may incur Acquired Debt, in each case if (x) no Default or Event of
Default shall have occurred and be continuing at the time of, or would occur
after giving effect on a pro forma basis to such incurrence or issuance, and (y)
the Interest Coverage Ratio for the Company's most recently ended four full
fiscal quarters for which internal financial statements are available
immediately preceding the date on which such additional Indebtedness is incurred
or such Disqualified Stock is issued would have been at least equal to the ratio
set forth below opposite the period in which such incurrence or issuance occurs,
determined on a pro forma basis (including a pro forma application of the net
proceeds therefrom), as if the additional Indebtedness had been incurred, or the
Disqualified Stock had been issued, as the case may be, at the beginning of such
four-quarter period:
<TABLE>
<CAPTION>
PERIOD ENDING RATIO
------------------------------------------------------ -----
<S> <C>
November 15, 1998..................................... 2.00
Thereafter............................................ 2.50
</TABLE>
The foregoing limitations do not prohibit the incurrence of:
(a) Indebtedness of the Company under the Revolving Credit Facility
and Indebtedness of CLARK Europe and its subsidiaries under the German
Subsidiary Facilities, provided, that the aggregate principal amount of
Indebtedness so incurred on any date, together with all other Indebtedness
incurred pursuant to this clause (a) and outstanding on such date, shall
not exceed the greater of (x) $40.0 million, less any required permanent
repayments (which are accompanied by a corresponding permanent commitment
reduction) thereunder, and (y) the sum, on such date, of (i) 90% of
Eligible Receivables (as defined) of the Company and the Restricted
Subsidiaries, plus (ii) 65% of Eligible Inventory (as defined) of the
Company and the Restricted Subsidiaries,
(b) performance bonds, appeal bonds, surety bonds, insurance
obligations or bonds and other similar bonds or obligations incurred in the
ordinary course of business,
(c) obligations incurred (i) to fix the interest rate on any variable
rate Indebtedness otherwise permitted by the Indenture, (ii) to hedge
currency risk with respect to any receivable or liability, the payment of
which is determined by reference to a foreign currency, or (iii) to protect
against fluctuations in the price of raw materials used in the ordinary
course of business of the Company and its Restricted Subsidiaries
(collectively, "Hedging Obligations"),
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<PAGE> 50
(d) Indebtedness arising out of Capital Lease Obligations or Purchase
Money Obligations (collectively, "Purchase Money Indebtedness") in an
aggregate amount not to exceed $10.0 million outstanding at any time,
(e) Indebtedness owed by (i) a Restricted Subsidiary to the Company or
to a Wholly Owned Subsidiary or (ii) the Company to a Wholly Owned
Subsidiary,
(f) Floor Plan Guarantees incurred in the ordinary course of business,
(g) Indebtedness outstanding on the date of the Indenture, including
the Notes,
(h) Guarantees by the Company or any Guarantor of Indebtedness
otherwise permitted to be incurred by the Indenture,
(i) 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, that such Indebtedness
is extinguished within three business days of incurrence,
(j) Indebtedness of the Company or any Restricted Subsidiary in
addition to that described in clauses (a) through (i) above, so long as the
aggregate principal amount of all such Indebtedness incurred pursuant to
this clause (j) does not exceed $10.0 million at any one time outstanding
(which may be, but shall not be required to be, incurred, in whole or in
part, under the Revolving Credit Facility or the Germany Subsidiary
Facilities), and
(k) Indebtedness issued in exchange for, or the proceeds of which are
contemporaneously used to extend, refinance, renew, replace, or refund
(collectively, "Refinance") Indebtedness referred to in clause (g) above or
this clause (k) or Indebtedness incurred pursuant to the Interest Coverage
Ratio test set forth in the immediately preceding paragraph ("Refinancing
Indebtedness"); provided, that (1) the principal amount of such Refinancing
Indebtedness does not exceed the principal amount of Indebtedness so
Refinanced (plus the premiums required to be paid, and the out-of-pocket
expenses (other than those payable to an Affiliate of the Company)
reasonably incurred, in connection therewith), (2) the Refinancing
Indebtedness has a final scheduled maturity that exceeds the final stated
maturity, and a Weighted Average Life to Maturity that is equal to or
greater than the Weighted Average Life to Maturity, of the Indebtedness
being Refinanced and (3) the Refinancing Indebtedness ranks, in right of
payment, no less favorable to the Notes as the Indebtedness being
Refinanced.
LIMITATION ON ASSET SALES. The Company will not, and will not permit any
Restricted Subsidiary to, make any Asset Sale unless (i) the Company or such
Restricted Subsidiary receives consideration at the time of such Asset Sale at
least equal to the fair market value (as determined in good faith by the Board
of Directors as evidenced by a resolution of the Board of Directors set forth in
an Officers' Certificate delivered to the Trustee) of the assets subject to such
Asset Sale, (ii) at least 75% of the consideration for such Asset Sale is in the
form of cash, Cash Equivalents or liabilities of the Company or any Restricted
Subsidiary (other than liabilities that are by their terms subordinated to the
Notes or any Guarantee) that are assumed by the transferee of such assets
(provided, that there is no further recourse to the Company and its Restricted
Subsidiaries with respect to such liabilities), and (iii) within 12 months of
such Asset Sale, the Net Proceeds thereof are (a) invested in assets related to
the business of the Company or its Restricted Subsidiaries or (b) to the extent
not used as provided in clause (a), applied to make an offer to purchase Notes
as described below (an "Excess Proceeds Offer"); provided, that if the amount of
Net Proceeds from any Asset Sale not invested pursuant to clause (a) above is
less than $5.0 million, the Company will not be required to make an offer
pursuant to clause (b). Pending the final application of any such Net Proceeds,
the Company or any Restricted Subsidiary may temporarily reduce Indebtedness
under the Revolving Credit Facility or the German Subsidiary Facilities, or
temporarily invest such Net Proceeds in Cash Equivalents.
The amount of Net Proceeds not invested as set forth in the preceding
clause (a) constitutes "Excess Proceeds." If the Company elects, or becomes
obligated to make an Excess Proceeds Offer, the Company will offer to purchase
Notes having an aggregate principal amount equal to the Excess Proceeds (the
"Purchase
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<PAGE> 51
Amount"), at a purchase price equal to 100% of the aggregate principal amount
thereof, plus accrued and unpaid interest, if any, to the purchase date. The
Company must commence such Excess Proceeds Offer not later than 30 days after
the expiration of the 12-month period following the Asset Sale that produced
Excess Proceeds. If the aggregate purchase price for the Notes tendered pursuant
to the Excess Proceeds Offer is less than the Excess Proceeds, the Company and
its Restricted Subsidiaries may use the portion of the Excess Proceeds remaining
after payment of such purchase price for general corporate purposes.
Each Excess Proceeds Offer will remain open for a period of 20 business
days and no longer, unless a longer period is required by law (the "Excess
Proceeds Offer Period"). Promptly after the termination of the Excess Proceeds
Offer Period (the "Excess Proceeds Payment Date"), the Company will purchase and
mail or deliver payment for the Purchase Amount for the Notes or portions
thereof tendered, pro rata or by such other method as may be required by law,
or, if less than the Purchase Amount has been tendered, all Notes tendered
pursuant to the Excess Proceeds Offer. The principal amount of Notes to be
purchased pursuant to an Excess Proceeds Offer may be reduced by the principal
amount of Notes acquired by the Company through purchase or redemption (other
than pursuant to a Change of Control Offer) subsequent to the date of the Asset
Sale and surrendered to the Trustee for cancellation.
Any Excess Proceeds Offer will be conducted in compliance with applicable
regulations under the Federal securities laws, including Exchange Act Rule
14e-1. 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.
There can be no assurance that sufficient funds will be available at the
time of any Excess Proceeds Offer to make required repurchases. The Company's
failure to comply with the covenant described above will be an Event of Default
under the Indenture if such failure continues for a specified period and the
required notice is given by the Trustee or the holders of not less than 25% in
principal amount of the then outstanding Notes.
LIMITATION ON LIENS. The Company will not, and will not permit any
Restricted Subsidiary to, directly or indirectly, create, incur, assume or
suffer to exist any Lien on any asset (including, without limitation, all real,
tangible or intangible property) of the Company or any Restricted Subsidiary,
whether now owned or hereafter acquired, or on any income or profits therefrom,
or assign or convey any right to receive income therefrom, except (i) Liens on
accounts receivable and inventory and proceeds thereof (and certain rights
relating thereto) securing Indebtedness permitted to be incurred under the
Revolving Credit Facility, (ii) Liens on property, plant, equipment, accounts
receivable and inventory of CLARK Europe and its subsidiaries, and proceeds
thereof (and certain rights relating thereto) securing Indebtedness permitted to
be incurred under the German Subsidiary Facilities, (iii) Purchase Money Liens,
and (iv) Permitted Liens.
LIMITATION ON RESTRICTIONS ON SUBSIDIARY DIVIDENDS. The Company will not,
and will not permit any Restricted Subsidiary to, directly or indirectly, create
or otherwise cause or suffer to exist or become effective any encumbrance or
restriction on the ability of any Restricted Subsidiary (a) to (1) pay dividends
or make any other distributions to the Company or any of its Restricted
Subsidiaries (A) on such Restricted Subsidiary's Capital Stock or (B) with
respect to any other interest or participation in, or measured by, such
Restricted Subsidiary's profits or (2) pay any indebtedness owed to the Company
or any of its Restricted Subsidiaries, or (b) make loans or advances to the
Company or any of its Restricted Subsidiaries, or (c) transfer any of its assets
to the Company or any of its Restricted Subsidiaries, except for such
encumbrances or restrictions existing under or by reason of (i) the Revolving
Credit Facility, as in effect on the Closing Date, or any refinancing thereof
containing restrictions that are not materially more restrictive than those
contained in the Revolving Credit Facility on the Closing Date, (ii) customary
net worth restrictions on the actions specified in clause (a)(1) above contained
in the German Subsidiary Facilities, (iii) the Indenture and the Notes, (iv)
applicable law, (v) restrictions with respect to a Subsidiary that was not a
Subsidiary on the Closing Date in existence at the time such Person becomes a
Subsidiary (but not created as a result of or in anticipation of such Person
becoming a Subsidiary); provided, that such restrictions are not applicable to
any other Person or the properties or assets of any other Person, (vi) customary
non-assignment and net worth provisions of any contract or lease entered into in
the ordinary course of
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business, (vii) customary restrictions on the transfer of assets subject to a
Lien permitted under the Indenture imposed by the holder of such Lien, (viii)
restrictions imposed by any agreement to sell assets or Capital Stock to any
Person pending the closing of such sale, and (ix) permitted Refinancing
Indebtedness (including Indebtedness Refinancing Acquired Debt), provided, that
such restrictions contained in any agreement governing such Refinancing
Indebtedness are not materially more restrictive than those contained in any
agreements governing the Indebtedness being Refinanced.
MERGER, CONSOLIDATION OR SALE OF ASSETS. The Company may not consolidate
or merge with or into (whether or not the Company is the surviving corporation),
or sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its properties or assets (determined on a consolidated
basis for the Company and its Restricted Subsidiaries) in one or more related
transactions to, any other Person unless (i) the Company is the surviving Person
or the Person formed by or surviving any such consolidation or merger (if other
than the Company) or to which such sale, assignment, transfer, lease, conveyance
or other disposition has been made is a corporation organized and existing under
the laws of the United States, any state thereof or the District of Columbia,
(ii) the Person formed by or surviving any such consolidation or merger (if
other than the Company) or the Person to which such sale, assignment, transfer,
lease, conveyance or other disposition has been made assumes all the Obligations
of the Company, pursuant to a supplemental indenture in a form reasonably
satisfactory to the Trustee, under the Notes, the Indenture and the Registration
Rights Agreement, (iii) immediately after such transaction, no Default or Event
of Default exists, and (iv) the Company, or any Person formed by or surviving
any such consolidation or merger, or to which such sale, assignment, transfer,
lease, conveyance or other disposition has been made, (A) has a Consolidated Net
Worth (immediately after the transaction but prior to any purchase accounting
adjustments resulting from the transaction) equal to or greater than the
Consolidated Net Worth of the Company immediately preceding the transaction and
(B) will be permitted, at the time of such transaction and after giving pro
forma effect thereto as if such transaction had occurred at the beginning of the
applicable four-quarter period, to incur at least $1.00 of additional
Indebtedness pursuant to the Interest Coverage Ratio test set forth in the
covenant described under "Incurrence of Indebtedness."
In the event of any transaction (other than a lease) complying with the
conditions listed in the immediately preceding paragraph in which the Company is
not the surviving Person, such surviving Person or transferee shall succeed to,
and be substituted for, and may exercise every right and power of, the Company,
and the Company shall be discharged from its Obligations under, the Indenture,
the Notes and the Registration Rights Agreement.
LIMITATION ON TRANSACTIONS WITH AFFILIATES. The Company will not, and will
not permit any of its Restricted Subsidiaries to, directly or indirectly, sell,
lease, transfer or otherwise dispose of any of its properties or assets to, or
purchase any property or assets from, or enter into any contract, agreement,
understanding, loan, advance or guarantee with, or for the benefit of, any
Affiliate (each of the foregoing, an "Affiliate Transaction"), except for (i)
Affiliate Transactions, which together with all Affiliate Transactions that are
part of a common plan, have an aggregate value of not more than $1.0 million;
provided, that such transactions are conducted in good faith and on terms that
are no less favorable to the Company or the relevant Restricted Subsidiary than
those that would have been obtained in a comparable transaction at such time on
an arm's-length basis from a Person that is not an Affiliate of the Company or
such Restricted Subsidiary, (ii) Affiliate Transactions, which together with all
Affiliate Transactions that are part of a common plan, have an aggregate value
of not more than $5.0 million; provided, that a majority of the disinterested
members of the Board of Directors of the Company determine that such
transactions are conducted in good faith and on terms that are no less favorable
to the Company or the relevant Restricted Subsidiary than those that would have
been obtained in a comparable transaction at such time on an arm's-length basis
from a Person that is not an Affiliate of the Company or such Restricted
Subsidiary, and (iii) Affiliate Transactions for which the Company delivers to
the Trustee an opinion as to the fairness to the Company or such Restricted
Subsidiary from a financial point of view, issued by an investment banking firm
of national standing; provided, that the following will not be deemed to be
Affiliate Transactions: (i) employment agreements entered into by the Company or
any Restricted Subsidiary in the ordinary course of business with the approval
of a majority of the disinterested members of the Company's Board of Directors,
(ii) transactions between or among the
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Company and/or its Wholly Owned Subsidiaries, (iii) Restricted Payments
permitted by the provisions of the Indenture described above under "Limitations
on Restricted Payments," and (iv) reasonable fees and compensation paid to and
indemnity provided on behalf of, officers, directors, employees or consultants
of the Company or any Restricted Subsidiary as determined in good faith by a
majority of the disinterested directors of the Company's Board of Directors or,
if none, unanimously by the Board of Directors.
RESTRICTIONS ON SALE AND ISSUANCE OF SUBSIDIARY STOCK. The Company shall
not sell, and shall not permit any of its Restricted Subsidiaries to issue or
sell, any shares of Capital Stock (other than directors' qualifying shares) of
any Restricted Subsidiary to any Person other than the Company or a Wholly Owned
Subsidiary; provided, that the Company and its Restricted Subsidiaries may sell
all of the Capital Stock of a Restricted Subsidiary owned by the Company and its
Restricted Subsidiaries if the Net Proceeds from such Asset Sale are used in
accordance with the terms of the covenant described under "-- Limitation on
Asset Sales."
LINE OF BUSINESS. The Company will not, and will not permit any Restricted
Subsidiary to, engage in any business other than (a) the business conducted or
proposed to be conducted by the Company and the Restricted Subsidiaries on the
Closing Date and (b) any business that in the reasonable, good faith judgment of
the Board of Directors of the Company is ancillary, complementary,
supplementary, or related to, or an extension of, any business described in
clause (a) above.
GUARANTORS. The Indenture provides that as long as any Notes remain
outstanding, any Restricted Subsidiary that is not a Foreign Subsidiary shall
(a) 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 Company's obligations
under the Notes and the Indenture on the terms set forth in the Indenture and
(b) 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. On the Issue Date the Company did
not, and on the date hereof the Company does not, have any Subsidiaries other
than Foreign Subsidiaries. Accordingly, there are no Guarantors.
If all of the Capital Stock of any Guarantor is sold to a Person (other
than the Company or any of its Restricted Subsidiaries) and the Net Proceeds
from such Asset Sale are used in accordance with the terms of the covenant
described under "-- Limitation on Asset Sales," then such Guarantor will be
released and discharged from all of its obligations under its Guarantee of the
Notes and the Indenture.
The obligations of each Guarantor are limited to the maximum amount as
will, after giving effect to all other contingent and fixed liabilities of such
Guarantor and after giving effect to any collections from or payments made by or
on behalf of any other Guarantor in respect of the obligations of such other
Guarantor under its Guarantee of the Notes, result in the obligations of such
Guarantor under its Guarantee of the Notes not constituting a fraudulent
conveyance or fraudulent transfer under Federal or state law. See "Risk
Factors -- Guarantees."
RULE 144A INFORMATION REQUIREMENT. The Company will furnish to the holders
of the Notes and prospective purchasers of Notes designated by the holders of
Notes, upon their request, the information required to be delivered pursuant to
Rule 144A(d)(4) under the Securities Act for so long as is required for an offer
or sale of the Notes to qualify for an exemption under Rule 144A. The Company
will provide a copy of the Registration Rights Agreement to prospective
investors upon request.
REPORTS. Whether or not required by the rules and regulations of the
Commission, so long as any Notes are outstanding, the Company will furnish to
the Trustee, and deliver or cause to be delivered to the holders of Notes, (i)
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 for each a "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and, with respect
to the annual information only, a report thereon by the Company's independent
certified public accountants and (ii) all reports that would be required to be
filed with the Commission on Form 8-K if the Company were required to file such
reports. From and after the time a registration statement with respect to
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the Notes is declared effective by the Commission, the Company will file such
information with the Commission, provided that the Commission will accept such
filing.
EVENTS OF DEFAULT AND REMEDIES
Each of the following constitutes an Event of Default under the Indenture:
(i) default for 30 days in the payment when due of interest on the Notes, (ii)
default in payment of principal (or premium, if any) on the Notes when due at
maturity, redemption, by acceleration or otherwise, (iii) default in the
performance or breach of the provisions of "-- Merger, Consolidation or Sale of
Assets," (iv) failure by the Company or any Guarantor for 60 days after notice
to comply with certain other agreements in the Indenture or the Notes, (v)
default under (after giving effect to any applicable grace periods or any
extension of any maturity date) any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any Restricted Subsidiary (or
the payment of which is guaranteed by the Company or any Restricted Subsidiary),
whether such Indebtedness or guarantee now exists or is created after the date
of the Indenture, if (a) either (1) such default results from the failure to pay
principal on such Indebtedness or (2) as a result of such default the maturity
of such Indebtedness has been accelerated, and (b) the principal amount of such
Indebtedness, together with the principal amount of any other such Indebtedness
with respect to which such a payment default (after the expiration of any
applicable grace period or any extension of the maturity date) has occurred, or
the maturity of which has been so accelerated, exceeds $5.0 million in the
aggregate, (vi) failure by the Company or any Restricted Subsidiary to pay final
non-appealable judgments (other than any judgment as to which a reputable
insurance company has accepted full liability) aggregating in excess of $2.5
million which judgments are not discharged, bonded or stayed within 60 days
after their entry, (vii) written assertion by the Company or any of the
Guarantors, of the unenforceability of their obligations under the Indenture,
the Notes or the Guarantees, and (viii) certain events of bankruptcy or
insolvency with respect to the Company or any Material Subsidiary.
If any Event of Default occurs and is continuing, the Trustee or the
holders of at least 25% in principal amount of the then outstanding Notes may
declare by written notice to the Company and the Trustee all the Notes to be due
and payable immediately. Notwithstanding the foregoing, in the case of an Event
of Default arising from certain events of bankruptcy or insolvency, all
outstanding Notes will become due and payable without further action or notice.
Holders of the Notes may not enforce the Indenture or the Notes except as
provided in the Indenture. Subject to certain limitations, holders of a majority
in principal amount of the then outstanding Notes may direct the Trustee in its
exercise of any trust or power.
The holders of a majority in aggregate principal amount of the Notes then
outstanding, by written notice to the Company and the Trustee, may on behalf of
the holders of all of the Notes (i) waive any existing Default or Event of
Default and its consequences under the Indenture except a continuing Default or
Event of Default in the payment of interest on, or the principal of, the Notes
or a Default or an Event of Default with respect to any covenant or provision
which cannot be modified or amended without the consent of the holder of each
outstanding Note affected, and/or (ii) rescind an acceleration and its
consequences if the rescission would not conflict with any judgment or decree
and if all existing Events of Default (except nonpayment of principal or
interest that has become due solely because of the acceleration) have been cured
or waived.
The Company is required upon becoming aware of any Default or Event of
Default, to deliver to the Trustee a statement specifying such Default or Event
of Default and what action the Company is taking or proposes to take with
respect thereto.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator, stockholder or controlling
person of the Company or any Guarantor, as such, has any liability for any
obligations of the Company under the Notes, the Indenture or the Registration
Rights Agreement or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each holder of the Notes by accepting a Note
waives and releases all such liability. The waiver and release will be part of
the consideration for issuance of the Notes and the Guarantees. Such waiver may
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not be effective to waive liabilities under the Federal securities laws and it
is the view of the Commission that such a waiver is against public policy.
DEFEASANCE AND DISCHARGE OF THE INDENTURE AND THE NOTES
The Indenture provides that the Company will be discharged from any and all
obligations in respect of the Notes, other than the obligation to duly and
punctually pay the principal of, and premium, if any, and interest on, the Notes
in accordance with the terms of the Notes and the Indenture upon irrevocable
deposit with the Trustee, in trust, of money and/or U.S. government obligations
that will provide money in an amount sufficient in the opinion of a nationally
recognized accounting firm to pay the principal of and premium, if any, and each
installment of interest, if any, on the due dates thereof on the Notes. Such
trust may only be established if, among other things, (i) the Company has
delivered to the Trustee an opinion of independent counsel to the effect that
the holders of the Notes will not recognize income, gain or loss for Federal
income tax purposes as a result of such deposit and defeasance and will be
subject to Federal income tax on the same amount, in the same manner and at the
same times as would have been the case if such deposit and defeasance had not
occurred, (ii) no Default or Event of Default shall have occurred or be
continuing, and (iii) certain customary conditions precedent are satisfied.
The Company may satisfy and discharge its Obligations under the Indenture
to holders of the Notes by delivering to the Trustee for cancellation all
outstanding Notes or by depositing with the Trustee or the Paying Agent, if
applicable, after the Notes have become due and payable, cash sufficient to pay
at the stated maturity of all of the outstanding Notes and paying all other sums
payable under the Indenture by the Company. If the Company has so deposited such
cash, the Guarantors will be discharged from their Obligations under their
Guarantees of the Notes and the Indenture.
TRANSFER AND EXCHANGE
A holder may transfer or exchange Notes in accordance with the Indenture.
The Registrar and the Trustee may require a holder, among other things, to
furnish appropriate endorsements and transfer documents and the Company may
require a holder to pay any taxes and fees required by law or permitted by the
Indenture. The Company is not required to transfer or exchange any Note selected
for redemption. Also, the Company is not required to transfer or exchange any
Note for a period of 15 days before a selection of Notes to be redeemed.
The registered holder of a Note will be treated as the owner of it for all
purposes.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the two succeeding paragraphs, the Indenture and the
Notes may be amended or supplemented with the consent of the holders of at least
a majority in principal amount of the Notes then outstanding (including consents
obtained in connection with a tender offer or exchange offer for Notes) and any
existing Default or Event of Default or compliance with any provision of the
Indenture or the Notes may be waived with the consent of the holders of a
majority in principal amount of the then outstanding Notes (including consents
obtained in connection with a tender offer or exchange offer for Notes).
Without the consent of each holder affected, an amendment or waiver may not
(with respect to any Notes held by a non-consenting holder of Notes): (i) reduce
the principal amount of Notes whose holders must consent to an amendment,
supplement or waiver, (ii) reduce the principal of, or the premium on, or change
the fixed maturity of any Note, alter the provisions with respect to the
redemption of the Notes in a manner adverse to the holders of the Notes, or
alter the price at which repurchases of the Notes may be made pursuant to an
Excess Proceeds Offer or Change of Control Offer, (iii) reduce the rate of or
change the time for payment of interest on any Note, (iv) waive a Default or
Event of Default in the payment of principal of or premium, if any, or interest
on the Notes, (v) make any Note payable in money other than that stated in the
Notes, (vi) make any change in the provisions of the Indenture relating to
waivers of past Defaults or the rights of holders of Notes to receive payments
of principal of or interest on the Notes, (vii) waive a
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redemption payment with respect to any Note, (viii) adversely affect the
contractual ranking of the Notes or Guarantees of the Notes, or (ix) make any
change in the foregoing amendment and waiver provisions.
Notwithstanding the foregoing, without the consent of the holders of Notes,
the Company, the Guarantors and the Trustee may amend or supplement the
Indenture or the Notes to cure any ambiguity, defect or inconsistency, to
provide for uncertificated Notes in addition to or in place of certificated
Notes, to provide for the assumption of the Company's obligations to holders of
the Notes or any Guarantor's obligation under its Guarantee of the Notes in the
case of a merger or consolidation, to make any change that would provide any
additional rights or benefits to the holders of the Notes or that does not
adversely affect the legal rights under the Indenture of any such holder, to
release any Guarantee of the Notes permitted to be released under the terms of
the Indenture, or to comply with requirements of the Commission in order to
effect or maintain the qualification of the Indenture under the Trust Indenture
Act.
CONCERNING THE TRUSTEE
The Indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any such
claim as security or otherwise. The Trustee is permitted to engage in other
transactions; provided, that if the Trustee acquires any conflicting interest it
must eliminate such conflict within 90 days, apply to the Commission for
permission to continue or resign.
The holders of a majority in principal amount of the then outstanding Notes
have the right to direct the time, method and place of conducting any proceeding
for exercising any remedy available to the Trustee, subject to certain
exceptions. The Indenture provides that in case an Event of Default occurs (and
is not cured), the Trustee will be required, in the exercise of its power, to
use the degree of care of a prudent man in the conduct of his own affairs.
Subject to such provisions, the Trustee will be under no obligation to exercise
any of its rights or powers under the Indenture at the request of any holder of
Notes, unless such holder shall have offered to the Trustee security and
indemnity satisfactory to it against any loss, liability or expense.
ADDITIONAL INFORMATION
Anyone who receives this Prospectus may obtain a copy of the Indenture
without charge by writing to the Company at 172 Trade Street, Lexington,
Kentucky 40508; Attention: Joseph F. Lingg.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for a full definition of all such terms, as well as any
other capitalized terms used herein for which no definition is provided.
"Acquired Debt" means Indebtedness of a Person existing at the time such
Person is merged with or into the Company or a Restricted Subsidiary or becomes
a Restricted Subsidiary, other than Indebtedness incurred in connection with, or
in contemplation of, such Person merging with or into the Company or a
Restricted Subsidiary or becoming a Restricted Subsidiary; provided, that
Indebtedness of such Person that is redeemed, defeased, retired or otherwise
repaid at the time, or immediately upon consummation, of the transaction by
which such Person is merged with or into the Company or a Restricted Subsidiary
or becomes a Restricted Subsidiary shall not be Acquired Debt.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, will mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise. Notwithstanding the
foregoing, neither Initial Purchaser nor any of their respective Affiliates will
be deemed to be Affiliates of the Company.
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"Asset Sale" means any direct or indirect (i) sale, assignment, transfer,
lease, conveyance, or other disposition (including, without limitation, by way
of merger or consolidation) (collectively, a "transfer"), other than in the
ordinary course of business, of any assets of the Company or any Restricted
Subsidiary or (ii) issuance of any Capital Stock of any Restricted Subsidiary,
in each case to any Person (other than the Company or a Restricted Subsidiary
and other than directors' qualifying shares). For purposes of this definition,
(a) any series of transfers that are part of a common plan shall be deemed a
single Asset Sale and (b) the term "Asset Sale" shall not include any
disposition of all or substantially all of the assets of the Company that is
governed under and complies with the terms of the covenant described under
"-- Merger, Consolidation or Sale of Assets."
"Capital 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 the amount of such obligations at any
date shall be the capitalized amount of such obligations at such date,
determined in accordance with GAAP.
"Capital Stock" means (i) with respect to any Person that is a corporation,
any and all shares, interests, participations, rights or other equivalents
(however designated) of corporate stock, and (ii) with respect to any other
Person, any and all partnership or other equity interests of such Person.
"Cash Equivalent" means (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof), (ii) time deposits and
certificates of deposit and commercial paper issued by the parent corporation of
any domestic commercial bank of recognized standing having capital and surplus
in excess of $250,000,000 and commercial paper issued by others rated at least
A-2 or the equivalent thereof by Standard & Poor's Corporation or at least P-2
or the equivalent thereof by Moody's Investors Service, Inc. and in each case
maturing within one year after the date of acquisition and (iii) investments in
money market funds substantially all of whose assets comprise securities of the
types described in clauses (i) and (ii) above.
"CLARK Europe" means Clark Material Handling GmbH, a Wholly Owned
Subsidiary.
"Closing Date" means the date upon which the Notes are first issued.
"Consolidated EBITDA" means, with respect to any Person (the referent
Person) for any period, consolidated income (loss) from operations of such
Person and its subsidiaries for such period, determined in accordance with GAAP,
plus (to the extent such amounts are deducted in calculating such income (loss)
from operations of such Person for such period, and without duplication)
amortization, depreciation and other non-cash charges (including, without
limitation, amortization of goodwill, deferred financing fees and other
intangibles but excluding non-cash charges incurred after the date of the
Indenture that require an accrual of or a reserve for cash charges for any
future period); provided, that (i) the income from operations of any Person
(including, without limitation, any Unrestricted Subsidiary) that is not a
Wholly Owned Subsidiary or that is accounted for by the equity method of
accounting will be included only to the extent of the amount of dividends or
distributions paid during such period to the referent Person or a Wholly Owned
Subsidiary of the referent Person, and (ii) the income from operations of any
Restricted Subsidiary will not be included to the extent that declarations of
dividends or similar distributions by that Restricted Subsidiary are not at the
time permitted, directly or indirectly, by operation of the terms of its
organization documents or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to that Restricted
Subsidiary or its owners.
"Consolidated Interest Expense" means, with respect to any Person for any
period, the consolidated interest expense of such Person and its subsidiaries
for such period, whether paid or accrued (including amortization of original
issue discount, noncash interest payment, and the interest component of Capital
Lease Obligations), to the extent such expense was deducted in computing
Consolidated Net Income of such Person for such period.
"Consolidated Net Income" means, with respect to any Person (the referent
Person) for any period, the aggregate of the Net Income of such Person and its
subsidiaries for such period, determined on a consolidated
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basis in accordance with GAAP; provided, that (i) the Net Income of any Person
(including, without limitation, any Unrestricted Subsidiary) that is not a
Wholly Owned Subsidiary or that is accounted for by the equity method of
accounting will be included in calculating the referent Person's Consolidated
Net Income only to the extent of the amount of dividends or distributions paid
during such period to the referent Person or a Wholly Owned Subsidiary of the
referent Person, (ii) the Net Income of any Person acquired in a pooling of
interests transaction for any period prior to the date of such acquisition will
be excluded, and (iii) the Net Income of any Subsidiary will be excluded to the
extent that declarations of dividends or similar distributions by that
Subsidiary of such Net Income are not at the time permitted, directly or
indirectly, by operation of the terms of its organization documents or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Subsidiary or its owners.
"Consolidated Net Worth" means, with respect to any Person, the total
stockholders' equity of such Person determined on a consolidated basis in
accordance with GAAP, adjusted to exclude (to the extent included in calculating
such equity), (i) the amount of any such stockholders' equity attributable to
Disqualified Capital Stock of such Person and its consolidated subsidiaries, and
(ii) all upward revaluations and other write-ups in the book value of any asset
of such person or a consolidated subsidiary of such person subsequent to the
Closing Date, and (iii) all Investments in persons that are not consolidated
Restricted Subsidiaries.
"Default" means any event that is, or after notice or the passage of time
or both would be, an Event of Default.
"Disqualified Stock" means that portion of any Equity Interests that (i)
either by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable) is or upon the happening of an
event would be required to be redeemed or repurchased prior to the final stated
maturity of the Notes or is redeemable at the option of the holder thereof at
any time prior to such final stated maturity or (ii) is convertible into or
exchangeable at the option of the issuer thereof or any other Person for debt
securities.
"Equity Interests" means Capital Stock or warrants, options or other rights
to acquire Capital Stock (but excluding any debt security that is convertible
into, or exchangeable for, Capital Stock).
"Floor Plan Guaranty" means (a) the Guarantee by the Company or a
Restricted Subsidiary of Indebtedness incurred by a franchise dealer or other
purchaser of Inventory manufactured or sold by the Company or a Restricted
Subsidiary, the proceeds of which Indebtedness is used solely to pay the
purchase price of such Inventory and any related fees and expenses (including
finance fees); provided, that (i) to the extent commercially practicable, the
Indebtedness so guaranteed is secured by a perfected first priority lien on such
inventory in favor of the holder of such Indebtedness and (ii) if the Company or
such Restricted Subsidiary is required to make payment with respect to such
Guarantee, the Company or such Restricted Subsidiary will have the right to
receive either (A) title to such Inventory, (B) a valid assignment of a first
priority perfected lien in such Inventory or (C) the net proceeds of any resale
of such Inventory and (b) obligations to repurchase equipment sold by the
Company or its Restricted Subsidiaries from a dealer upon termination of such
dealer or from customers who lease such equipment to third parties when the
equipment comes off lease.
"Foreign Subsidiary" means a Restricted Subsidiary not organized under the
laws of the United States or any political subdivision thereof and the
operations of which are located entirely outside the United States.
"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 approved by a significant segment of the accounting profession,
and in the rules and regulations of the Commission, that are in effect on the
date of the Indenture.
"German Subsidiary Facilities" means one or more revolving credit
facilities of CLARK Europe, as the same may be amended, modified, renewed,
refunded, replaced or refinanced from time to time including (i) any related
notes, letters of credit, guarantees, collateral documents, instruments and
agreements executed in connection therewith, and in each case amended, modified,
renewed, refunded, replaced or refinanced from
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time to time, and (ii) any notes, guarantees, collateral documents, instruments
and agreements executed in connection with any such amendment, modification,
renewal, refunding, replacement or refinancing.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"Indebtedness" of any Person means (without duplication) (1) all
liabilities and obligations, contingent or otherwise, of such Person (a) in
respect of borrowed money (whether or not the recourse of the lender is to the
whole of the assets of such Person or only to a portion thereof), (b) evidenced
by bonds, debentures, notes or other similar instruments, (c) representing the
deferred purchase price of property or services (other than (i) non interest
bearing obligations and (ii) liabilities incurred in the ordinary course of
business which are not more than 90 days past due), (d) created or arising under
any conditional sale or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession
or sale of such property), (e) as lessee under capitalized leases, (f) under
bankers' acceptance and letter of credit facilities, (g) to purchase, redeem,
retire, defease or otherwise acquire for value any Disqualified Stock, or (h) in
respect of Hedging Obligations, (2) all liabilities and obligations of others of
the type described in clause (1), above, that are Guaranteed by such Person, and
(3) all liabilities and obligations of others of the type described in clause
(1), above, that are secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien on
property (including, without limitation, accounts and contract rights) owned by
such Person; provided, that the amount of such Indebtedness shall (to the extent
such Person has not assumed or become liable for the payment of such
Indebtedness in full) be the lesser of (x) the fair market value of such
property at the time of determination and (y) the amount of such Indebtedness.
The amount of Indebtedness of any Person at any date shall be the outstanding
balance at such date of all unconditional obligations as described above and the
maximum liability, upon the occurrence of the contingency giving rise to the
obligation, of any contingent obligations at such date.
"Interest Coverage Ratio" means, for any period, the ratio of (i)
Consolidated EBITDA of the Company for such period, to (ii) Consolidated
Interest Expense of the Company for such period. In calculating the Interest
Coverage Ratio for any period, pro forma effect shall be given to: (a) the
incurrence, assumption, guarantee, repayment, repurchase, redemption or
retirement by the Company or any of its Subsidiaries of any Indebtedness (other
than under the Revolving Credit Facility) subsequent to the commencement of the
period for which the Interest Coverage Ratio is being calculated but on or prior
to the date on which the event for which the calculation is being made, as if
the same had occurred at the beginning of the applicable period; and (b) the
occurrence of any Asset Sale during such period by reducing Consolidated EBITDA
for such period by an amount equal to the Consolidated EBITDA (if positive)
directly attributable to the assets sold and by reducing Consolidated Interest
Expense by an amount equal to the Consolidated Interest Expense directly
attributable to any Indebtedness assumed by third parties or repaid with the
proceeds of such Asset Sale, in each case as if the same had occurred at the
beginning of the applicable period. For purposes of making the computation
referred to above, acquisitions that have been made by the Company or any of its
Restricted Subsidiaries, including mergers and consolidations, subsequent to the
commencement of such period but on or prior to the date on which the event for
which the calculation is being made shall be given effect on a pro forma basis,
assuming that all such acquisitions, mergers and consolidations had occurred on
the first day of such period. Without limiting the foregoing, the financial
information of the Company with respect to any portion of such four fiscal
quarters that falls before the Closing Date shall be adjusted to give pro forma
effect to the issuance of the Notes and the application of the proceeds
therefrom as if they had occurred at the beginning of such four fiscal quarters.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of loans,
Guarantees, advances or capital contributions (excluding (i) commission, travel
and similar advances to officers and employees of such Person made in the
ordinary course of business and (ii) bona fide accounts receivable arising from
the sale of goods or services in the ordinary course of business consistent with
past practice), purchases or other acquisitions for consideration of
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Indebtedness, Equity Interests or other securities, and any other items that are
or would be classified as investments on a balance sheet prepared in accordance
with GAAP.
"Lien" means any mortgage, lien, pledge, charge, security interest or
encumbrance of any kind, whether or not filed, recorded or otherwise perfected
under applicable law (including any conditional sale or other title retention
agreement, any lease in the nature thereof, any option or other agreement to
sell or give a security interest in and any filing of or agreement to give any
financing statement under the Uniform Commercial Code (or equivalent statutes)
of any jurisdiction).
"Material Subsidiary" means any Subsidiary (a) that is a "Significant
Subsidiary" of the Company as defined in Rule 1-02 of Regulation S-X promulgated
by the Commission or (b) is otherwise material to the business of the Company.
"Net Income" means, with respect to any Person for any period, the net
income (loss) of such Person for such period, determined in accordance with
GAAP, excluding any gain or loss, together with any related provision for taxes
on such gain or loss, realized in connection with any Asset Sales and
dispositions pursuant to sale and leaseback transactions, and excluding any
extraordinary gain or loss, together with any related provision for taxes on
such gain or loss.
"Net Proceeds" means the aggregate proceeds received in the form of cash or
Cash Equivalents in respect of any Asset Sale (including payments in respect of
deferred payment obligations when received), net of (a) the reasonable and
customary direct out-of-pocket costs relating to such Asset Sale (including,
without limitation, legal, accounting and investment banking fees and sales
commissions), other than any such costs payable to an Affiliate of the Company,
(b) taxes actually payable directly as a result of such Asset Sale (after taking
into account any available tax credits or deductions and any tax sharing
arrangements), (c) amounts required to be applied to the permanent repayment of
Indebtedness in connection with such Asset Sale, and (d) appropriate amounts
provided as a reserve by the Company or any Restricted Subsidiary, in accordance
with GAAP, against any liabilities associated with such Asset Sale and retained
by the Company or such 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 arising from such Asset Sale.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other obligations and liabilities
of the Company or any of the Guarantors under the Indenture, the Notes or the
Guarantees of the Notes.
"Permitted Investments" means (a) Investments in the Company, any Guarantor
or any Wholly Owned Subsidiary (including without limitation, Guarantees of
Indebtedness of any such Person), (b) Investments in Cash Equivalents, (c)
Investments in a Person, if as a result of such Investment (i) such Person
becomes a Wholly Owned Subsidiary or (ii) such Person is merged, consolidated or
amalgamated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, the Company or a Wholly Owned Subsidiary, (d)
Floor Plan Guarantees permitted to be incurred in compliance with the covenant
described under the caption "Limitation on Incurrence of Indebtedness," (e)
Hedging Obligations, (f) 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 and (g)
Investments as a result of consideration received in connection with an Asset
Sale made in compliance with the covenant described under the caption
"Limitation on Asset Sales."
"Permitted Liens" means (i) Liens in favor of the Company and/or its
Restricted Subsidiaries other than with respect to intercompany Indebtedness,
(ii) Liens on property of a Person existing at the time such Person is acquired
by, merged into or consolidated with the Company or any Restricted Subsidiary,
provided, that such Liens were not created in contemplation of such acquisition
and do not extend to assets other than those subject to such Liens immediately
prior to such acquisition, (iii) Liens on property existing at the time of
acquisition thereof by the Company or any Restricted Subsidiary, provided, that
such Liens were not created in contemplation of such acquisition and do not
extend to assets other than those subject to such Liens immediately prior to
such acquisition, (iv) Liens incurred in the ordinary course of business in
respect of
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Hedging Obligations and Floor Plan Guarantees, (v) Liens to secure Indebtedness
for borrowed money of a Subsidiary in favor of the Company or a Wholly Owned
Subsidiary, (vi) Liens incurred in the ordinary course of business to secure the
performance of statutory obligations, surety or appeal bonds, performance bonds
or other obligations (exclusive of obligations constituting Indebtedness) of a
like nature, (vii) Liens existing or created on the date of the Indenture,
(viii) Liens for taxes, assessments or governmental charges or claims that are
not yet delinquent or that are being contested or remedied in good faith by
appropriate proceedings promptly instituted and diligently concluded, provided,
that any reserve or other appropriate provision as may be required in conformity
with GAAP has been made therefor, (ix) Liens arising by reason of any judgment,
decree or order of any court with respect to which the Company or any of its
Restricted Subsidiaries is then in good faith prosecuting an appeal or other
proceedings for review, the existence of which judgment, order or decree is not
an Event of Default under the Indenture, (x) encumbrances consisting of zoning
restrictions, survey exceptions, utility easements, licenses, rights of way,
easements of ingress or egress over property of the Company or any of its
Restricted Subsidiaries, rights or restrictions of record on the use of real
property, minor defects in title, landlord's and lessor's liens under leases on
property located on the premises rented, mechanics' liens, vendors' liens, and
similar encumbrances, rights or restrictions on personal or real property, in
each case not interfering in any material respect with the ordinary conduct of
the business of the Company or any of its Restricted Subsidiaries, (xi) Liens
incidental to the conduct of business or the ownership of properties incurred in
the ordinary course of business in connection with workers' compensation,
unemployment insurance and other types of social security, or to secure the
performance of tenders, bids, and government contracts and leases and subleases,
(xii) Liens for any interest or title of a lessor under any Capitalized Lease
Obligation permitted to be incurred under the Indenture; provided, that such
Liens do not extend to any property or asset that is not leased property subject
to such Capitalized Lease Obligation, (xiii) any extension, renewal, or
replacement (or successive extensions, renewals or replacements), in whole or in
part, of Liens described in clauses (i) through (xii) above and (xiv) Liens in
addition to the foregoing, which in the aggregate, are secured by assets with a
fair market value not in excess of $100,000 at any time.
"Permitted Transactions" means bona fide purchases and sales of Inventory
or of machining, assembly, testing and fabrication services, in any such case
made in the ordinary course of business; provided, that such transactions are
conducted in good faith and on terms that are no less favorable to the Company
or the relevant Restricted Subsidiary than those that would have been obtained
in a comparable transaction with an unrelated Person.
"Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization, government
or any agency or political subdivision thereof, or any other entity.
"Public Equity Offering" means a bona fide underwritten public offering of
Qualified Capital Stock of Holdings or the Company, pursuant to a registration
statement filed with and declared effective by the Commission in accordance with
the Securities Act; provided, that in the event of a Public Equity Offering by
Holdings, Holdings contributes to the capital of the Company the portion of the
net cash proceeds of such Public Equity Offering necessary to pay the aggregate
redemption price, plus accrued and unpaid interest, if any, to the redemption
date of the Notes to be redeemed pursuant to the second paragraph under the
caption "Redemption."
"Purchase Money Liens" means Liens to secure or securing Purchase Money
Obligations permitted to be incurred under the Indenture.
"Purchase Money Obligations" means Indebtedness representing, or incurred
to finance, the cost (i) of acquiring or improving any assets and (ii) of
construction or build-out of manufacturing, distribution or administrative
facilities (including Purchase Money Obligations of any other Person at the time
such other Person is merged with or into or is otherwise acquired by the
Company), provided, that (a) the principal amount of such Indebtedness does not
exceed 100% of such cost, including construction charges, (b) any Lien securing
such Indebtedness does not extend to or cover any other asset or property other
than the asset or property being so acquired or improved and (c) such
Indebtedness is incurred, and any Liens with respect thereto are granted, within
180 days of the acquisition or improvement of such property or asset.
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"Qualified Capital Stock" means, with respect to any Person, Capital Stock
of such Person other than Disqualified Capital Stock.
"Restricted Investment" means any Investment other than a Permitted
Investment. The aggregate amount of each Investment constituting a Restricted
Payment since the date of the Indenture shall be reduced by the aggregate
after-tax amount of all payments made to the Company and its Restricted
Subsidiaries with respect to such Investments; provided, that (a) the maximum
amount of such payments so applied shall not exceed the original amount of such
Investment and (b) such payments shall be excluded from the calculations
contemplated by clauses (c)(1) through (4) under the caption "Limitation on
Restricted Payments."
"Restricted Subsidiary" means a Subsidiary other than an Unrestricted
Subsidiary.
"Revolving Credit Facility" means the Revolving Credit Facility, entered
into on the Closing Date between the Company and the lenders named therein as
the same may be amended, modified, renewed, refunded, replaced or refinanced
from time to time, including (i) any related notes, letters of credit,
guarantees, collateral documents, instruments and agreements executed in
connection therewith, and in each case as amended, modified, renewed, refunded,
replaced or refinanced from time to time, and (ii) any notes, guarantees,
collateral documents, instruments and agreements executed in connection with
such amendment, modification, renewal, refunding, replacement or refinancing.
"subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Voting Stock thereof is at the time owned or controlled,
directly or indirectly, by such Person or one or more of the other subsidiaries
of that Person or a combination thereof and (ii) any partnership in which such
Person or any of its subsidiaries is a general partner.
"Subsidiary" means any subsidiary of the Company.
"Unrestricted Subsidiary" means any Subsidiary that has been designated by
the Company (by written notice to the Trustee as provided below) as an
Unrestricted Subsidiary; provided, that a Subsidiary may not be designated as an
"Unrestricted Subsidiary" unless (a) such Subsidiary does not own any Capital
Stock of, or own or hold any Lien on any property of, the Company or any
Restricted Subsidiary (other than such Subsidiary), (b) neither immediately
prior thereto nor after giving pro forma effect to such designation, would there
exist a Default or Event of Default, (c) immediately after giving effect to such
designation on a pro forma basis, the Company could incur at least $1.00 of
Indebtedness pursuant to the Interest Coverage Ratio test set forth in the
covenant described under "-- Limitation on Incurrence of Indebtedness" and (d)
the creditors of such Subsidiary have no direct or indirect recourse (including,
without limitation, recourse with respect to the payment of principal or
interest on Indebtedness of such Subsidiary) to the assets of the Company or of
a Restricted Subsidiary (other than such Subsidiary). The Board of Directors of
the Company may designate any Unrestricted Subsidiary to be a Restricted
Subsidiary only if (i) no Default or Event of Default is existing or will occur
as a consequence thereof and (ii) immediately after giving effect to such
designation, on a pro forma basis, the Company could incur at least $1.00 of
Indebtedness pursuant to the Interest Coverage Ratio test set forth in the
covenant described under "-- Limitation on Incurrence of Indebtedness." Each
such designation shall be evidenced by filing with the Trustee a certified copy
of the Board Resolution giving effect to such designation and an Officers'
Certificate certifying that such designation complied with the foregoing
conditions. The Company shall be deemed to make an Investment in each Subsidiary
designated as an "Unrestricted Subsidiary" immediately following such
designation in an amount equal to the Investment in such Subsidiary and its
subsidiaries immediately prior to such designation; provided, that if such
Subsidiary is subsequently redesignated as a Restricted Subsidiary, the amount
of such Investment shall be deemed to be reduced (but not below zero) by the
fair market value of the net consolidated assets of such Subsidiary on the date
of such redesignation.
"Voting Stock" means, with respect to any Person, (i) one or more classes
of the Capital Stock of such Person having general voting power to elect at
least a majority of the board of directors, managers or trustees of such Person
(irrespective of whether or not at the time Capital Stock of any other class or
classes have or might have voting power by reason of the happening of any
contingency) and (ii) any Capital Stock of such
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Person convertible or exchangeable without restriction at the option of the
holder thereof into Capital Stock of such Person described in clause (i) above.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years (rounded to the nearest one-twelfth) obtained
by dividing (i) the then outstanding principal amount of such Indebtedness into
(ii) the total of the products obtained by multiplying (x) the amount of each
then remaining installment, sinking fund, serial maturity or other required
payments of principal, including payment at final maturity, in respect thereof,
by (y) the number of years (calculated to the nearest one-twelfth) that will
elapse between such date and the making of such payment.
"Wholly Owned Subsidiary" means a Restricted Subsidiary all the Capital
Stock of which (other than directors' qualifying shares) is owned by the Company
or one or more Wholly Owned Subsidiaries.
BOOK-ENTRY, DELIVERY AND FORM
Except as set forth below, the New Notes will initially be issued in the
form of one or more registered notes in global form without coupons (each, a
"Global Note"). Upon issuance, each Global Note will be deposited with, or on
behalf of, the Depository Trust Company (the "Depository") and registered in the
name of Cede & Co., as nominee of the Depository.
If a holder tendering Existing Notes so requests, such holder's New Notes
will be issued as described below under "Certificated Securities" in registered
form without coupons (the "Certificated Securities").
The Depository has advised the Company that it is (i) a limited purpose
trust company organized under the laws of the State of New York, (ii) a member
of the Federal Reserve System, (iii) a "clearing corporation" within the meaning
of the Uniform Commercial Code, as amended, and (iv) a "Clearing Agency"
registered pursuant to Section 17A of the Exchange Act. The Depository was
created to hold securities for its participants (collectively, the
"Participants") and facilitates the clearance and settlement of securities
transactions between Participants through electronic book-entry changes to the
accounts of its Participants, thereby eliminating the need for physical transfer
and delivery of certificates. The Depository's Participants include securities
brokers and dealers (including the Initial Purchaser), banks and trust
companies, clearing corporations and certain other organizations. Access to the
Depository's system is also available to other entities such as banks, brokers,
dealers and trust companies (collectively, the "Indirect Participants") that
clear through or maintain a custodial relationship with a Participant, either
directly or indirectly.
The Company expects that pursuant to procedures established by the
Depository (i) upon deposit of the Global Notes, the Depository will credit the
accounts of Participants who elect to exchange Existing Notes with an interest
in the Global Note and (ii) ownership of the New Notes will be shown on, and the
transfer of ownership thereof will be effected only through, records maintained
by the Depository (with respect to the interest of Participants), the
Participants and the Indirect Participants. The laws of some states require that
certain persons take physical delivery in definitive form of securities that
they own and that security interests in negotiable instruments can only be
perfected by delivery of certificates representing the instruments.
So long as the Depository or its nominee is the registered owner of a
Global Note, the Depository or such nominee, as the case may be, will be
considered the sole owner or holder of the New Notes represented by the Global
Note for all purposes under the Indenture. Except as provided below, owners of
beneficial interests in a Global Note will not be entitled to have New Notes
represented by such Global Note registered in their names, will not receive or
be entitled to receive physical delivery of Certificated Securities, and will
not be considered the owners or holders thereof under the Indenture for any
purpose, including with respect to the giving of any directions, instruction or
approval to the Trustee thereunder. As a result, the ability of a person having
a beneficial interest in New Notes represented by a Global Note to pledge such
interest to persons or entities that do not participate in the Depository's
system, or to otherwise take action with respect to such interest, may be
affected by the lack of a physical certificate evidencing such interest.
The Company understands that under existing industry practice, in the event
the Company requests any action of holders or an owner of a beneficial interest
in a Global Note desires to take any action that the
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Depository, as the holder of such Global Note, is entitled to take, the
Depository would authorize the Participants to take such action and the
Participant would authorize persons owning through such Participants to take
such action or would otherwise act upon the instruction of such persons. Neither
the Company nor the Trustee will have any responsibility or liability for any
aspect of the records relating to or payments made on account of New Notes by
the Depository, or for maintaining, supervising or reviewing any records of the
Depository relating to such New Notes.
Payments with respect to the principal of, premium, if any, and interest on
any New Notes represented by a Global Note registered in the name of the
Depository or its nominee on the applicable record date will be payable by the
Trustee to or at the direction of the Depository or its nominee in its capacity
as the registered holder of the Global Note representing such New Notes under
the Indenture. Under the terms of the Indenture, the Company and the Trustee may
treat the persons in whose names the New Notes, including the Global Notes, are
registered as the owners thereof for the purpose of receiving such payment and
for any and all other purposes whatsoever. Consequently, neither the Company nor
the Trustee has or will have any responsibility or liability for the payment of
such amounts to beneficial owners of New Notes (including principal, premium, if
any, and interest), or to immediately credit the accounts of the relevant
Participants with such payment, in amounts proportionate to their respective
holdings in principal amount of beneficial interest in the Global Note as shown
on the records of the Depository. Payments by the Participants and the Indirect
Participants to the beneficial owners of New Notes will be governed by standing
instructions and customary practice and will be the responsibility of the
Participants or the Indirect Participants.
CERTIFICATED SECURITIES
If (i) the Company notifies the Trustee in writing that the Depository is
no longer willing or able to act as a depository and the Company is unable to
locate a qualified successor within 90 days or (ii) the Company, at its option,
notifies the Trustee in writing that it elects to cause the issuance of Notes in
definitive form under the Indenture, then, upon surrender by the Depository of
its Global Notes, Certificated Securities will be issued to each person that the
Depository identifies as the beneficial owner of the New Notes represented by
the Global Note. In addition, any person having a beneficial interest in a
Global Note or any holder of Existing Notes whose Existing Notes have been
accepted for exchange may, upon request to the Trustee or the Exchange Agent, as
the case may be, exchange such beneficial interest or Existing Notes for
Certificated Securities. Upon any such issuance, the Trustee is required to
register such Certificated Securities in the name of such person or persons (or
the nominee of any thereof), and cause the same to be delivered thereto.
Neither the Company nor the Trustee shall be liable for any delay by the
Depository or any Participant or Indirect Participant in identifying the
beneficial owners of the related New Notes and each such person may conclusively
rely on, and shall be protected in relying on, instructions from the Depository
for all purposes (including with respect to the registration and delivery, and
the respective principal amounts, of the New Notes to be issued).
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following discussion summarizes the material United States federal
income tax consequences of the Exchange Offer to a holder of Existing Notes that
is an individual citizen or resident of the United States or a United States
corporation that purchased the Existing Notes pursuant to their original issue
(a "U.S. Holder"). It is based on the Internal Revenue Code of 1986, as amended
to the date hereof (the "Code"), existing and proposed Treasury regulations, and
judicial and administrative determinations, all of which are subject to change
at any time, possibly on a retroactive basis. The following relates only to the
Existing Notes, and the New Notes received therefor, that are held as "capital
assets" within the meaning of Section 1221 of the Code by U.S. Holders. It does
not discuss state, local, or foreign tax consequences, nor does it discuss tax
consequences to subsequent purchasers (persons who did not purchase the Existing
Notes pursuant to their original issue), or to categories of holders that are
subject to special rules, such as foreign persons, tax-exempt organizations,
insurance companies, banks, and dealers in stocks and securities. Tax
consequences may vary
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depending on the particular status of an investor. No rulings will be sought
from the Internal Revenue Service with respect to the federal income tax
consequences of the Exchange Offer.
THIS SECTION DOES NOT PURPORT TO DEAL WITH ALL ASPECTS OF FEDERAL INCOME
TAXATION THAT MAY BE RELEVANT TO AN INVESTOR'S DECISION TO EXCHANGE EXISTING
NOTES FOR NEW NOTES. EACH INVESTOR SHOULD CONSULT WITH ITS OWN TAX ADVISOR
CONCERNING THE APPLICATION OF THE FEDERAL INCOME TAX LAWS AND OTHER TAX LAWS TO
ITS PARTICULAR SITUATION BEFORE DETERMINING WHETHER TO EXCHANGE EXISTING NOTES
FOR NEW NOTES.
THE EXCHANGE OFFER
The exchange of Existing Notes pursuant to the Exchange Offer should be
treated as a continuation of the corresponding Existing Notes because the terms
of the New Notes are not materially different from the terms of the Existing
Notes. Accordingly, such exchange should not constitute a taxable event to U.S.
Holders and, therefore, (i) no gain or loss should be realized by U.S. Holders
upon receipt of a New Note, (ii) the holding period of the New Note should
include the holding period of the Old Note exchanged therefor and (iii) the
adjusted tax basis of the New Note should be the same as the adjusted tax basis
of the Old Note exchanged therefor immediately before the exchange.
STATED INTEREST
Stated interest on a Note will be taxable to a U.S. Holder as ordinary
interest income at the time that such interest accrues or is received, in
accordance with the U.S. Holder's regular method of accounting for federal
income tax purposes. The Notes are not considered to have been issued with
original issue discount for federal income tax purposes.
SALE, EXCHANGE OR RETIREMENT OF THE NOTES
A U.S. Holder's tax basis in a Note generally will be its cost. A U.S.
Holder generally will recognize gain or loss on the sale, exchange or retirement
of a Note in an amount equal to the difference between the amount realized on
the sale, exchange or retirement and the tax basis of the Note. Gain or loss
recognized on the sale, exchange or retirement of a Note (excluding amounts
received in respect of accrued interest, which will be taxable as ordinary
interest income) generally will be capital gain or loss and will be long-term
capital gain or loss if the Note was held for more than one year.
BACKUP WITHHOLDING
Under certain circumstances, a U.S. Holder of a Note may be subject to
"backup withholding" at a 31% rate with respect to payments of interest thereon
or the gross proceeds from the disposition thereof. This withholding generally
applies if the U.S. Holder fails to furnish his or her social security number or
other taxpayer identification number in the specified manner and in certain
other circumstances. Any amount withheld from a payment to a U.S. Holder under
the backup withholding rules is allowable as a credit against such U.S. Holder's
federal income tax liability, provided that the required information is
furnished to the IRS. Corporations and certain other entities described in the
Code and Treasury regulations are exempt from backup withholding if their exempt
status is properly established.
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New 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 New Notes received in exchange for Existing Notes
where such Existing Notes were acquired as a result of market-making activities
or other trading activities. The Company has agreed that, for a period of 180
days after the Effective Date, it will make this Prospectus, as amended or
supplemented,
63
<PAGE> 66
available to any broker-dealer for use in connection with any such resale. In
addition, until , 1997 (90 days after the date of this Prospectus), all
dealers effecting transactions in the New Notes may be required to deliver a
prospectus.
The Company will not receive any proceeds from any sale of New Notes by
broker-dealers. New Notes received by broker-dealers for their own account
pursuant to 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 New Notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market price or negotiated prices. Any such 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 such
broker-dealer or the purchasers of any such New Notes. Any broker-dealer that
resells New Notes that were received by it for its own account pursuant to the
Exchange Offer and any broker or dealer that participates in a distribution of
such New Notes may be deemed to be an "underwriter" within the meaning of the
Securities Act and any profit on any such resale of New Notes and any
commissions or concessions received by any such 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.
For a period of 180 days after the Expiration Date, the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay all expenses
incident to the Exchange Offer (including the expenses of one counsel for the
holders of the Existing Notes) other than commissions or concessions of any
brokers or dealers and will indemnify the holders of the Existing Notes
(including any broker-dealers) against certain liabilities, including
liabilities under the Securities Act.
LEGAL MATTERS
Certain legal matters with respect to the New Notes offered hereby will be
passed upon for the Company by Dechert Price & Rhoads, New York, New York.
EXPERTS
The combined financial statements of the Company as of December 31, 1995
and 1994 and for each of the three years in the period ended December 31, 1995
included in this Prospectus and Registration Statement have been so included in
reliance on the report of Price Waterhouse LLP, independent accountants, given
on the authority of said firm as experts in accounting and auditing.
64
<PAGE> 67
CLARK MATERIAL HANDLING
INDEX TO COMBINED FINANCIAL STATEMENTS AND INFORMATION
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Accountants.................................................... F-2
Audited Combined Balance Sheet as of December 31, 1994 and 1995...................... F-3
Audited Combined Statement of Operations for the years ended December 31, 1993, 1994
and 1995........................................................................... F-4
Audited Combined Statement of Stockholder's Deficit as of December 31, 1992, 1993,
1994 and 1995...................................................................... F-5
Audited Combined Statement of Cash Flows for the years ended December 31, 1993, 1994
and 1995........................................................................... F-6
Notes to Audited Combined Financial Statements....................................... F-7
Unaudited Combined Balance Sheet as of September 30, 1996............................ F-19
Unaudited Combined Statement of Operations for the nine months ended September 30,
1995 and 1996...................................................................... F-20
Unaudited Combined Statement of Cash Flows for the nine months ended September 30,
1995 and 1996...................................................................... F-21
Notes to Unaudited Combined Financial Statements..................................... F-22
Unaudited Pro Forma Combined Financial Information................................... P-1
Unaudited Pro Forma Combined Balance Sheet as of September 30, 1996.................. P-2
Unaudited Pro Forma Combined Statement of Operations for the year ended December 31,
1995............................................................................... P-4
Unaudited Pro Forma Combined Statement of Operations for the nine months ended
September 30, 1996................................................................. P-5
Unaudited Pro Forma Combined Statement of Operations for the twelve months ended
September 30, 1996................................................................. P-6
</TABLE>
F-1
<PAGE> 68
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders of Terex Corporation
In our opinion, the accompanying combined balance sheet and the related
combined statements of operations, of stockholder's deficit and of cash flows
present fairly, in all material respects, the combined financial position of
Terex Corporation's material handling business ("Clark Material Handling") at
December 31, 1995 and 1994, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 1995, in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
PRICE WATERHOUSE LLP
Stamford, Connecticut
March 22, 1996
F-2
<PAGE> 69
CLARK MATERIAL HANDLING
COMBINED BALANCE SHEET
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1994 1995
-------- --------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents............................................ $ 1,514 $ 819
Cash securing letters of credit...................................... 220 736
Trade receivables (less allowance of $3,600 in 1994 and $2,867 in
1995)............................................................. 39,193 39,433
Net inventories...................................................... 65,779 68,464
Other current assets................................................. 2,888 4,660
-------- --------
Total Current Assets......................................... 109,594 114,112
LONG-TERM ASSETS
Property, plant and equipment -- net................................. 60,697 58,194
Goodwill -- net...................................................... 3,408 3,138
Other assets......................................................... 20,963 17,265
-------- --------
TOTAL ASSETS........................................................... $194,662 $192,709
======== ========
CURRENT LIABILITIES
Notes payable........................................................ $ 2,078 $ 879
Current portion of capital lease obligations......................... 1,256 2,414
Trade accounts payable............................................... 63,619 61,535
Accrued compensation and benefits.................................... 4,658 4,585
Accrued warranties and product liability............................. 17,886 19,012
Other current liabilities............................................ 12,729 9,834
-------- --------
Total Current Liabilities.................................... 102,226 98,259
NON CURRENT LIABILITIES
Capital lease obligations, less current portion...................... 5,706 4,140
Allocated long-term debt............................................. 51,754 51,220
Accrued warranties and product liability............................. 29,624 31,661
Accrued pension...................................................... 12,805 13,070
Other non current liabilities........................................ 4,110 3,435
COMMITMENTS AND CONTINGENCIES
DUE TO PARENT COMPANY.................................................. 68,459 87,646
STOCKHOLDER'S DEFICIT
Accumulated deficit.................................................. (76,107) (94,873)
Cumulative translation adjustment.................................... (3,915) (1,849)
-------- --------
TOTAL LIABILITIES AND STOCKHOLDER'S DEFICIT............................ $194,662 $192,709
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE> 70
CLARK MATERIAL HANDLING
COMBINED STATEMENT OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1993 1994 1995
-------- -------- --------
<S> <C> <C> <C>
NET SALES.................................................. $395,625 $472,652 $528,759
COST OF GOODS SOLD......................................... 373,313 429,744 484,035
Gross Profit............................................. 22,312 42,908 44,724
ENGINEERING, SELLING AND ADMINISTRATIVE EXPENSES........... 46,505 41,702 31,183
PARENT COMPANY MANAGEMENT FEES............................. 4,380 8,453 6,996
SEVERANCE AND EXIT CHARGES................................. -- 6,736 3,478
-------- -------- --------
Income (Loss) from operations............................ (28,573) (13,983) 3,067
OTHER INCOME (EXPENSE):
Interest income.......................................... 298 653 602
Allocated interest expense from Parent Company........... (16,756) (14,361) (16,145)
Interest expense -- others............................... (1,169) (2,221) (790)
Amortization of allocated debt issuance costs............ (1,004) (822) (530)
Gain on sale of Drexel business.......................... -- 4,742 --
Property impairment charge............................... -- -- (2,500)
Gain (Loss) on sale of property, plant and equipment..... 1,992 (16) (183)
Other income (expense) -- net............................ 451 1,539 (792)
-------- -------- --------
LOSS BEFORE INCOME TAXES AND EXTRAORDINARY ITEMS......... (44,761) (24,469) (17,271)
PROVISION FOR INCOME TAXES................................. (158) (786) (148)
-------- -------- --------
LOSS BEFORE EXTRAORDINARY ITEMS.......................... (44,919) (25,255) (17,419)
EXTRAORDINARY LOSS ON RETIREMENT OF ALLOCATED DEBT......... (297) (565) (1,347)
-------- -------- --------
NET LOSS................................................. $(45,216) $(25,820) $(18,766)
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE> 71
CLARK MATERIAL HANDLING
COMBINED STATEMENT OF STOCKHOLDER'S DEFICIT
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOREIGN
CURRENCY
ACCUMULATED TRANSLATION
DEFICIT ADJUSTMENTS
----------- -----------
<S> <C> <C>
Balance at December 31, 1992........................................ $ (5,071) $(3,496)
Net loss.......................................................... (45,216) --
Translation adjustment............................................ -- (5,150)
-------- -------
Balance at December 31, 1993........................................ (50,287) (8,646)
Net loss.......................................................... (25,820) --
Translation adjustment............................................ -- 4,731
-------- -------
Balance at December 31, 1994........................................ (76,107) (3,915)
Net loss.......................................................... (18,766) --
Translation adjustment............................................ -- 2,066
-------- -------
Balance at December 31, 1995........................................ $ (94,873) $(1,849)
======== =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE> 72
CLARK MATERIAL HANDLING
COMBINED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1993 1994 1995
-------- -------- --------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net Loss................................................. $(45,216) $(25,820) $(18,766)
Adjustments to reconcile net loss to cash provided by
(used in) operating activities:
Depreciation.......................................... 8,786 10,066 11,534
Amortization.......................................... 2,097 1,382 1,310
Extraordinary loss on retirement of allocated debt.... 297 565 1,347
Gain on sale of Drexel business....................... -- (4,742) --
(Gain) loss on sale of property, plant and
equipment........................................... (1,992) 16 183
Property impairment charge............................ -- -- 2,500
Other, net............................................ 1,071 -- 328
Changes in operating assets and liabilities:
Restricted cash..................................... 85 251 (516)
Trade receivables................................... 5,310 (6,210) (240)
Net inventories..................................... 16,497 2,672 (2,685)
Trade accounts payable.............................. (13,526) 13,027 (2,084)
Accrued compensation and benefits................... (2,873) 559 (73)
Accrued warranties and product liability............ (6,212) 1,344 1,126
Due to Parent Company................................. 58,915 28,262 19,187
Other, net............................................ (19,729) (12,377) (5,973)
-------- -------- --------
Net cash provided by (used in) operating
activities..................................... 3,510 8,995 7,178
-------- -------- --------
INVESTING ACTIVITIES
Capital expenditures..................................... (8,143) (6,570) (5,290)
Proceeds from sale of assets............................. 9,992 2,984 534
Proceeds from sale of Drexel business.................... -- 10,289 --
Proceeds from sale-leaseback of Saarn property........... -- 9,981 --
-------- -------- --------
Net cash provided by (used in) investing activities... 1,849 16,684 (4,756)
-------- -------- --------
FINANCING ACTIVITIES
Principal repayments of long-term debt................... -- (6,090) --
Repayment of allocated debt.............................. (9,992) (23,254) (51,754)
Proceeds from refinancing of allocated debt.............. -- -- 51,220
Other, net............................................... 2,778 135 (1,607)
-------- -------- --------
Net cash provided by (used in) financing activities... (7,214) (29,209) (2,141)
-------- -------- --------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH
EQUIVALENTS.............................................. 254 748 (976)
NET DECREASE IN CASH AND CASH EQUIVALENTS.................. (1,601) (2,782) (695)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD........... 5,897 4,296 1,514
-------- -------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD................. $ 4,296 $ 1,514 $ 819
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE> 73
CLARK MATERIAL HANDLING
NOTES TO COMBINED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
NOTE A -- REPORTING ENTITY AND BASIS OF PRESENTATION
CMH Acquisition Corp. and CMH Acquisition International Corp. (collectively
"Clark Material Handling," "CMH" or the "Company"), incorporated in the state of
Delaware, are wholly-owned subsidiaries of Terex Corporation ("Terex" or the
"Parent Company"). Terex, through CMH, acquired the Material Handling
Operations, comprised of Clark Material Handling Company ("CMHC") and certain
affiliated companies, from Clark Equipment Company on July 31, 1992 (the
"Acquisition"). The purchase price for all the businesses acquired was $91,090.
The assets acquired and the liabilities assumed were valued at their estimated
fair market values at the time of the Acquisition. (See Note
C -- "Acquisition.") As a result, the acquisition debt and goodwill associated
with the Acquisition have been "pushed down" to the Company's financial
statements.
Parent Company Allocations. The combined financial statements include
allocations of Parent Company Acquisition debt and related interest expense.
Management Parent Company Corporate Charges, which include corporate overhead
costs (including legal, treasury and other shared services), have been allocated
to the Company based generally on the percentage of Company revenues to Terex
consolidated revenues. Interest has been charged on the corporate charges
allocated and the Due to Parent Company balance at a rate of 13% compounded
monthly.
The accompanying combined financial statements reflect the financial
position, results of operations and cash flows of CMH.
CMH is engaged in the design, manufacture, marketing and worldwide
distribution and support of internal combustion and electric lift trucks,
electric walkies and related components and replacement parts.
NOTE B -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Combination. The combined financial statements include the
accounts of CMH and their subsidiaries, including CMHC, Clark Material Handling
GmbH and Clark Forklift Korea. All material intercompany balances, transactions
and profits have been eliminated.
Cash and Cash Equivalents. Cash equivalents consist of highly liquid
investments with original maturities of three months or less. The carrying
amount of cash and cash equivalents approximates their fair value.
Cash Securing Letters of Credit. The Company has certain cash and cash
equivalents that are not fully available for use in its operations. Certain
international operations collateralize letters of credit and performance bonds
with cash deposits.
Inventories. Inventories are stated at the lower of cost or market value.
Cost is determined using the last-in, first-out ("LIFO") method for U.S.
inventories and by the first-in, first-out ("FIFO") method for inventories of
international subsidiaries. Approximately 74% and 68% of combined inventories at
December 31, 1994 and 1995, respectively, are accounted for under the LIFO
method.
Goodwill. Goodwill, representing the difference between the total purchase
price and the fair value of assets (tangible and intangible) and liabilities at
the date of acquisition, is being amortized on a straight-line basis over
fifteen years. Accumulated amortization is $601 and $871 at December 31, 1994
and 1995, respectively. It is the Company's policy to periodically evaluate the
carrying value of goodwill, and to recognize impairments when the estimated
related future net operating cash flows is less than its carrying value. The
amount of any impairment then recognized would be calculated as the difference
between estimated future discounted cash flows and the carrying value of the
goodwill.
F-7
<PAGE> 74
CLARK MATERIAL HANDLING
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
Allocated Debt Issuance Costs. Debt issuance costs incurred in securing
the Parent Company's financing arrangements are capitalized and amortized over
the term of the associated debt. Allocated debt issuance costs related to
Acquisition debt are allocated to the Company. Allocated capitalized debt
issuance costs related to allocated debt that is retired early are charged to
expense at the time of retirement. Unamortized allocated debt issuance costs are
included in Other Assets and totaled $1,013 and $2,898 at December 31, 1994 and
1995, respectively. During 1993, 1994 and 1995, the Company amortized $1,004,
$822 and $530, respectively, of allocated capitalized debt issuance costs; in
addition, $297, $565 and $1,347 of such costs were charged to extraordinary loss
on early retirement of allocated debt in 1993, 1994 and 1995, respectively.
Property, Plant and Equipment. Property, plant and equipment are stated at
cost. Expenditures for major renewals and improvements are capitalized while
expenditures for maintenance and repairs not expected to extend the life of an
asset beyond its normal useful life are charged to expense when incurred. Plant
and equipment are depreciated over the estimated useful lives, not exceeding
forty years, of the assets under the straight-line method of depreciation for
financial reporting purposes and both straight-line and other methods for tax
purposes.
Revenue Recognition. Revenue and costs are generally recorded when
products are shipped and invoiced to customers. Certain new units may be
invoiced prior to the time customers take physical possession. Revenue is
recognized in such cases only when the customer has a fixed commitment to
purchase the units, the units have been completed, tested and made available to
the customer for pickup or delivery, and the customer has requested that the
Company hold the units for pickup or delivery at a time specified by the
customer in the sales documents. In such cases, the units are invoiced under the
Company's customary billing terms, title to the units and risks of ownership
pass to the customer upon invoicing, the units are segregated from the Company's
inventory and identified as belonging to the customer and the Company has no
further obligations under the order.
Accrued Warranties and Product Liability. The Company records accruals for
potential warranty and product liability claims based on the Company's claim
experience. Warranty costs are accrued at the time revenue is recognized. The
Company provides self-insurance accruals for estimated product liability
experience on known claims and for claims anticipated to have been incurred
which have not yet been reported. The Company's product liability accruals are
presented on a gross settlement basis. Product liability payments, including
expenses, are estimated to average $7.5 million dollars per year.
Foreign Currency Translation. Assets and liabilities of the Company's
international operations are translated at year-end exchange rates. Income and
expenses are translated at average exchange rates prevailing during the year.
For operations whose functional currency is the local currency, translation
adjustments are accumulated in the Cumulative Translation Adjustment component
of Stockholder's Deficit. Gains or losses resulting from foreign currency
transactions are included in Other income (expense) -- net.
Environmental Policies. Environmental expenditures that relate to current
operations are either expensed or capitalized depending on the nature of the
expenditure. Expenditures relating to conditions caused by past operations that
do not contribute to current or future revenue generation are expensed.
Liabilities are recorded when environmental assessments and/or remedial actions
are probable, and the costs can be reasonably estimated. Such amounts were not
material at December 31, 1994 and 1995.
Income Taxes. Income taxes are provided using the asset and liability
method. The Company's U.S. operations are a part of a group that files a
consolidated income tax return. The method used to allocate income taxes to
members of the group is one in which current and deferred income taxes are
calculated on a separate return basis as if the Company had not been included in
a consolidated income tax return with its parent. Income taxes for international
operations are based upon the individual subsidiary's tax return.
F-8
<PAGE> 75
CLARK MATERIAL HANDLING
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
Use of Estimates. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
NOTE C -- ACQUISITION
On July 31, 1992, Terex acquired the Company from Clark Equipment Company.
The purchase price of the Acquisition was $91,090, which was funded by $85,000
of cash and a $6,090 note to the seller.
The Acquisition was accounted for as a purchase with the purchase price of
the acquisition allocated to assets acquired and liabilities assumed based upon
their respective estimated fair value at the date of the acquisition. Estimated
fair values were based on evaluations, estimations, appraisals, actuarial
studies and other studies performed by the Parent Company. The excess of
purchase price over the net assets acquired ($4,009) is included in Goodwill and
is being amortized on a straight-line basis over 15 years.
NOTE D -- INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1994 1995
------- -------
<S> <C> <C>
Finished equipment............................................... $ 7,210 $ 9,410
Replacement parts................................................ 18,467 22,966
Work-in-process.................................................. 4,348 3,405
Raw materials and supplies....................................... 36,300 33,229
------- -------
66,325 69,010
Less: Excess of FIFO inventory value over LIFO cost.............. (546) (546)
------- -------
Net inventories............................................. $65,779 $68,464
======= =======
</TABLE>
In 1994, certain inventory quantities were reduced, resulting in the
liquidation of LIFO inventory quantities carried at lower costs prevailing in
prior years. The effect of such liquidation was to decrease cost of goods sold
by $1,581 in 1994.
NOTE E -- PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1994 1995
-------- --------
<S> <C> <C>
Property....................................................... $ 7,742 $ 8,348
Plant.......................................................... 18,604 20,262
Equipment...................................................... 50,703 55,433
-------- --------
77,049 84,043
Less: Accumulated depreciation................................. (16,352) (25,849)
-------- --------
Net property, plant and equipment......................... $ 60,697 $ 58,194
======== ========
</TABLE>
F-9
<PAGE> 76
CLARK MATERIAL HANDLING
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE F -- LONG-TERM OBLIGATIONS
Long-term debt is summarized as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1994 1995
------- -------
<S> <C> <C>
Allocated acquisition debt:
13.25% Senior Secured Notes due May 15, 2002
("Senior Secured Notes").................................... $ -- $51,220
13.0% Senior Secured Notes due August 1, 1996
("Old Senior Secured Notes")................................ 51,754 --
Capital lease obligations........................................ 6,962 6,554
------- -------
Total long-term debt........................................... 58,716 57,774
Current portion of long-term debt.............................. 1,256 2,414
------- -------
Long-term debt, less current portion........................... $57,460 $55,360
======= =======
</TABLE>
Senior Secured Notes
On May 9, 1995, Terex issued $250,000 of Senior Secured Notes due May 15,
2002. The Senior Secured Notes were issued in conjunction with Terex's
acquisition of substantially all of the capital stock of PPM Cranes, Inc. and
P.P.M. S.A. (the "PPM Acquisition") and the refinancing of Terex's debt. Of the
total amount $51,220 relates to the refinancing of the debt remaining from the
July 1992 acquisition of the Company and has been included in the Company's
balance sheet. Except in the event of certain asset sales, there are no
principal repayment or sinking fund requirements prior to maturity. The notes
bear interest at 13 3/4% per annum. Upon the earlier of (i) the consummation of
an exchange offer or (ii) the effectiveness of a Shelf Registration Statement,
the interest rate on the notes will decrease to 13 1/4% per annum. Interest is
computed on the basis of a 360-day year comprised of twelve 30-day months.
Repayments of the Senior Secured Notes are guaranteed by certain domestic
subsidiaries of Terex (the "Guarantors"), including CMHC and CMH. The Senior
Secured Notes are secured by a first priority security interest on substantially
all of the assets of Terex and the Guarantors, other than cash and cash
equivalents, except that as to accounts receivable and inventory and proceeds
thereof, and certain related rights, such security shall be subordinated to
liens securing obligations outstanding under any working capital or revolving
credit facility secured by such accounts receivable and inventory. The indenture
for the Senior Secured Notes places certain limits on Terex's ability to incur
additional indebtedness; permit the existence of liens; issue, pay dividends on
or redeem equity securities; sell assets; consolidate, merge or transfer assets
to another entity; and enter into transactions with affiliates.
Old Senior Secured Notes
The Old Senior Secured Notes were retired on May 9, 1995 in conjunction
with the PPM Acquisition and the issuance of the Senior Secured Notes. The
Company realized an extraordinary loss of $1,347 on the early extinguishment of
its allocated share of the Old Senior Secured Notes. The Old Senior Secured
Notes were issued in July 1992 for a total of $160,000 ($85,000 allocated to
CMH) in conjunction with the Acquisition and a refinancing of the Parent
Company's bank debt. Proceeds from the issuance of the Old Senior Secured Notes
were used for the cash portion of the Acquisition purchase price, for the
settlement of all amounts outstanding under the Parent Company's previous credit
facility, for working capital and for transaction costs. During 1993 and 1994
the Company recorded extraordinary losses of $297 and $565, respectively, on the
early retirement of its allocated debt based on the proceeds from sales of
certain property, plant and equipment.
F-10
<PAGE> 77
CLARK MATERIAL HANDLING
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
The Company paid $1,169, $2,218 and $793 of interest in 1993, 1994 and
1995, respectively.
NOTE G -- LEASE COMMITMENTS
The Company leases certain facilities, machinery and equipment, and
vehicles with varying terms. Under most leasing arrangements, the Company pays
the property taxes, insurance, maintenance and expenses related to the leased
property. Certain of the equipment leases are classified as capital leases and
the related assets have been included in Property, Plant and Equipment. Net
assets under capital leases were $8,014 and $8,042 at December 31, 1994 and
1995, respectively.
Future minimum capital and noncancelable operating lease payments and the
related present value of capital lease payments at December 31, 1995 are as
follows:
<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES
------- ---------
<S> <C> <C>
1996............................................................. $ 3,118 $ 2,574
1997............................................................. 2,074 2,063
1998............................................................. 1,352 382
1999............................................................. 697 136
2000............................................................. 270 85
Thereafter....................................................... 22 --
------ ------
Total minimum obligations.............................. 7,533 $ 5,240
======
Less amount representing interest................................ 979
------
Present value of net minimum obligations............... 6,554
Less current portion............................................. 2,414
------
Long-term obligations.................................. $ 4,140
======
</TABLE>
Most of the Company's operating leases provide the Company with the option
to renew the leases for varying periods after the initial lease terms. These
renewal options enable the Company to renew the leases based upon the fair
rental values at the date of expiration of the initial lease. Total rental
expense under operating leases was $3,430, $4,414 and $2,557 in 1993, 1994, and
1995, respectively.
In 1994, the Company entered into a sale-leaseback transaction for its
parts distribution center in Germany. The Company received net proceeds of
DM16,500 ($11,000) and will lease the facility under the terms of a five year
lease. The Company realized a gain of $3,866 which was deferred and will be
amortized as a reduction of rental expense over the lease term ($774 per year).
The unamortized gain included in Other Non Current Liabilities is $3,126 and
$2,576 at December 31, 1994 and 1995, respectively.
The Company also routinely enters into sale-leaseback arrangements for
certain equipment, which is similarly sold to third-party customers under
sales-type lease agreements. The Company maintains a net investment in these
leases, represented by the present value of payments due under the leases of
$6,554 of which $2,414 is current at December 31, 1995.
In connection with the original sale-leaseback arrangements underlying the
customer leasing program, the Company has an outstanding rental installment
obligation which is recorded based on the present value of minimum payments due
under the leases.
F-11
<PAGE> 78
CLARK MATERIAL HANDLING
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE H -- INCOME TAXES
The components of Loss Before Income Taxes and Extraordinary Items are as
follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1993 1994 1995
-------- -------- --------
<S> <C> <C> <C>
United States...................................... $(43,230) $ (6,817) $(16,405)
Foreign............................................ (1,531) (17,652) (866)
-------- -------- --------
Loss before income taxes and extraordinary items... (44,761) $(24,469) $(17,271)
======== ======== ========
</TABLE>
The major components of the Company's provision for income taxes are
summarized below:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31,
----------------------
1993 1994 1995
---- ---- ----
<S> <C> <C> <C>
Current:
Federal..................................................... $ -- $ -- $ --
State....................................................... -- 498 --
Foreign..................................................... $158 288 148
--- ---- ----
Current income tax provision........................ 158 786 148
--- ---- ----
Deferred:
Deferred federal income tax benefit......................... -- -- --
--- ---- ----
Total provision for income taxes............................ 158 $786 $148
=== ==== ====
</TABLE>
The tax effects of the basis differences and net operating loss
carryforward as of December 31, 1995 and 1994 are summarized below for major
balance sheet captions:
<TABLE>
<CAPTION>
1994 1995
-------- --------
<S> <C> <C>
Net inventories................................................ $(10,209) $ (8,982)
Property, plant and equipment.................................. (2,910) (2,085)
Other.......................................................... (35) --
-------- --------
Total deferred tax liabilities....................... (13,154) (11,067)
-------- --------
Receivables.................................................... 867 759
Warranties and product liability............................... 17,866 18,773
All other items................................................ 1,623 1,538
Benefit of net operating loss carryforward..................... 42,716 52,838
-------- --------
Total deferred tax assets............................ 63,072 73,908
-------- --------
Deferred tax assets valuation allowance........................ (49,918) (62,841)
-------- --------
Net deferred tax liabilities................................. $ -- $ --
======== ========
</TABLE>
Deferred tax assets and liabilities result from differences in the basis of
assets and liabilities for tax and financial statement purposes. A valuation
allowance for deferred tax assets as of January 1, 1994 was $47,111. The net
change in the total valuation allowance for the years ended December 31, 1994
and 1995 were increases of $2,807 and $12,923, respectively. Based on the
historical operating results, it is more likely than not that the benefit will
not be realized, therefore a valuation allowance has been provided.
F-12
<PAGE> 79
CLARK MATERIAL HANDLING
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
The Company's Provision for Income Taxes is different from the amount which
would be provided by applying the statutory federal income tax rate to the
Company's Loss Before Income Taxes and Extraordinary Items. The reasons for the
difference are summarized below:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1993 1994 1995
-------- ------- -------
<S> <C> <C> <C>
Statutory federal income tax rate.................... $(15,666) $(8,564) $(6,045)
Recognition of previously unrecognized tax assets.... -- -- --
NOL with no current benefit.......................... 15,143 2,449 5,651
Foreign tax differential on income/losses of
foreign............................................ 536 6,178 303
Goodwill............................................. -- -- --
State tax............................................ -- 498 --
Other................................................ 145 225 239
-------- ------- -------
Total provision for income taxes........... $ 158 $ 786 $ 148
======== ======= =======
</TABLE>
At December 31, 1995, the Company had U.S. federal net operating loss
carryforwards of $99,084. The Company's future utilization of U.S. net operating
loss carryforwards may be limited should there be a change of ownership under
the U.S. income tax laws. The tax basis net operating loss carryforwards expire
as follows:
<TABLE>
<S> <C>
2007............................................... $ 6,577
2008............................................... 57,575
2009............................................... 21,121
2010............................................... 13,811
-------
Total.................................... $99,084
=======
</TABLE>
The Company also has various state net operating loss and tax credit
carryforwards expiring at various dates through 2010 available to reduce future
state taxable income and income taxes. In addition, the Company's foreign
subsidiaries have approximately $39,964 of loss carryforwards, $34,585 in
Germany, $1,564 in France and $3,815 in other countries, which are available to
offset future foreign taxable income. The loss carryforwards in Germany and
France are available without expiration. The loss carryforwards in other
countries of $3,815 expire in the years 1996 through 2001.
The Company made income tax payments of $158, $790 and $148 in 1993, 1994
and 1995, respectively.
The Korean tax authorities have assessed Clark Forklift Korea approximately
$1 million related to transfer pricing matters. The Company has retained legal
counsel who have filed a protest.
NOTE I -- RETIREMENT PLANS
Pension Plans
The Company does not provide any pension plans for its U.S. employees.
Certain of the Company's German employees are covered by noncontributory defined
benefit pension plans. The Company also maintains separate pension benefit plans
for certain German executive employees and for other staff. The executive
pension plans are based on final pay and service, and, in some cases, are
dependent on social security pensions while the other staff plans are based on
fixed amounts applied to the number of years service rendered. The plans are
unfunded.
F-13
<PAGE> 80
CLARK MATERIAL HANDLING
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
The components of pension expense for each of the reporting periods covered
by these financial statements is as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1993 1994 1995
------ ----- -----
<S> <C> <C> <C>
Current service cost...................................... $ 201 $ 174 $ 57
Interest cost............................................. 862 877 886
Net amortization and deferrals............................ 84 (820) (927)
------ ---- ---
Defined benefit pension expense........................... $1,147 $ 231 $ 16
====== ==== ===
</TABLE>
The following table reconciles the funded status of the Company's defined
benefit pension plans to the amounts recognized in the Company's combined
balance sheet:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1994 1995
------- -------
<S> <C> <C>
Accumulated benefit obligation, including nonvested benefits of
$207 and $221 at December 31, 1994 and 1995.................... $11,095 $12,792
Projected benefit obligations.................................... $11,152 $12,843
Unrecognized net gain/(loss)..................................... 1,902 (930)
Unrecognized prior service cost.................................. -- 368
Unrecognized transition asset (liability)........................ (665) 620
Adjustment required to recognize minimum liability............... -- 5
------- -------
Accrued pension cost............................................. $12,389 $12,906
======= =======
</TABLE>
The discount rate of 7.5% was used in 1994 and 1995 to determine the
projected benefit obligation. During 1994, the Company significantly reduced its
German work force in connection with restructuring of its operations. As a
result, the Company realized a curtailment gain with respect to these plans,
which was recognized as a reduction of the unrecognized transition liability. In
1994 the Company changed certain assumptions used in the actuarial valuation of
the plans. These changes in assumptions reflected the reductions in personnel
and other changes in the Company's operations, including changes in compensation
arrangements, implemented during 1994. These changes resulted in an actuarial
gain of $2,724. The gain in excess of 10% of the projected benefit obligation is
being amortized over 2 years.
Savings Plans
The Company sponsors various tax deferred savings plans into which eligible
employees may elect to contribute a portion of their compensation. The Company
can, but is not obligated to, contribute to certain of these plans.
Other Postemployment Benefits
The Company does not have any benefit program which provides retiree health
or life insurance benefits.
NOTE J -- LITIGATION AND CONTINGENCIES
In the Company's line of business suits have been filed alleging damages
for accidents that have arisen in the normal course of operations involving the
Company's products. As part of the Acquisition, Terex and the Company assumed
both the outstanding and future product liability exposures related to such
operations. As of December 31, 1995, CMH had approximately 120 lawsuits
outstanding alleging damages for injuries or deaths arising from accidents
involving CMH products. Most of the foregoing suits are in various stages of
pretrial completion, and certain plaintiffs are seeking punitive as well as
compensatory damages. The
F-14
<PAGE> 81
CLARK MATERIAL HANDLING
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
Company is self-insured, up to certain limits, for these product liability
exposures, as well as for certain exposures related to general, workers'
compensation and automobile liability. Insurance coverage is obtained for
catastrophic losses as well as those risks required to be insured by law or
contract. The Company has recorded and maintains an estimated liability, based
in part upon actuarial determinations, in the amount of management's estimate of
the Company's aggregate exposure for such self-insured risks.
The Company is involved in various other legal proceedings which have
arisen in the normal course of its operations. The Company has recorded
provisions for estimated losses in circumstances where a loss is probable and
the amount or range of possible amounts of the loss is estimable.
The Company is contingently liable as a guarantor for certain customers'
floor plan obligations with financial institutions. As a guarantor, the Company
is obligated to purchase equipment which has been repossessed by the financial
institution based upon the unamortized principal balance outstanding. The
Company records the repossessed inventory at its estimated net realizable value.
Any resultant losses are charged against related reserves. The guarantee under
such floor plans aggregated approximately $30,000 at December 31, 1995. The
Company has recorded reserves based on management's estimates of potential
losses arising from these guarantees. Historically, the Company has incurred
only minimal losses relating to these arrangements.
The Company is contingently liable for a portion of the residual value of
machines sold by the Company to an independent company which subsequently leases
those machines to third parties for terms generally ranging from three to five
years. Sales for which there is a contingent liability were $16,700 in 1993,
$15,600 in 1994, and $21,000 in 1995. The Company sells or leases to third
parties the repurchased machines. At December 31, 1994 and 1995 there was $240
and $1,065, respectively, of repurchased machines included in inventory.
Historically, the Company has made a profit on the subsequent resale of
repurchased machines. At December 31, 1995, the maximum contingent liability was
approximately $7,100.
The Company has also given guarantees to financial institutions relating to
capital loans and other dealer and customer obligations arising in the ordinary
conduct of its business. Such guarantees approximated $3,800 at December 31,
1995. Estimated losses, if any, on such guarantees are accrued as a component of
the Allowance for Doubtful Accounts. Historically, the Company has not incurred
material losses on these guarantees.
To enhance its marketing effort and ensure continuity of its dealer
network, the Company has also agreed as part of its dealer sales agreements to
repurchase certain new and unused equipment in the event of a dealer
termination. Repurchase agreements included in operating agreements with an
independent financial institution have been patterned after those included in
the dealer sales agreements, and provide for repurchase of inventory in certain
circumstances of dealer default on financing provided by the financial
institution to the dealer. Dealer inventory of approximately $200,000 at
December 31, 1995 was covered by those operating agreements. Under these
agreements, when dealer terminations do occur, a newly selected dealer generally
assumes the assets of the prior dealer and any related financial obligations.
Historically, the Company has incurred only minimal losses relating to these
arrangements.
The Parent Company's Credit Facility provides the Parent Company with the
ability to borrow (in the form of revolving loans and up to $15,000 in
outstanding letters of credit) up to $100,000. The Credit Facility is secured by
substantially all of the Parent Company's domestic receivables and inventory
(including CMHC). The amount of borrowings is limited to the sum of the
following: (i) 75% of the net amount of eligible receivables, as defined, of the
Parent Company's U.S. businesses other than CMHC, plus (ii) 70% of the net
amount of CMHC eligible receivables, plus (iii) the lesser of 45% of the value
of eligible inventory, as defined, or 80% of the appraised orderly liquidation
value of eligible inventory less (iv) any availability reserves established by
the lenders. The Credit Facility expires May 9, 1998 unless extended by the
lenders for one additional year. At the option of the Parent Company, revolving
loans may be in the form of prime rate
F-15
<PAGE> 82
CLARK MATERIAL HANDLING
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
loans initially bearing interest at the rate of 1.75% per annum in excess of the
prime rate and Eurodollar rate loans initially bearing interest at the rate of
3.75% per annum in excess of the adjusted Eurodollar rate.
The Company's outstanding letters of credit totaled $736 at December 31,
1995. The letters of credit generally serve as collateral for certain
liabilities included in the combined balance sheet. Certain of the letters of
credit serve as collateral guaranteeing the Company's performance under
contracts.
NOTE K -- RELATED PARTY TRANSACTIONS
The Company had transactions with various unconsolidated affiliates as
follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1993 1994 1995
------- ------- -------
<S> <C> <C> <C>
Distribution expenses............................... $ 7,619 $ 6,584 $ 7,088
Terex management fee allocation..................... 4,380 8,453 6,996
Interest expense.................................... $16,756 $14,361 $16,145
Interest income..................................... -- 560 480
</TABLE>
Debt has been allocated by Terex to the Company based on the initial
purchase price of $91 million, subsequently reduced by proceeds from the sale of
Drexel, the Saarn property sale-leaseback, and the sale of other property, plant
and equipment. Interest on the debt has been allocated at 13%, compounded
monthly. Interest accrued on the allocated debt is included in the Company's
combined balance sheet as a component of Due to Parent Company.
The Company utilizes the services of the Terex worldwide distribution
center for services related to its replacement parts business. Distribution
expenses, which are included in Cost of Goods Sold, reflect the charges for
those services.
Sales to affiliated companies were not material in any of the years
presented.
NOTE L -- BUSINESS SEGMENT INFORMATION
The Company operates in one industry segment, that being the design,
manufacture and sale of a complete line of internal combustion and electric lift
trucks, electric walkies, and related components and replacement parts. These
products are used in material handling applications in a broad array of
manufacturing, distribution and transportation industries.
F-16
<PAGE> 83
CLARK MATERIAL HANDLING
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
Geographic segment information is presented below:
<TABLE>
<CAPTION>
1993 1994 1995
-------- -------- --------
<S> <C> <C> <C>
Sales
North America.................................... $287,216 $350,604 $385,611
Europe........................................... 110,765 137,478 162,396
All other........................................ 22,570 26,800 116
Eliminations..................................... (24,926) (42,230) (19,364)
-------- -------- --------
Total.................................... $395,625 $472,652 $528,759
======== ======== ========
Income (Loss) from Operations
North America.................................... $(24,499) $ (8,403) $ (523)
Europe........................................... (6,128) (5,405) 3,973
All other........................................ 1,914 (541) (379)
Eliminations..................................... 140 366 (4)
-------- -------- --------
Total.................................... $(28,573) $(13,983) $ 3,067
======== ======== ========
Identifiable Assets
North America.................................... $120,605 $107,930 $ 95,107
Europe........................................... 84,248 91,931 101,054
All other........................................ 18,148 14,899 9,650
Eliminations..................................... (14,217) (20,098) (13,102)
-------- -------- --------
Total.................................... $208,784 $194,662 $192,709
======== ======== ========
</TABLE>
Sales between geographic areas are generally priced to recover costs plus a
reasonable markup for profit. Operating income equals net sales less direct and
allocated operating expenses, excluding interest and other nonoperating items.
The Company is not dependent upon any single customer.
Export sales from U.S. operations were as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1993 1994 1995
------- ------- -------
<S> <C> <C> <C>
North and South America............................... $14,672 $17,542 $37,306
Europe, Africa and Middle East........................ 2,110 2,053 4,728
Asia and Australia.................................... 2,982 6,002 5,016
------- ------- -------
$19,764 $25,597 $47,050
======= ======= =======
</TABLE>
NOTE M -- SEVERANCE ACTIONS
In 1994, the Company announced personnel reductions in plant supervision,
engineering, marketing and administration totaling approximately 160 employees
in its North American and European operations. Also in 1994, the Company
announced additional personnel reductions totaling approximately 90 employees in
conjunction with the closing of the Korean plant and certain branch sales
offices in France. The Company recorded a combined charge of $6,736 for costs,
principally severance costs, associated with these actions.
The Company announced personnel reductions totaling approximately 134
employees in the North American operations during 1995 as a continuation of the
Company's programs to increase manufacturing efficiency, reduce costs and
improve liquidity. The Company recorded a combined charge of $3,478 in 1995
F-17
<PAGE> 84
CLARK MATERIAL HANDLING
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
for severance costs associated with these actions and additional costs
associated with the closing of certain administrative and warehouse facilities.
Also during 1995, the Company recorded a charge of $2,500 to recognize the
impairment in value of certain properties held for sale in Korea.
NOTE N -- LIQUIDITY AND FINANCING
The Company's business is working capital intensive and requires funding
for purchases of production and replacement parts inventories, capital
expenditures for repair, replacement and upgrading of existing facilities as
well as financing of receivables from customers and dealers. The Parent Company
has significant debt service requirements including semi-annual interest
payments on senior debt and monthly interest payments on its credit facility.
CMH's sources of financing are integrated with those of Terex Corporation.
Cash flows between CMH and Terex are funded through an intercompany account.
Terex and CMH believe that Terex as a whole has sufficient resources to meet
operating requirements for the foreseeable future.
F-18
<PAGE> 85
CLARK MATERIAL HANDLING
UNAUDITED COMBINED BALANCE SHEET
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1995 1996
------------ -------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents........................................ $ 819 $ 1,424
Cash securing letters of credit.................................. 736 957
Trade receivables (less allowance of $2,867 in 1995 and $2,752 in
1996)......................................................... 39,433 38,845
Net inventories.................................................. 68,464 62,997
Other current assets............................................. 4,660 4,593
-------- --------
Total Current Assets..................................... 114,112 108,816
LONG-TERM ASSETS
Property, plant and equipment -- net............................. 58,194 51,434
Goodwill -- net.................................................. 3,138 2,814
Other assets..................................................... 17,265 17,593
-------- --------
TOTAL ASSETS....................................................... $192,709 $ 180,657
======== ========
CURRENT LIABILITIES
Notes payable.................................................... $ 879 $ 424
Current portion of capital lease obligations..................... 2,414 2,408
Trade accounts payable........................................... 61,535 51,802
Accrued compensation and benefits................................ 4,585 4,911
Accrued warranties and product liability......................... 19,012 17,773
Other current liabilities........................................ 9,834 7,976
-------- --------
Total Current Liabilities................................ 98,259 85,294
NON CURRENT LIABILITIES
Capital lease obligations, less current portion.................. 4,140 3,791
Allocated long-term debt......................................... 51,220 51,138
Accrued warranties and product liability......................... 31,661 31,090
Accrued pension.................................................. 13,070 12,720
Other non-current liabilities.................................... 3,435 4,934
COMMITMENTS AND CONTINGENCIES
DUE TO PARENT COMPANY.............................................. 87,646 93,631
STOCKHOLDER'S DEFICIT
Accumulated deficit.............................................. (94,873) (97,753)
Cumulative translation adjustment................................ (1,849) (4,188)
-------- --------
TOTAL LIABILITIES AND STOCKHOLDER'S DEFICIT........................ $192,709 $ 180,657
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-19
<PAGE> 86
CLARK MATERIAL HANDLING
UNAUDITED COMBINED STATEMENT OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
---------------------
1995 1996
-------- --------
<S> <C> <C>
NET SALES.............................................................. $404,418 $334,889
COST OF GOODS SOLD..................................................... 372,470 297,297
-------- --------
Gross Profit......................................................... 31,948 37,592
ENGINEERING, SELLING AND ADMINISTRATIVE EXPENSES....................... 24,523 22,009
PARENT COMPANY MANAGEMENT FEES......................................... 5,428 4,701
SEVERANCE AND EXIT CHARGES............................................. 3,478 --
-------- --------
Income (Loss) from operations........................................ (1,481) 10,882
OTHER INCOME (EXPENSE):
Interest income...................................................... 64 126
Allocated interest expense from Parent Company....................... (11,365) (13,175)
Interest expense -- others........................................... (680) (278)
Amortization of allocated debt issuance costs........................ (417) (338)
Property impairment charge........................................... (2,500) --
Loss on sale of property, plant and equipment........................ (104) (277)
Other income (expense) -- net........................................ (798) 180
-------- --------
LOSS BEFORE INCOME TAXES AND EXTRAORDINARY ITEMS..................... (17,281) (2,880)
PROVISION FOR INCOME TAXES............................................. (135) --
-------- --------
LOSS BEFORE EXTRAORDINARY ITEMS...................................... (17,416) (2,880)
EXTRAORDINARY LOSS ON RETIREMENT OF ALLOCATED DEBT..................... (1,347) --
-------- --------
NET LOSS............................................................. $(18,763) $ (2,880)
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-20
<PAGE> 87
CLARK MATERIAL HANDLING
UNAUDITED COMBINED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
---------------------
1995 1996
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES
Net Loss............................................................... $(18,763) $ (2,880)
Adjustments to reconcile net loss to cash provided by (used in)
operating activities:
Depreciation......................................................... 8,733 7,894
Amortization......................................................... 1,085 945
Extraordinary loss on retirement of allocated debt................... 1,347 --
(Gain) loss on sale of property, plant and equipment................. 104 227
Property impairment charge........................................... 2,500 --
Other................................................................ 263 223
Changes in operating assets and liabilities:
Restricted cash................................................... (395) (221)
Trade receivables................................................. (1,986) 588
Net inventories................................................... (4,074) 5,467
Trade accounts payable............................................ (3,147) (9,733)
Accrued compensation and benefits................................. 606 326
Accrued warranties and product liability.......................... 1,167 (1,239)
Due to Parent Company................................................ 21,056 5,985
Other, net........................................................... (2,760) (2,256)
-------- --------
Net cash provided by (used in) operating activities............. 5,736 5,326
-------- --------
INVESTING ACTIVITIES
Capital expenditures................................................. (3,996) (2,478)
Proceeds from sale of assets......................................... 433 82
-------- --------
Net cash provided by (used in) investing activities............. (3,563) (2,396)
-------- --------
FINANCING ACTIVITIES
Repayment of allocated debt.......................................... (51,754) (82)
Proceeds from refinancing of allocated debt.......................... 51,220 --
Other, net........................................................... (1,152) (810)
-------- --------
Net cash provided by (used in) financing activities............. (1,686) (892)
-------- --------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS........... (1,409) (1,433)
-------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS................. (922) 605
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD....................... 1,514 819
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD............................. $ 592 $ 1,424
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-21
<PAGE> 88
CLARK MATERIAL HANDLING
NOTES TO UNAUDITED COMBINED FINANCIAL STATEMENTS
(IN THOUSANDS)
NOTE A -- REPORTING ENTITY AND BASIS OF PRESENTATION
CMH Acquisition Corp. and CMH Acquisition International Corp. (collectively
"Clark Material Handling," "CMH" or the "Company"), incorporated in the state of
Delaware, are wholly-owned subsidiaries of Terex Corporation ("Terex" or the
"Parent Company"). Terex, through CMH, acquired the Material Handling
Operations, comprised of Clark Material Handling Company ("CMHC") and certain
affiliated companies, from Clark Equipment Company on July 31, 1992 (the
"Acquisition"). The purchase price for all the businesses acquired was $91,090.
The assets acquired and the liabilities assumed were valued at their estimated
fair market values at the time of the Acquisition. As a result, the acquisition
debt and goodwill associated with the Acquisition have been "pushed down" to the
Company's financial statements.
Parent Company Allocations. The combined financial statements include
allocations of Parent Company Acquisition debt and related interest expense.
Corporate charges, which include corporate overhead costs (including legal,
treasury and other shared services), have been allocated to the Company based
generally on the percentage of Company revenues to Terex consolidated revenues.
Interest has been charged on the corporate charges allocated and the Due to
Parent Company balance at a rate of 13% compounded monthly.
The accompanying combined financial statements reflect the financial
position, results of operations and cash flows of CMH.
CMH is engaged in the design, manufacture, marketing and worldwide
distribution and support of internal combustion and electric lift trucks,
electric walkies and related components and replacement parts.
In the opinion of management, all adjustments considered necessary for a
fair presentation have been made. Such adjustments consist only of those of a
recurring nature. Operating results for the nine months ended September 30, 1996
are not necessarily indicative of the results that may be expected for the year
ending December 31, 1996.
NOTE B -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Combination. The combined financial statements include the
accounts of CMH and their subsidiaries, including CMHC, Clark Material Handling
GmbH and Clark Forklift Korea. All material intercompany balances, transactions
and profits have been eliminated.
Cash and Cash Equivalents. Cash equivalents consist of highly liquid
investments with original maturities of three months or less. The carrying
amount of cash and cash equivalents approximates their fair value.
Cash Securing Letters of Credit. The Company has certain cash and cash
equivalents that are not fully available for use in its operations. Certain
international operations collateralize letters of credit and performance bonds
with cash deposits.
Inventories. Inventories are stated at the lower of cost or market value.
Cost is determined using the last-in, first-out ("LIFO") method for U.S.
inventories and by the first-in, first-out ("FIFO") method for inventories of
international subsidiaries. Approximately 68% and 70% of combined inventories at
December 31, 1995 and September 30, 1996, respectively, are accounted for under
the LIFO method.
Goodwill. Goodwill, representing the difference between the total purchase
price and the fair value of assets (tangible and intangible) and liabilities at
the date of acquisition, is being amortized on a straight-line basis over
fifteen years. It is the Company's policy to periodically evaluate the carrying
value of goodwill, and to recognize impairments when the estimated related
future net operating cash flows is less than its carrying value. The amount of
any impairment then recognized would be calculated as the difference between
estimated future discounted cash flows and the carrying value of the goodwill.
F-22
<PAGE> 89
CLARK MATERIAL HANDLING
NOTES TO UNAUDITED COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS)
Allocated Debt Issuance Costs. Debt issuance costs incurred in securing
the Parent Company's financing arrangements are capitalized and amortized over
the term of the associated debt. Allocated debt issuance costs related to
Acquisition debt are allocated to the Company. Allocated capitalized debt
issuance costs related to allocated debt that is retired early are charged to
expense at the time of retirement. Unamortized allocated debt issuance costs are
included in Other Assets and totaled $2,898 and $2,560 at December 31, 1995 and
September 30, 1996, respectively.
Property, Plant and Equipment. Property, plant and equipment are stated at
cost. Expenditures for major renewals and improvements are capitalized while
expenditures for maintenance and repairs not expected to extend the life of an
asset beyond its normal useful life are charged to expense when incurred. Plant
and equipment are depreciated over the estimated useful lives, not exceeding
forty years, of the assets under the straight-line method of depreciation for
financial reporting purposes and both straight-line and other methods for tax
purposes.
Revenue Recognition. Revenue and costs are generally recorded when
products are shipped and invoiced to customers. Certain new units may be
invoiced prior to the time customers take physical possession. Revenue is
recognized in such cases only when the customer has a fixed commitment to
purchase the units, the units have been completed, tested and made available to
the customer for pickup or delivery, and the customer has requested that the
Company hold the units for pickup or delivery at a time specified by the
customer in the sales documents. In such cases, the units are invoiced under the
Company's customary billing terms, title to the units and risks of ownership
pass to the customer upon invoicing, the units are segregated from the Company's
inventory and identified as belonging to the customer and the Company has no
further obligations under the order.
Accrued Warranties and Product Liability. The Company records accruals for
potential warranty and product liability claims based on the Company's claim
experience. Warranty costs are accrued at the time revenue is recognized. The
Company provides self-insurance accruals for estimated product liability
experience on known claims and for claims anticipated to have been incurred
which have not yet been reported. The Company's product liability accruals are
presented on a gross settlement basis.
Foreign Currency Translation. Assets and liabilities of the Company's
international operations are translated at year-end exchange rates. Income and
expenses are translated at average exchange rates prevailing during the year.
For operations whose functional currency is the local currency, translation
adjustments are accumulated in the Cumulative Translation Adjustment component
of Stockholder's Deficit. Gains or losses resulting from foreign currency
transactions are included in Other income (expense) -- net.
Environmental Policies. Environmental expenditures that relate to current
operations are either expensed or capitalized depending on the nature of the
expenditure. Expenditures relating to conditions caused by past operations that
do not contribute to current or future revenue generation are expensed.
Liabilities are recorded when environmental assessments and/or remedial actions
are probable, and the costs can be reasonably estimated.
Income Taxes. Income taxes are provided using the asset and liability
method. The Company's U.S. operations are a part of a group that files a
consolidated income tax return. The method used to allocate income taxes to
members of the group is one in which current and deferred income taxes are
calculated on a separate return basis as if the Company had not been included in
a consolidated income tax return with its parent. Income taxes for international
operations are based upon the individual subsidiary's tax return.
Use of Estimates. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial
F-23
<PAGE> 90
CLARK MATERIAL HANDLING
NOTES TO UNAUDITED COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS)
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
NOTE C -- INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1995 1996
------------ -------------
<S> <C> <C>
Finished equipment......................................... $ 9,410 $15,151
Replacement parts.......................................... 22,966 23,362
Work-in-process............................................ 3,405 1,548
Raw materials and supplies................................. 33,229 23,482
------- -------
69,010 63,543
Less: Excess of FIFO inventory value over LIFO cost........ (546) (546)
------- -------
Net inventories.......................................... $ 68,464 $62,997
======= =======
</TABLE>
NOTE D -- PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1995 1996
------------ -------------
<S> <C> <C>
Property................................................... $ 8,348 $ 7,846
Plant...................................................... 20,262 19,465
Equipment.................................................. 55,433 55,831
-------- --------
84,043 83,142
Less: Accumulated depreciation............................. (25,849) (31,708)
-------- --------
Net property, plant and equipment........................ $ 58,194 $ 51,434
======== ========
</TABLE>
NOTE E -- LITIGATION AND CONTINGENCIES
In the Company's line of business suits have been filed alleging damages
for accidents that have arisen in the normal course of operations involving the
Company's products. As part of the Acquisition, Terex and the Company assumed
both the outstanding and future product liability exposures related to such
operations. As of September 30, 1996, CMH had approximately 120 lawsuits
outstanding alleging damages for injuries or deaths arising from accidents
involving CMH products. Most of the foregoing suits are in various stages of
pretrial completion, and certain plaintiffs are seeking punitive as well as
compensatory damages. The Company is self-insured, up to certain limits, for
these product liability exposures, as well as for certain exposures related to
general, workers' compensation and automobile liability. Insurance coverage is
obtained for catastrophic losses as well as those risks required to be insured
by law or contract. The Company has recorded and maintains an estimated
liability, based in part upon actuarial determinations, in the amount of
management's estimate of the Company's aggregate exposure for such self-insured
risks.
The Company is involved in various other legal proceedings which have
arisen in the normal course of its operations. The Company has recorded
provisions for estimated losses in circumstances where a loss is probable and
the amount or range of possible amounts of the loss is estimable.
The Company is contingently liable as a guarantor for certain customers'
floor plan obligations with financial institutions. As a guarantor, the Company
is obligated to purchase equipment which has been repossessed by the financial
institution based upon the unamortized principal balance outstanding. The
F-24
<PAGE> 91
CLARK MATERIAL HANDLING
NOTES TO UNAUDITED COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS)
Company records the repossessed inventory at its estimated net realizable value.
Any resultant losses are charged against related reserves. The guarantee under
such floor plans aggregated approximately $25,000 at September 30, 1996. The
Company has recorded reserves based on management's estimates of potential
losses arising from these guarantees. Historically, the Company has incurred
only minimal losses relating to these arrangements.
The Company is contingently liable for a portion of the residual value of
machines sold by the Company to an independent company which subsequently leases
those machines to third parties for terms generally ranging from three to five
years. The Company sells or leases to third parties the repurchased machines;
the repurchased machines are included in inventory. At September 30, 1996, the
maximum contingent liability under these programs was $9,900. The Company has
also given guarantees to financial institutions relating to capital loans and
other dealer and customer obligations arising in the ordinary conduct of its
business. Estimated losses, if any, on such guarantees are accrued as a
component of the Allowance for Doubtful Accounts. Historically, the Company has
not incurred material losses on these guarantees.
To enhance its marketing effort and ensure continuity of its dealer
network, the Company has also agreed as part of its dealer sales agreements to
repurchase certain new and unused equipment in the event of a dealer
termination. Repurchase agreements included in operating agreements with an
independent financial institution have been patterned after those included in
the dealer sales agreements, and provide for repurchase of inventory in certain
circumstances of dealer default on financing provided by the financial
institution to the dealer. Under these agreements, when dealer terminations do
occur, a newly selected dealer generally assumes the assets of the prior dealer
and any related financial obligations. Historically, the Company has incurred
only minimal losses relating to these arrangements.
The Parent Company's Credit Facility provides the Parent Company with the
ability to borrow (in the form of revolving loans and up to $15,000 in
outstanding letters of credit) up to $100,000. The Credit Facility is secured by
substantially all of the Parent Company's domestic receivables and inventory
(including CMHC). The amount of borrowings is limited to the sum of the
following: (i) 75% of the net amount of eligible receivables, as defined, of the
Parent Company's U.S. businesses other than CMHC, plus (ii) 70% of the net
amount of CMHC eligible receivables, plus (iii) the lesser of 45% of the value
of eligible inventory, as defined, or 80% of the appraised orderly liquidation
value of eligible inventory less (iv) any availability reserves established by
the lenders. The Credit Facility expires May 9, 1998 unless extended by the
lenders for one additional year. At the option of the Parent Company, revolving
loans may be in the form of prime rate loans initially bearing interest at the
rate of 1.75% per annum in excess of the prime rate and Eurodollar rate loans
initially bearing interest at the rate of 3.75% per annum in excess of the
adjusted Eurodollar rate.
The Company's outstanding letters of credit totaled $3,474 at September 30,
1996. The letters of credit generally serve as collateral for certain
liabilities included in the combined balance sheet. Certain of the letters of
credit serve as collateral guaranteeing the Company's performance under
contracts.
NOTE F -- ACQUISITION OF THE COMPANY
CLARK and CMH Holdings Corporation, a Delaware corporation, were formed by
Citicorp Venture Capital Ltd. and certain members of management of CLARK to
effect the acquisition of substantially all the assets and certain liabilities
of Clark Material Handling Company, a Kentucky corporation, and all of the
outstanding capital stock of certain of its affiliates, including its German,
Korean, Brazilian and Canadian affiliates. The acquisition was consummated on
November 27, 1996 pursuant to a Stock and Asset Purchase and Sale Agreement
dated as of November 9, 1996 among Terex and certain of its subsidiaries, as
sellers, and CLARK, as buyer. The aggregate consideration for the acquisition
was $139.5 million, which is subject to certain post-closing adjustments.
F-25
<PAGE> 92
CLARK MATERIAL HANDLING
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
The following unaudited pro forma combined financial information (the
"Unaudited Pro Forma Combined Financial Information") has been derived from the
application of pro forma adjustments to the Company's combined historical
financial statements included elsewhere herein. The Unaudited Pro Forma Combined
Financial Information gives effect to the Transactions as if such events had
occurred on September 30, 1996 for purposes of the unaudited pro forma combined
balance sheet and on January 1, 1995 for purposes of the unaudited pro forma
combined statements of operations for the year ended December 31, 1995, the nine
months ended September 30, 1996, and the twelve months ended September 30, 1996,
respectively. The pro forma adjustments are described in the accompanying notes.
The Unaudited Pro Forma Combined Financial Information is presented for
informational purposes only and does not purport to represent what the Company's
financial position or results of operations would actually have been if the
aforementioned events had occurred on the dates specified or to project the
Company's financial position or results of operations at any future date or for
any future periods. The Unaudited Pro Forma Combined Financial Information
should be read in conjunction with the Company's combined historical financial
statements, and the notes thereto, included elsewhere herein.
The Unaudited Pro Forma Combined Financial Information with respect to the
Acquisition is based on the historical financial statements of the business
acquired. The Acquisition will be accounted for under the purchase method of
accounting. The purchase price for the Acquisition, including the related fees
and expenses, has been allocated to the tangible and identifiable intangible
assets or liabilities of the acquired business based upon the Company's
preliminary estimates of their fair value with the remainder allocated to
goodwill. The allocation of purchase price for the Acquisition is subject to
revision when additional information concerning asset and liability valuation
becomes available. The pro forma adjustments directly attributable to the
Transactions include adjustments to interest expense related to the financing
and changes in amortization of intangible assets relating to the allocation of
the purchase price and the related tax effects. The purchase price of $139.5
million is subject to adjustment under the provisions of the Acquisition
Agreement. See "The Transactions" and "Risk Factors -- Lack of Independent
Operating History."
P-1
<PAGE> 93
CLARK MATERIAL HANDLING
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
(IN THOUSANDS)
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1996
------------------------------------------
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ---------
<S> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents.............................. $ 1,424 $ 9,963(1) $ 11,387
Cash securing letters of credit........................ 957 957
Net trade receivables.................................. 38,845 38,845
Net inventories........................................ 62,997 62,997
Other current assets................................... 4,593 4,593
--------- --------
Total Current Assets......................... 108,816 9,963 118,779
LONG-TERM ASSETS
Property, Plant and Equipment, Net..................... 51,434 440(2) 51,874
Goodwill -- net........................................ 2,814 97,760(3) 100,574
Other assets........................................... 17,593 2,940(4) 20,533
--------- --------
TOTAL ASSETS........................................... $ 180,657 $ 111,103 $ 291,760
========= ========
CURRENT LIABILITIES
Notes payable.......................................... $ 424 (424)(5) $ --
Current portion of capital lease obligations........... 2,408 2,408
Accounts payable....................................... 51,802 440(2) 52,242
Accrued compensation and benefits...................... 4,911 4,911
Other current liabilities.............................. 7,976 (194)(6) 7,782
Accrued product liability and warranty expense......... 17,773 17,773
--------- --------
Total Current Liabilities.................... 85,294 (178) 85,116
NON CURRENT LIABILITIES
Capital lease obligations, less current portion........ 3,791 3,791
Allocated long-term debt............................... 51,138 (51,138)(5) --
Long-term debt......................................... -- 130,000(7) 130,000
Accrued warranties and product liability............... 31,090 31,090
Accrued pension........................................ 12,720 12,720
Other non-current liabilities.......................... 4,934 (891)(6) 4,043
DUE TO PARENT.......................................... 93,631 (93,631)(5) --
STOCKHOLDER'S EQUITY (DEFICIT)......................... (101,941) 126,941(8) 25,000
--------- --------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)... $ 180,657 $ 111,103 $ 291,760
========= ========
</TABLE>
- ---------------
(1) To eliminate cash retained by former parent company ($37) and reflect net
cash resulting from issuance of Notes ($130,000), Equity Contribution by
Holdings ($25,000), payment of estimated debt issuance costs ($5,500) and
payment of purchase price ($139,500).
(2) To reflect fixed asset addition and related liability.
(3) To reflect goodwill ($100,574) resulting from the Transactions and eliminate
pre-acquisition goodwill ($2,814). The Company intends to amortize goodwill
over a forty year period. The purchase price used to determine the goodwill
amount does not reflect any adjustment that might occur on the closing date
for changes in working capital after September 30, 1996.
P-2
<PAGE> 94
(4) To reflect capitalized debt issuance costs ($5,500) related to issuance of
the Notes and eliminate debt issuance costs allocated by former parent
company ($2,560).
(5) To eliminate liabilities not assumed by the Company.
(6) To accrue rent ($1,074) and related costs ($427) of unused facility and
eliminate unamortized gain recorded by predecessor on sale-leaseback
transaction ($2,586) as follows.
<TABLE>
<CAPTION>
CURRENT LONG-TERM
------- ---------
<S> <C> <C>
Eliminate deferred gain.................................. $(787) $(1,799)
Accrue rent and related costs of unused facility......... 593 908
----- -------
$(194) $ (891)
===== =======
</TABLE>
(7) To reflect issuance of the Notes.
(8) To eliminate stockholder's deficit and reflect the Equity Contribution.
P-3
<PAGE> 95
CLARK MATERIAL HANDLING
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
(in thousands)
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ---------
<S> <C> <C> <C>
NET SALES............................................... $ 528,759 -- $ 528,759
COST OF GOODS SOLD...................................... 484,035 $ 2,445(1) 486,480
-------- -------- --------
Gross Profit.......................................... 44,724 (2,445) 42,279
ENGINEERING, SELLING AND ADMINISTRATIVE EXPENSES........ 31,183 1,500(2) 32,683
PARENT COMPANY MANAGEMENT FEES.......................... 6,996 (6,996)(3) --
SEVERANCE AND EXIT CHARGES.............................. 3,478 -- 3,478
-------- -------- --------
Income (Loss) from Operations......................... 3,067 3,051 6,118
OTHER INCOME (EXPENSE):
Interest income....................................... 602 -- 602
Allocated interest expense from Parent Company........ (16,145) 16,145(4) --
Interest expense -- others............................ (790) (13,975)(5) (14,765)
Amortization of allocated debt issuance costs......... (530) (20)(6) (550)
Property impairment charge............................ (2,500) -- (2,500)
Loss on sale of property, plant and equipment......... (183) -- (183)
Other income (expense) -- net......................... (792) -- (792)
-------- -------- --------
LOSS BEFORE INCOME TAXES AND EXTRAORDINARY ITEMS........ (17,271) 5,201 (12,070)
PROVISION FOR INCOME TAXES.............................. (148) -- (148)
-------- -------- --------
LOSS BEFORE EXTRAORDINARY ITEMS......................... $ (17,419) $ 5,201 $ (12,218)
======== ======== ========
</TABLE>
- ---------------
(1) To eliminate pre-acquisition goodwill ($307) and reflect amortization of
goodwill resulting from the Transactions ($2,514); eliminate amortization of
deferred gain relating to predecessor's sale-leaseback of facilities ($787);
and eliminate rental and related costs of abandoned facility ($593) net of
incremental costs in other facilities for relocated employees ($44).
Included in historical cost of goods sold is $7,088 charged by former parent
company for certain services rendered and expenses incurred in connection
with the distribution of parts at the Southaven Facility. No pro forma
effect has been given to the elimination of these charges or the inclusion
of other expenses expected to be incurred to replace these amounts
(including charges under the Service Agreement) following consummation of
the Transactions because the amount of such other expenses is not readily
discernable. Management believes, however, that such other expenses will not
be materially different than the historical charges. See "Certain
Relationships and Related Transactions -- Service Agreement" and "Risk
Factors -- Lack of Independent Operating History."
(2) To reflect estimated costs ($1,500) to be incurred to replace certain legal,
accounting and administrative services previously provided by former parent
company.
(3) To eliminate former parent company management fees.
(4) To eliminate interest expense allocated by former parent company.
(5) To reflect interest expense on the Notes calculated at 10 3/4% per annum.
(6) To eliminate amortization of allocated debt issuance costs and reflect
amortization of debt issuance costs related to the Notes ($5,500) over a ten
year period.
P-4
<PAGE> 96
CLARK MATERIAL HANDLING
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1996
(in thousands)
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ---------
<S> <C> <C> <C>
NET SALES............................................... $ 334,889 $ -- $ 334,889
COST OF GOODS SOLD...................................... 297,297 1,834(1) 299,131
-------- ------- --------
Gross Profit.......................................... 37,592 (1,834) 35,758
ENGINEERING, SELLING AND ADMINISTRATIVE EXPENSES........ 22,009 1,125(2) 23,134
PARENT COMPANY MANAGEMENT FEES.......................... 4,701 (4,701)(3) --
-------- ------- --------
Income (Loss) from operations......................... 10,882 1,742 12,624
OTHER INCOME (EXPENSE):
Interest income....................................... 126 -- 126
Allocated interest expense from Parent Company........ (13,175) 13,175(4) --
Interest expense -- others............................ (278) (10,481)(5) (10,759)
Amortization of allocated debt issuance costs......... (338) (74)(6) (412)
Loss on sale of property, plant and equipment......... (277) -- (277)
Other income (expense) -- net......................... 180 -- 180
-------- ------- --------
INCOME (LOSS) BEFORE INCOME TAXES AND EXTRAORDINARY
ITEMS................................................. (2,880) 4,362 1,482
PROVISION FOR INCOME TAXES.............................. -- 593(7) 593
-------- ------- --------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEMS................ $ (2,880) $ 3,769 $ 889
======== ======= ========
</TABLE>
- ---------------
(1) To eliminate pre-acquisition goodwill ($230) and reflect amortization of
goodwill resulting from the Transactions ($1,886); eliminate amortization of
deferred gain relating to predecessor's sale-leaseback of facilities ($590);
and eliminate rental and related costs of abandoned facility ($445) net of
incremental costs in other facilities for relocated employees ($33).
Included in historical cost of goods sold is $5,431 charged by former parent
company for certain services rendered and expenses incurred in connection
with the distribution of parts at the Southaven Facility. No pro forma
effect has been given to the elimination of these charges or the inclusion
of other expenses expected to be incurred to replace these amounts
(including charges under the Service Agreement) following consummation of
the Transactions because the amount of such other expenses is not readily
discernible. Management believes, however, that such other expenses will not
be materially different than the historical charges. See "Certain
Relationships and Related Transactions -- Service Agreement" and "Risk
Factors -- Lack of Independent Operating History."
(2) To reflect estimated costs ($1,125) to be incurred to replace certain legal,
accounting and administrative services previously provided by former parent
company.
(3) To eliminate former parent company management fees.
(4) To eliminate interest expense allocated by former parent company.
(5) To reflect interest expense on the Notes calculated at an assumed 10 3/4%
per annum.
(6) To eliminate amortization of allocated debt issuance costs and reflect
amortization of debt issuance costs related to the Notes ($5,500) over a ten
year period.
(7) To adjust tax provision to a 40% effective tax rate.
P-5
<PAGE> 97
CLARK MATERIAL HANDLING
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
TWELVE MONTHS ENDED SEPTEMBER 30, 1996
(in thousands)
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ---------
<S> <C> <C> <C>
NET SALES............................................... $ 459,230 $ -- $ 459,230
COST OF GOODS SOLD...................................... 408,862 2,445(1) 411,307
-------- -------- --------
Gross Profit.......................................... 50,368 (2,445) 47,923
ENGINEERING, SELLING AND
ADMINISTRATIVE EXPENSES............................... 28,669 1,500(2) 30,169
PARENT COMPANY MANAGEMENT FEES.......................... 6,269 (6,269)(3) --
-------- -------- --------
Income (loss) from operations......................... 15,430 2,324 17,754
OTHER INCOME (EXPENSE)
Interest income....................................... 664 -- 664
Allocated interest expense from Parent Company........ (17,955) 17,955(4) --
Interest expense -- others............................ (388) (13,975)(5) (14,363)
Amortization of allocated debt issuance costs......... (451) (99)(6) (550)
Loss on sale of property, plant and equipment......... (356) -- (356)
Other income (expense) -- net......................... 186 -- 186
-------- -------- --------
INCOME (LOSS) BEFORE INCOME TAXES AND EXTRAORDINARY
ITEMS................................................. (2,870) 6,205 3,335
PROVISION FOR INCOME TAXES.............................. (13) 1,347(7) 1,334
-------- -------- --------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEMS................ $ (2,883) $ 4,858 $ 2,001
======== ======== ========
</TABLE>
- ---------------
(1) To eliminate pre-acquisition goodwill ($307) and reflect amortization of
goodwill resulting from the Transactions ($2,514); eliminate amortization of
deferred gain relating to predecessor's sale-leaseback of facilities ($787);
and eliminate rental and related costs of abandoned facility ($593) net of
incremental costs in other facilities for relocated employees ($44).
Included in historical cost of goods sold is $6,654 charged by former parent
company for certain services rendered and expenses incurred in connection
with the distribution of parts at the Southaven Facility. No pro forma
effect has been given to the elimination of these charges or the inclusion
of other expenses expected to be incurred to replace these amounts
(including charges under the Service Agreement) following consummation of
the Transactions because the amount of such other expenses is not readily
discernable. Management believes, however, that such other expenses will not
be materially different than the historical charges. See "Certain
Relationships and Related Transactions -- Service Agreement" and "Risk
Factors -- Lack of Independent Operating History."
(2) To reflect estimated costs ($1,500) to be incurred to replace certain legal,
accounting and administrative services previously provided by former parent
company.
(3) To eliminate former parent company management fees.
(4) To eliminate interest expense allocated by former parent company.
(5) To reflect interest expense on the Notes calculated at an assumed 10 3/4%
per annum.
(6) To eliminate amortization of allocated debt issuance costs and reflect
amortization of debt issuance costs related to the Notes ($5,500) over a ten
year period.
(7) To adjust tax provision to a 40% effective tax rate.
P-6
<PAGE> 98
- ------------------------------------------------------
- ------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THOSE TO WHICH IT
RELATES, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER
TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH SOLICITATION IS
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. 2
Summary............................... 3
Risk Factors.......................... 11
The Transactions...................... 15
Use of Proceeds....................... 16
Pro Forma Capitalization.............. 16
Selected Historical Financial Data.... 17
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 18
The Exchange Offer.................... 19
Business.............................. 30
Management............................ 36
Ownership of the Company.............. 39
Certain Relationships and Related
Transactions........................ 41
Description of Certain Indebtedness... 42
Description of the Notes.............. 43
Book-Entry; Delivery and Form......... 61
Certain Federal Income Tax
Consequences........................ 62
Plan of Distribution.................. 63
Legal Matters......................... 64
Experts............................... 64
Index to Combined Financial Statements
and Information..................... F-1
</TABLE>
------------------------
UNTIL , 1997 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE NOTES, WHETHER OR NOT PARTICIPATING IN THE
ORIGINAL DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN
ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
PROSPECTUS
$130,000,000
LOGO
CLARK MATERIAL
HANDLING COMPANY
OFFER TO EXCHANGE
10 3/4% SENIOR NOTES DUE 2006
FOR ALL OUTSTANDING
10 3/4% SENIOR NOTES DUE 2006
, 1997
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 99
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law provides in relevant
part that a corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that such person is or was a director, officer, employee, or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or proceeding if
such person acted in good faith and in a manner such person reasonably believed
to be in or not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
such person's conduct was unlawful.
In addition, Section 145 provides that a corporation may indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person is or was a director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a director, officer,
employee or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses
(including attorneys' fees) actually and reasonably incurred by such person in
connection with the defense or settlement of such action or suit if such person
acted in good faith and in a manner such person reasonably believed to be in or
not opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Delaware Court of Chancery or the court
in which such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Delaware Court of Chancery or such other court shall deem
proper.
Section 145 further provides that nothing in the above-described provisions
shall be deemed exclusive of any other rights to indemnification or advancement
of expenses to which any person may be entitled under any bylaw, agreement, vote
of stockholders or disinterested directors or otherwise.
The By-laws of the Company provide for the indemnification of any person
who was or is party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that such person is or
was a director or officer of the Company or a constituent corporation absorbed
in a consolidation or merger, or is or was serving at the request of the Company
or a constituent corporation absorbed in a consolidation or merger, as a
director or officer of another corporation, partnership, joint venture, trust or
other enterprise, or is or was a director or officer of the Company serving at
its request as an administrator, trustee or other fiduciary of one or more of
the employee benefit plans of the Company or other enterprise, against expenses
(including attorneys' fees), liability and loss actually and reasonably incurred
or suffered by such person in connection with such proceedings, whether or not
the indemnified liability arises or arose from any threatened, pending or
completed proceeding by or in the right of the Company, except to the extent
that such indemnification is prohibited by applicable law. The By-laws of the
Company also provide that such indemnification shall not be deemed exclusive of
any other rights to which those indemnified may be entitled as a matter of law
or under any by-law, agreement, vote of stockholders or otherwise.
Section 102(b)(7) of the Delaware General Corporation Law provides that a
corporation may in its certificate of incorporation eliminate or limit the
personal liability of a director to the corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director except for
liability: for any breach
II-1
<PAGE> 100
of the director's duty of loyalty to the corporation or its stockholders; for
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law; under Section 174 of the Delaware General Corporation
Law (pertaining to certain prohibited acts including unlawful payment of
dividends or unlawful purchase or redemption of the corporation's capital
stock); or for any transaction from which the director derived an improper
personal benefit. The Certificate of Incorporation of the Company contains a
provision so limiting the personal liability of directors of the Company.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits:
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- ------------------------------------------------------------------------------------
<C> <S>
3.1 Certificate of Incorporation, as amended, of the Company
3.2 By-laws of the Company
4.1 Indenture dated as of November 27, 1996 between the Company and United States Trust
Company of New York, as Trustee
4.2 Registration Rights Agreement dated as of November 27, 1996 among the Company,
Jefferies & Company, Inc. and Bear, Stearns & Co. Inc.
4.3 Form of 10 3/4% Senior Notes due 2006 (included in Exhibit 4.1)
5.1 Opinion of Dechert Price & Rhoads*
10.1 Purchase Agreement dated November 22, 1996 among the Company, Jefferies & Company,
Inc. and Bear, Stearns & Co. Inc.
10.2 Loan and Security Agreement dated November 27, 1996 by and between Congress
Financial Corporation and the Company
10.3 Stock and Asset Purchase and Sale Agreement, dated as of November 9, 1996 among
Terex Corporation, and certain of its subsidiaries and the Company
10.4 Service Agreement dated as of November 27, 1996 between Terex Corporation and the
Company.
10.5 Indemnity as to Letters of Credit, Performance Bonds, Appeal Bonds, Guaranties, etc.
dated November 27, 1996 by the Company in favor of Terex Corporation, for itself and
as successor to CMH Acquisition Corp., CMH Acquisition International Corp., Clark
Material Handling Company and Clark Material Handling International, Inc.
10.6 Employment Agreement dated as of November 27, 1996 between Holdings and Dr. Martin
M. Dorio
10.7 Tax Sharing Agreement made as of November 27, 1996 between Holdings and the Company
10.8 Stock Purchase Agreement, dated as of May 27, 1992, by and between Clark Equipment
Company and Terex Corporation
10.9 First Amendment to the Stock Purchase Agreement, dated as of July 31, 1992, by and
between Clark Equipment Company and Terex Corporation
10.10 Trademark Assignment Agreement, dated as of July 31, 1992, by and between Clark
Equipment Company and Clark Material Handling Company
10.11 Second Amended and Restated General Operating Agreement, dated November 29, 1990, by
and between Clark Material Handling Company and Chase Manhattan Leasing Company,
Inc.
10.12 Second Amendment to the Second Amended and Restated General Operating Agreement,
dated April 15, 1994, by and among Clark Material Handling Company, Drexel
Industries, Inc. and Clark Credit Corporation
10.13 Third Amendment to the Second Amended and Restated General Operating Agreement,
dated August 1, 1994, by and between Clark Material Handling Company and Clark
Credit Corporation
10.14 Assignment of Second Amended and Restated General Operating Agreement, dated March
22, 1995, by and between Clark Material Handling Company, Clark Credit Corporation,
f/k/a Chase Manhattan Leasing Company, and Associates Commercial Corporation
10.15 Master Software License and Service Agreement, dated May 17, 1996, between Clark
Material Handling Company and SDRC Operations
</TABLE>
II-2
<PAGE> 101
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- ------------------------------------------------------------------------------------
<C> <S>
10.16 Letter Agreement, dated October 26, 1995, between Clark Material Handling Company,
Manufacturers Distribution Services, Inc. and Maine Rubber International
10.17 MCI Services Agreement, effective as of July 1, 1995, between MCI Telecommunications
Corporation and Clark Material Handling Company*
10.18 Agreement for Systems Operations Services, dated as of March 2, 1992, between Clark
Material Handling Company and Integrated Systems Solutions Corporation, as amended
by Amendments #1 through #5
10.19 Supply Agreement, dated December 14, 1994, between Clark Material Handling Company
and Funk Manufacturing Company
10.20 Supply Agreement, dated July 1, 1995, between Clark Material Handling Company and
Funk Manufacturing Company
10.21 Supply Agreement, dated January 1, 1988, between Clark Material Systems Technology
Company and HydroElectric Lift Trucks Inc.
10.22 Amendment Agreement, dated March 2, 1992, between Clark Material Handling Company
and HydroElectric Lift Trucks, Inc.
10.23 Second Amendment Agreement, dated September 30, 1992, between Clark Material
Handling Company and HydroElectric Lift Trucks, Inc.
10.24 Agreement, dated June 1, 1983, between Clark Equipment Company and Mitsubishi
Corporation, Mitsubishi Heavy Industries, Ltd. and Mitsubishi Motors Corporation, as
amended
10.25 Master Contract for Purchase and Sale, dated July 17, 1995, between Clark Material
Handling Company and Custom Tool and Manufacturing Company
10.26 Supply Agreement, dated December 20, 1991, between Clark Material Handling Company
and Dixson, Inc.
10.27 Lease Agreement, dated as of April 15, 1987, between Vergil D. Kelly and Kenny
Angelucci and Clark Equipment Company with respect to 172 Trade Street, Lexington,
Kentucky, as amended by Amendment #1 to Lease dated April 15, 1987
10.28 Standard Form Dealer Sales Agreements between Clark Material Handling Company and
domestic dealer entities
10.29 Agreement, dated as of September 12, 1995, by and between Clark Material Handling
Company and Nissan Forklift Corporation, North America
12.1 Statement of Ratio of Earnings to Fixed Charges
21.1 Subsidiaries of the Company
23.1 Consent of Dechert Price & Rhoads (included in Exhibit 5.1)
23.2 Consent of Price Waterhouse LLP
24 Power of Attorney (included on signature page)
25 Statement of Eligibility and Qualification, Form T-1, of United States Trust Company
of New York
27 Financial Data Schedule
99.1 Form of Letter of Transmittal
99.2 Form of Notice of Guaranteed Delivery
</TABLE>
- ---------------
* To be supplied by amendment.
(b) Financial Statement Schedules:
Schedule II -- Valuation and Qualifying Accounts and Reserves
Schedules not listed above are omitted because of the absence of the
conditions under which they are required or because the information required by
such omitted schedules is set forth in the financial statements or the notes
thereto.
II-3
<PAGE> 102
ITEM 22. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) to file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(iii) to include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
(2) that, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof; and
(3) to remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
(c) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11 or 13 of this Form, within one business day of receipt of such
request, and to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in documents filed
subsequent to the effective date of the registration statement through the date
of responding to the request.
(d) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-4
<PAGE> 103
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Lexington,
State of Kentucky, on the 18th day of December 1996.
CLARK MATERIAL HANDLING COMPANY
By: /s/ DR. MARTIN M. DORIO
------------------------------------
Dr. Martin M. Dorio
President and Chief Executive
Officer
POWER OF ATTORNEY
Each person whose signature appears below appoints Dr. Martin M. Dorio and
Michael A. Delaney, any of whom may act without the joinder of the other, as his
true and lawful attorney-in-fact and agent with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities to sign any and all amendments (including post-effective amendments)
to this Registration Statement, and to file the same, with all exhibits thereto
and all other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents or their substitute or substitutes may lawfully do or cause to be
done by virtue thereof.
Pursuant to this requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities at the above-named Registrant on December 18, 1996.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------------------ ------------------------------------------
<S> <C>
/s/ DR. MARTIN M. DORIO President, Chief Executive Officer and
- ------------------------------------------ Director (Principal Executive Officer)
Dr. Martin M. Dorio
/s/ JOSEPH F. LINGG Vice President, Finance, and Treasurer
- ------------------------------------------ (Principal Financial and Accounting
Joseph F. Lingg Officer)
/s/ THOMAS J. SNYDER Director
- ------------------------------------------
Thomas J. Snyder
/s/ MICHAEL A. DELANEY Director
- ------------------------------------------
Michael A. Delaney
</TABLE>
<PAGE> 104
CLARK MATERIAL HANDLING COMPANY
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
<TABLE>
<CAPTION>
BALANCE
BEGINNING CHARGES TO (1) (2) BALANCE
OF YEAR EARNINGS OTHER DEDUCTIONS END OF YEAR
--------- ---------- ----- ---------- -----------
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1995
Deducted from Asset Accounts:
Allowance for Doubtful Accounts...... 3,600 -- 71 (804) 2,867
Reserve for Excess and Obsolete
Inventory......................... 6,350 2,453 71 (4,161) 4,713
Year ended December 31, 1994
Deducted from Asset Accounts:
Allowance for Doubtful Accounts...... 4,643 -- 106 (1,149) 3,600
Reserve for Excess and Obsolete
Inventory......................... 6,397 2,383 59 (2,489) 6,350
Year ended December 31, 1993
Deducted from Asset Accounts:
Allowance for Doubtful Accounts...... 4,307 786 (94) (356) 4,643
Reserve for Excess and Obsolete
Inventory......................... 6,309 2,195 -- (2,107) 6,397
</TABLE>
- ---------------
(1) Effect of exchange rate
(2) Utilization of established reserves, net of recoveries
1
<PAGE> 1
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 11/08/1996
960326801-2682172
Exhibit 3.1
CERTIFICATE OF INCORPORATION
OF
CMHC ACQUISITION CORPORATION
1. Name. The name of the Corporation is CMHC Acquisition Corporation.
2. Registered Office and Agent. The address of the Corporation's
registered office in the State of Delaware is 1013 Centre Road, in the City of
Wilmington, County of New Castle. The name of the Corporation's registered
agent at such address is Corporation Service Company.
3. Purpose. The purposes for which the Corporation is formed are to
engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of Delaware and to possess and exercise all
of the powers and privileges granted by such law and any other law of Delaware.
4. Authorized Capital. The aggregate number of shares of stock which
the Corporation shall have authority to issue is one thousand (1,000) shares,
all of which are of one class and are designated as Common Stock and each of
which has a par value of one cent ($.01).
5. Incorporator. The name and mailing address of the incorporator are
Robin L. Foelster, 4000 Bell Atlantic Tower, 1717 Arch Street, Philadelphia,
Pennsylvania 19103-2793.
6. Bylaws. The board of directors of the Corporation is authorized to
adopt, amend or repeal the bylaws of the Corporation, except as otherwise
specifically provided therein.
7. Elections of Directors. Elections of directors need not be by written
ballot unless the bylaws of the Corporation shall so provide.
8. Right to Amend. The Corporation reserves the right to amend any
provision contained in this Certificate as the same may from time to time be in
effect in the manner now or hereafter prescribed by law, and all rights
conferred on stockholders or others hereunder are subject to such reservation.
9. Limitation on Liability. The directors of the Corporation shall be
entitled to the benefits of all limitations on the liability of directors
generally that are now or hereafter become available under the General
Corporation Law of Delaware. Without limiting the generality of the foregoing,
no director of the Corporation shall be liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to
the Corporation or its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(iii) under Section 174 of the Delaware General Corporation Law, or (iv) for
any transaction from which the director derived an improper personal benefit.
Any repeal or modification of this Section 9 shall be prospective only, and
shall not affect, to the detriment of any director, any limitation on the
personal liability of a director of the Corporation existing at the time of
such repeal or modification.
Dated: November 8, 1996
/s/ Robin L. Foelster
-----------------------------------
Robin L. Foelster
Incorporator
<PAGE> 2
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
CMHC ACQUISITION CORPORATION
CMHC Acquisition Corporation, a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware (the "Company"), does hereby certify:
FIRST: That by written consent of the board of directors dated November
22, 1996, a resolution was duly adopted setting forth a proposed
amendment to the Certificate of Incorporation of the Company, declaring
said amendment to be advisable and calling for consideration of said
proposed amendment by the sole stockholder of the Company. The
resolution setting forth the amendment is as follows:
RESOLVED, that it is hereby proposed that Article 1 of the
Certificate of Incorporation of the Company be amended so that the same as
amended would read as follows:
1. Name. The name of the Corporation is CLARK Material
Handling Company.
SECOND: That thereafter, pursuant to the resolution of the board of
directors, the proposed amendment was approved by the sole stockholder
of the Company by written consent dated November 22, 1996.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 and 228 of the General Corporation Law of the
State of Delaware.
<PAGE> 3
IN WITNESS WHEREOF, the Company has caused this Certificate to
be executed by Michael J. Grossman, its Secretary, this 22nd day of November,
1996.
CMHC ACQUISITION CORPORATION
By: /s/ Michael J. Grossman
-------------------------------------
Michael J. Grossman
Secretary
-2-
<PAGE> 1
Exhibit 3.2
BYLAWS
OF
CLARK MATERIAL HANDLING COMPANY
(f/k/a CMHC Acquisition Corporation)
ARTICLE I
STOCKHOLDERS
1.1 Meetings.
1.1.1 Place. Meetings of the stockholders shall be held at such place
as may be designated by the board of directors.
1.1.2 Annual Meeting. An annual meeting of the stockholders for the
election of directors and for other business shall be held on such date and at
such time as may be fixed by the board of directors.
1.1.3 Special Meetings. Special meetings of the stockholders may be
called at any time by the president, or the board of directors, or the holders
of a majority of the outstanding shares of stock of the Company entitled to vote
at the meeting.
1.1.4 Quorum. The presence, in person or by proxy, of the holders of a
majority of the outstanding shares of stock of the Company entitled to vote on a
particular matter shall constitute a quorum for the purpose of considering such
matter.
1.1.5 Voting Rights. Except as otherwise provided herein, in the
certificate of incorporation or by law, every stockholder shall have the right
at every meeting of stockholders to one vote for every share standing in the
name of such stockholder on the books of the Company which is entitled to vote
at such meeting. Every stockholder may vote either in person or by proxy.
ARTICLE II
DIRECTORS
2.1 Number and Term. The board of directors shall have authority to (i)
determine the number of directors to constitute the board and (ii) fix the terms
of office of the directors.
<PAGE> 2
2.2 Meetings.
2.2.1 Place. Meetings of the board of directors sha11 be held at such
place as may be designated by the board or in the notice of the meeting.
2.2.2 Regular Meetings. Regular meetings of the board of directors
shall be held at such times as the board may designate. Notice of regular
meetings need not be given.
2.2.3 Special Meetings. Special meetings of the board may be called by
direction of the president or any two members of the board on three days' notice
to each director, either personally or by mail, telegram or facsimile
transmission.
2.2.4 Quorum. A majority of all the directors in office shall
constitute a quorum for the transaction of business at any meeting.
2.2.5 Voting. Except as otherwise provided herein, in the certificate
of incorporation or by law, the vote of a majority of the directors present at
any meeting at which a quorum is present shall constitute the act of the board
of directors.
2.2.6 Committees. The board of directors may, by resolution adopted by
a majority of the whole board, designate one or more committees, each committee
to consist of one or more directors and such alternate members (also directors)
as may be designated by the board. Unless otherwise provided herein, in the
absence or disqualification of any member of a committee, the member or members
thereof present at any meeting and not disqualified from voting, whether or not
such member or members constitute a quorum, may unanimously appoint another
director to act at the meeting in the place of any such absent or disqualified
member. Except as otherwise provided herein, in the certificate of incorporation
or by law, any such committee shall have and may exercise the powers of the full
board of directors to the extent provided in the resolution of the board
directing the committee.
ARTICLE III
OFFICERS
3.1 Election. At its first meeting after each annual meeting of the
stockholders, the board of directors shall elect a president, treasurer,
secretary and such other officers as it deems advisable.
-2-
<PAGE> 3
3.2 Authority, Duties and Compensation. The officers shall have such authority,
perform such duties and serve for such compensation as may be determined by
resolution of the board of directors. Except as otherwise provided by board
resolution, (i) the president shall be the chief executive officer of the
Company, shall have general supervision over the business and operations of the
Company, may perform any act and execute any instrument for the conduct of such
business and operations and shall preside at all meetings of the board and
stockholders, (ii) the other officers shall have the duties customarily related
to their respective offices, and (iii) any vice president, or vice presidents in
the order determined by the board, shall in the absence of the president have
the authority and perform the duties of the president.
ARTICLE IV
INDEMNIFICATION
4.1 Right to Indemnification. The Company shall indemnify any person who was or
is party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (a "proceeding"), by reason of the fact that such person is or was
a director or officer of the Company or a constituent corporation absorbed in a
consolidation or merger, or is or was serving at the request of the Company or a
constituent corporation absorbed in a consolidation or merger, as a director or
officer of another corporation, partnership, joint venture, trust or other
enterprise, or is or was a director or officer of the Company serving at its
request as an administrator, trustee or other fiduciary of one or more of the
employee benefit plans of the Company or other enterprise, against expenses
(including attorneys' fees), liability and loss actually and reasonably incurred
or suffered by such person in connection with such proceeding, whether or not
the indemnified liability arises or arose from any threatened, pending or
completed proceeding by or in the right of the Company, except to the extent
that such indemnification is prohibited by applicable law.
4.2 Advance of Expenses. Expenses incurred by a director or officer of the
Company in defending a proceeding shall be paid by the Company in advance of the
final disposition of such proceeding subject to the provisions of any applicable
statute.
4.3 Procedure for Determining Permissibility. To determine whether any
indemnification or advance of expenses under this Article IV is permissible, the
board of directors by a majority
-3-
<PAGE> 4
vote of a quorum consisting of directors not parties to such proceeding may, and
on request of any person seeking indemnification or advance of expenses shall be
required to, determine in each case whether the applicable standards in any
applicable statute have been met, or such determination shall be made by
independent legal counsel if such quorum is not obtainable, or, even if
obtainable, a majority vote of a quorum of disinterested directors so directs,
provided that, if there has been a change in control of the Company between the
time of the action or failure to act giving rise to the claim for
indemnification or advance of expenses and the time such claim is made, at the
option of the person seeking indemnification or advance of expenses, the
permissibility of indemnification or advance of expenses shall be determined by
independent legal counsel. The reasonable expenses of any director or officer in
prosecuting a successful claim for indemnification, and the fees and expenses of
any special legal counsel engaged to determine permissibility of indemnification
or advance of expenses, shall be borne by the Company.
4.4 Contractual Obligation. The obligations of the Company to indemnify a
director or officer under this Article IV, including the duty to advance
expenses, shall be considered a contract between the Company and such director
or officer, and no modification or repeal of any provision of this Article IV
shall affect, to the detriment of the director or officer, such obligations of
the Company in connection with a claim based on any act or failure to act
occurring before such modification or repeal.
4.5 Indemnification Not Exclusive; Inuring of Benefit. The indemnification and
advance of expenses provided by this Article IV shall not be deemed exclusive of
any other right to which one indemnified may be entitled under any statute,
provision of the Certificate of Incorporation, these bylaws, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in such
person's official capacity and as to action in another capacity while holding
such office, and shall inure to the benefit of the heirs, executors and
administrators of any such person.
4.6 Insurance and Other Indemnification. The board of directors shall have the
power to (i) authorize the Company to purchase and maintain, at the Company's
expense, insurance on behalf of the Company and on behalf of others to the
extent that power to do so has not been prohibited by statute, (ii) create any
fund of any nature, whether or not under the control of a trustee, or otherwise
secure any of its indemnification obligations, and
-4-
<PAGE> 5
(iii) give other indemnification to the extent permitted by statute.
ARTICLE V
TRANSFER OF SHARE CERTIFICATES
Transfers of share certificates and the shares represented thereby
shall be made on the books of the Company only by the registered holder or by
duly authorized attorney. Transfers shall be made only on surrender of the share
certificate or certificates.
ARTICLE VI
AMENDMENTS
These bylaws may be amended or repealed at any regular or special
meeting of the board of directors by vote of a majority of all directors in
office or at any annual or special meeting of stockholders by vote of holders of
a majority of the outstanding stock entitled to vote. Notice of any such annual
or special meeting of stockholders shall set forth the proposed change or a
summary thereof.
-5-
<PAGE> 1
EXHIBIT 4.1
CLARK Material Handling Company
as obligor
$130,000,000
10 3/4% Senior Notes due 2006
Series A and Series B
----------------------------
INDENTURE
Dated as of November 27, 1996
----------------------------
UNITED STATES TRUST COMPANY OF NEW YORK,
Trustee
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2. Other Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 1.3. Incorporation by Reference of Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 1.4. Rules of Construction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE 2
THE NOTES
Section 2.1. Form and Dating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 2.2. Execution and Authentication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 2.3. Registrar, Paying Agent and Depository . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 2.4. Paying Agent to Hold Money in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 2.5. Holder Lists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 2.6. Transfer and Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 2.7. Replacement Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 2.8. Outstanding Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 2.9. Treasury Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 2.10. Temporary Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 2.11. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 2.12. Defaulted Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 2.13. Legends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE 3
REDEMPTION
Section 3.1. Notices to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 3.2. Selection of Notes to Be Redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 3.3 Notice of Redemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 3.4. Effect of Notice of Redemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 3.5. Deposit of Redemption Price. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 3.6. Notes Redeemed in Part. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 3.7. Optional Redemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
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ARTICLE 4
COVENANTS
Section 4.1. Payment of Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 4.2. Maintenance of Office or Agency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 4.3. Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 4.4. Compliance Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 4.5. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 4.6. Stay, Extension and Usury Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 4.7. Limitation on Restricted Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 4.8. Limitation on Restrictions on Subsidiary Dividends. . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 4.9. Limitation on Incurrence of Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 4.10. Limitation on Asset Sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 4.11. Limitation on Transactions With Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 4.12. Limitation on Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 4.13. Corporate Existence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 4.14. Repurchase Upon a Change of Control. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 4.15. Maintenance of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 4.16. Maintenance of Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 4.17. Restrictions on Sale and Issuance of Subsidiary Stock. . . . . . . . . . . . . . . . . . . . . . . . 54
Section 4.18. Line of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
ARTICLE 5
SUCCESSORS
Section 5.1. When the Company May Merge, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 5.2. Successor Substituted. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.1. Events of Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 6.2. Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 6.3. Other Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 6.4. Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 6.5. Control by Majority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 6.6. Limitation on Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 6.7. Rights of Holders to Receive Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 6.8. Collection Suit by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 6.9. Trustee May File Proofs of Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
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Section 6.10. Priorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 6.11. Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
ARTICLE 7
TRUSTEE
Section 7.1. Duties of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 7.2. Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 7.3. Individual Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 7.4. Trustee's Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 7.5. Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 7.6. Reports by Trustee to Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 7.7. Compensation and Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 7.8. Replacement of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 7.9. Successor Trustee by Merger, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 7.10. Eligibility; Disqualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 7.11. Preferential Collection of Claims Against Company . . . . . . . . . . . . . . . . . . . . . . . . . . 69
ARTICLE 8
DISCHARGE OF INDENTURE
Section 8.1. Termination of Company's Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 8.2. Application of Trust Money. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 8.3. Repayment to the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 8.4. Reinstatement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
ARTICLE 9
AMENDMENTS
Section 9.1. Without Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 9.2. With Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 9.3. Compliance with Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Section 9.4. Revocation and Effect of Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Section 9.5. Notation on or Exchange of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 9.6. Trustee to Sign Amendments, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
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ARTICLE 10
GUARANTY
Section 10.1. Guarantors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 10.2. Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 10.3. Execution and Delivery of Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 10.4. Limitation on Guarantor's Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 10.5. Rights under the Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 10.6. Primary Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 10.7. Release of Guarantors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
ARTICLE 11
MISCELLANEOUS
Section 11.1. Trust Indenture Act Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 11.2. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 11.3. Communication by Holders with Other Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Section 11.4. Certificate and Opinion as to Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . 83
Section 11.5. Statements Required in Certificate or Opinion. . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Section 11.6. Rules by Trustee and Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Section 11.7. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Section 11.8. No Recourse Against Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Section 11.9. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Section 11.10. No Adverse Interpretation of Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Section 11.11. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Section 11.12. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Section 11.13. Counterpart Originals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Section 11.14. Table of Contents, Headings, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
SIGNATURES
EXHIBIT A - FORM OF NOTE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
EXHIBIT B - CERTIFICATE OF TRANSFEROR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
EXHIBIT C - FORM OF GUARANTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-1
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<CAPTION>
CROSS-REFERENCE TABLE*
Trust Indenture
Act Section Indenture Section
- -------------- --------------
<S> <C>
310(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.8; 7.10
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.3
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.3
313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6
(b)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6
(b)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6
314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3; 4.4
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.4
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.4
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.5
(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1(2)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.5
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1(1)
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1(3)
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.11
316(a)(last sentence) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.9
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.2
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.4
317(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.8
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.9
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4
318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.1
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.1
</TABLE>
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
<PAGE> 7
INDENTURE, dated as of November 27, 1996, between CLARK
Material Handling Company, a Delaware corporation (the "Company"), and United
States Trust Company of New York, a New York corporation, as trustee (the
"Trustee").
The Company and the Trustee agree as follows for the benefit
of each other and for the equal and ratable benefit of the Holders of the
Company's 10 3/4% Series A Senior Notes due 2006 and the Company's 10 3/4%
Series B Senior Notes due 2006.
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.1. Definitions.
"Accounts" shall mean, as to any Person, all of such Person's
now owned and hereafter acquired rights to payment (including intercompany
obligations) for the prior, concurrent or future sale, lease or other
disposition of Inventory or rendition of services, whether or not evidenced by
an instrument or chattel paper and whether or not earned by performance.
"Acquired Debt" means Indebtedness of a Person existing at the
time such Person is merged with or into the Company or a Restricted Subsidiary
or becomes a Restricted Subsidiary, other than Indebtedness incurred in
connection with, or in contemplation of, such Person merging with or into the
Company or a Restricted Subsidiary or becoming a Restricted Subsidiary;
provided, that Indebtedness of such Person that is redeemed, defeased, retired
or otherwise repaid at the time, or immediately upon consummation, of the
transaction by which such Person is merged with or into the Company or a
Restricted Subsidiary or becomes a Restricted Subsidiary shall not be Acquired
Debt.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such Person,
whether through the
<PAGE> 8
ownership of voting securities, by agreement or otherwise. Notwithstanding the
foregoing, neither Initial Purchaser nor any of their respective Affiliates
will be deemed to be Affiliates of the Company.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Asset Sale" means any direct or indirect (a) transfer (as
hereinafter defined), other than in the ordinary course of business, of any
assets of the Company or any Restricted Subsidiary or (b) issuance of any
Capital Stock of any Restricted Subsidiary, in each case to any Person (other
than the Company or a Restricted Subsidiary and other than directors'
qualifying shares). For purposes of this definition, (i) any series of
transfers that are part of a common plan shall be deemed a single Asset Sale
and (ii) the term "Asset Sale" shall not include any disposition of all or
substantially all of the assets of the Company that is governed under and
complies with Article V of this Indenture.
"Bankruptcy Law" means title 11, U.S. Code or any similar
Federal, state or foreign law for the relief of debtors.
"Board of Directors" means the board of directors or any duly
constituted committee of any corporation or of a corporate general partner of a
partnership and any similar body empowered to direct the affairs of any other
entity.
"Business Day" means any day other than a Legal Holiday.
"Capital 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 the amount of such
obligations at any date shall be the capitalized amount of such obligations at
such date, determined in accordance with GAAP.
"Capital Stock" means (i) with respect to any Person that is a
corporation, any and all shares, interests, participations, rights or other
equivalents (however designated) of corporate stock, and (ii) with respect to
any other Person, any and all partnership or other equity interests of such
Person.
"Cash Equivalent" means (i) securities issued or directly and
fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of
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<PAGE> 9
America is pledged in support thereof), (ii) time deposits and certificates of
deposit and commercial paper issued by the parent corporation of any domestic
commercial bank of recognized standing having capital and surplus in excess of
$250,000,000 and commercial paper issued by others rated at least A-2 or the
equivalent thereof by Standard & Poor's Corporation or at least P-2 or the
equivalent thereof by Moody's Investors Service, Inc. and in each case maturing
within one year after the date of acquisition and (iii) investments in money
market funds substantially all of whose assets comprise securities of the types
described in clauses (i) and (ii) above.
"Change of Control" means (i) the transfer (in one transaction
or a series of transactions) of all or substantially all of the Company's
assets to any Person or group (as such term is used in Section 13(d)(3) of the
Exchange Act) other than to one or more Existing Holders, (ii) the liquidation
or dissolution of the Company or the adoption of a plan by the stockholders of
the Company relating to the dissolution or liquidation of the Company, (iii)
the acquisition by any Person or group (as such term is used in Section
13(d)(3) of the Exchange Act), except for one or more Existing Holders, of
beneficial ownership, directly or indirectly, of more than 50% of the voting
power of the total outstanding Voting Stock of Holdings, (iv) after the
consummation of an initial public offering of any class of common stock of the
Company or Holdings, during any period of two consecutive years, individuals
who at the beginning of such period constituted the Board of Directors of the
Company or Holdings (together with any new directors who have been appointed by
CVC, Citicorp N.A., or any Affiliate of CVC or whose nomination for election by
the stockholders of the Company was approved by a vote of at least 66 2/3% of
the directors then still in office who were either directors at the beginning
of such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board of
Directors of the Company or Holdings, as the case may be, then still in office
or (v) the failure by Holdings to own more than 50% of the voting power of the
total outstanding Voting Stock of the Company.
"Clark Europe" means Clark Material Handling GmbH, a Wholly
Owned Subsidiary.
"Closing Date" means the date upon which the Series A Notes
are first issued.
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<PAGE> 10
"Commission" means the Securities and Exchange Commission, as
from time to time constituted, created under the Exchange Act, or if at any
time after the execution of this Indenture such Commission is not existing and
performing the duties now assigned to it under the TIA, then the body
performing such duties at such time.
"Company" means the party named as such above, until a
successor replaces such Person in accordance with the terms of this Indenture,
and thereafter means such successor.
"Company Order" means a written request or order signed in the
name of the Company by its Chairman of the Board, President or Vice President,
and by its Treasurer, an Assistant Treasurer, its Secretary or an Assistant
Secretary and delivered to the Trustee.
"Consolidated EBITDA" means, with respect to any Person (the
referent Person) for any period, consolidated income (loss) from operations of
such Person and its subsidiaries for such period, determined in accordance with
GAAP, plus (to the extent such amounts are deducted in calculating such income
(loss) from operations of such Person for such period, and without duplication)
amortization, depreciation and other non-cash charges (including, without
limitation, amortization of goodwill, deferred financing fees and other
intangibles but excluding non-cash charges incurred after the date of this
Indenture that require an accrual of or a reserve for cash charges for any
future period); provided, that (i) the income from operations of any Person
(including, without limitation, any Unrestricted Subsidiary) that is not a
Wholly Owned Subsidiary or that is accounted for by the equity method of
accounting will be included only to the extent of the amount of dividends or
distributions paid during such period to the referent Person or a Wholly Owned
Subsidiary of the referent Person, and (ii) the income from operations of any
Restricted Subsidiary will not be included to the extent that declarations of
dividends or similar distributions by that Restricted Subsidiary are not at the
time permitted, directly or indirectly, by operation of the terms of its
organization documents or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to that Restricted
Subsidiary or its owners.
"Consolidated Interest Expense" means, with respect to any
Person for any period, the consolidated interest expense of such Person and its
subsidiaries for such period, whether paid or accrued (including amortization
of original issue discount, noncash interest payment, and the interest
component of Capital
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<PAGE> 11
Lease Obligations), to the extent such expense was deducted in computing
Consolidated Net Income of such Person for such period.
"Consolidated Net Income" means, with respect to any Person
(the referent Person) for any period, the aggregate of the Net Income of such
Person and its subsidiaries for such period, determined on a consolidated basis
in accordance with GAAP; provided, that (i) the Net Income of any Person
(including, without limitation, any Unrestricted Subsidiary) that is not a
Wholly Owned Subsidiary or that is accounted for by the equity method of
accounting will be included in calculating the referent Person's Consolidated
Net Income only to the extent of the amount of dividends or distributions paid
during such period to the referent Person or a Wholly Owned Subsidiary of the
referent Person, (ii) the Net Income of any Person acquired in a pooling of
interests transaction for any period prior to the date of such acquisition will
be excluded, and (iii) the Net Income of any Subsidiary will be excluded to the
extent that declarations of dividends or similar distributions by that
Subsidiary of such Net Income are not at the time permitted, directly or
indirectly, by operation of the terms of its organization documents or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Subsidiary or its owners.
"Consolidated Net Worth" means, with respect to any Person,
the total stockholders' equity of such Person determined on a consolidated
basis in accordance with GAAP, adjusted to exclude (to the extent included in
calculating such equity), (i) the amount of any such stockholders' equity
attributable to Disqualified Capital Stock of such Person and its consolidated
subsidiaries, and (ii) all upward revaluations and other write-ups in the book
value of any asset of such person or a consolidated subsidiary of such person
subsequent to the Closing Date, and (iii) all Investments in persons that are
not consolidated Restricted Subsidiaries.
"Corporate Trust Office" shall be at the address of the
Trustee specified in Section 11.2 or such other address as the Trustee may
specify by notice to the Company.
"Custodian" means any receiver, trustee, assignee, liquidator
or similar official under any Bankruptcy Law.
"CVC" means Citicorp Venture Capital Ltd.
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<PAGE> 12
"Default" means any event that is, or after notice or the
passage of time or both would be, an Event of Default.
"Definitive Notes" means Notes that are in the form of the
Notes attached hereto as Exhibit A, that do not include the information called
for by footnotes 1 and 2 thereof.
"Depository" means the Person specified in Section 2.3 hereof
as the Depository with respect to the Notes issuable in global form, until a
successor shall have been appointed and become such pursuant to the applicable
provision of this Indenture, and, thereafter, "Depository" shall mean or
include such successor.
"Disqualified Stock" means that portion of any Equity
Interests that (i) either by its terms (or by the terms of any security into
which it is convertible or for which it is exchangeable) is or upon the
happening of an event would be required to be redeemed or repurchased prior to
the final stated maturity of the Notes or is redeemable at the option of the
holder thereof at any time prior to such final stated maturity or (ii) is
convertible into or exchangeable at the option of the issuer thereof or any
other Person for debt securities.
"DTC" means The Depository Trust Company.
"Eligible Inventory" means all Inventory of the Company and
the Restricted Subsidiaries consisting of (i) finished goods held for resale in
the ordinary course of business of any such Person, (ii) work in process
relating to goods to be held for resale in the ordinary course of business of
any such Person, (iii) parts held for resale or to be incorporated into any
such finished goods, and (iv) raw materials for such finished goods.
"Eligible Receivables" means Accounts of the Company and the
Restricted Subsidiaries arising from the actual and bona fide sale and delivery
of goods or rendition of services by any such Person in the ordinary course of
its business that (i) are not unpaid more than ninety (90) days from the
original due date thereof or more than one hundred and eighty (180) days after
the date of the original invoice therefor, (ii) do not arise from sales on
consignment, guaranteed sale, sale and return, sale on approval, or other terms
under which payment by the account debtor may be conditional or contingent;
provided, that no Account where the debtor is a dealer of Inventory shall be
deemed ineligible solely because the Company or a Restricted Subsidiary has a
buy-back arrangement with
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<PAGE> 13
such account debtor effective upon the termination of such account debtor as a
dealer, but upon such termination such dealer's Accounts shall become
ineligible, (iii) the account debtor with respect to such Accounts (x) has not
asserted a counterclaim, defense or dispute and (y) does not have, and does not
engage in transactions that may give rise to, any right of setoff against such
Accounts unless in the case of this clause (y) such account debtor has entered
into a written agreement, pursuant to which such account debtor agrees not to
assert any setoff against Accounts owed to the Company or any of its
Subsidiaries, and (iv) such account debtor is not the Company or any Subsidiary
or Affiliate of the Company.
"Equity Interests" means Capital Stock or warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Offer" means the offer that may be made by the
Company pursuant to the Registration Rights Agreement to exchange Series B
Notes for Series A Notes.
"Existing Holders" shall mean (i) CVC, (ii) Citicorp N.A. or
any other Affiliate of CVC, (iii) any officer, employee or director of CVC,
(iv) the Management Investors and (v) in the case of any natural Person
specified in the foregoing clauses, any spouse or lineal descendant (including
by adoption) of such Person; provided, that in no event shall the Persons
specified in clauses (iii) through (v) be deemed "Existing Holders" with
respect to more than 30% of the voting power of the total outstanding Voting
Stock of the Company or Holdings.
"Floor Plan Guaranty" means (a) the Guarantee by the Company
or a Restricted Subsidiary of Indebtedness incurred by a franchise dealer or
other purchaser of Inventory manufactured or sold by the Company or a
Restricted Subsidiary, the proceeds of which Indebtedness is used solely to pay
the purchase price of such Inventory and any related fees and expenses
(including finance fees); provided, that (i) to the extent commercially
practicable, the Indebtedness so guaranteed is secured by a perfected first
priority lien on such Inventory in favor of the holder of such Indebtedness and
(ii) if the Company or such Restricted Subsidiary is required to make payment
with respect to such Guarantee, the Company or such Restricted Subsidiary will
have the right to receive either
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<PAGE> 14
(A) title to such Inventory, (B) a valid assignment of a first priority
perfected lien in such Inventory or (C) the net proceeds of any resale of such
Inventory; and (b) obligations to repurchase equipment sold by the Company or
its Restricted Subsidiaries from a dealer upon termination of such dealer or
from customers who lease such equipment to third parties when the equipment
comes off lease.
"Foreign Subsidiary" means a Restricted Subsidiary not
organized under the laws of the United States or any political subdivision
thereof and the operations of which are located entirely outside the United
States.
"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 approved by a significant segment of the
accounting profession, and in the rules and regulations of the Commission, that
are in effect on the date of this Indenture.
"German Subsidiary Facilities" means one or more revolving
credit facilities of Clark Europe, as the same may be amended, modified,
renewed, refunded, replaced or refinanced from time to time including (i) any
related notes, letters of credit, guarantees, collateral documents, instruments
and agreements executed in connection therewith, and in each case amended,
modified, renewed, refunded, replaced or refinanced from time to time, and (ii)
any notes, guarantees, collateral documents, instruments and agreements
executed in connection with any such amendment, modification, renewal,
refunding, replacement or refinancing.
"Global Note" means a Note that contains the paragraph
referred to in footnote 1 and the additional schedule referred to in footnote 2
in the form of the Note attached hereto as Exhibit A.
"Guarantee" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, letters of
credit and reimbursement agreements in respect thereof), of all or any part of
any Indebtedness.
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<PAGE> 15
"Guarantors" means all direct or indirect Restricted
Subsidiaries that are not Foreign Subsidiaries.
"Holder" means a Person in whose name a Note is registered.
"Holdings" means CMH Holdings Corporation, the holder of all
of the outstanding shares of Capital Stock of the Company.
"Indebtedness" of any Person means (without duplication) (1)
all liabilities and obligations, contingent or otherwise, of such Person (a) in
respect of borrowed money (whether or not the recourse of the lender is to the
whole of the assets of such Person or only to a portion thereof), (b) evidenced
by bonds, debentures, notes or other similar instruments, (c) representing the
deferred purchase price of property or services (other than (i) non interest
bearing obligations and (ii) liabilities incurred in the ordinary course of
business which are not more than 90 days past due), (d) created or arising
under any conditional sale or other title retention agreement with respect to
property acquired by such Person (even though the rights and remedies of the
seller or lender under such agreement in the event of default are limited to
repossession or sale of such property), (e) as lessee under capitalized leases,
(f) under bankers' acceptance and letter of credit facilities, (g) to purchase,
redeem, retire, defease or otherwise acquire for value any Disqualified Stock,
or (h) in respect of Hedging Obligations, (2) all liabilities and obligations
of others of the type described in clause (1), above, that are Guaranteed by
such Person, and (3) all liabilities and obligations of others of the type
described in clause (1), above, that are secured by (or for which the holder of
such Indebtedness has an existing right, contingent or otherwise, to be secured
by) any Lien on property (including, without limitation, accounts and contract
rights) owned by such Person; provided, that the amount of such Indebtedness
shall (to the extent such Person has not assumed or become liable for the
payment of such Indebtedness in full) be the lesser of (x) the fair market
value of such property at the time of determination and (y) the amount of such
Indebtedness. The amount of Indebtedness of any Person at any date shall be
the outstanding balance at such date of all unconditional obligations as
described above and the maximum liability, upon the occurrence of the
contingency giving rise to the obligation, of any contingent obligations at
such date.
"Indenture" means this Indenture as amended or supplemented
from time to time.
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<PAGE> 16
"Initial Purchasers" means Jefferies & Company, Inc. and Bear,
Stearns & Co. Inc.
"Interest Coverage Ratio" means, for any period, the ratio of
(i) Consolidated EBITDA of the Company for such period, to (ii) Consolidated
Interest Expense of the Company for such period. In calculating the Interest
Coverage Ratio for any period, pro forma effect shall be given to: (a) the
incurrence, assumption, guarantee, repayment, repurchase, redemption or
retirement by the Company or any of its Subsidiaries of any Indebtedness (other
than under the Revolving Credit Facility) subsequent to the commencement of the
period for which the Interest Coverage Ratio is being calculated but on or
prior to the date on which the event for which the calculation is being made,
as if the same had occurred at the beginning of the applicable period; and (b)
the occurrence of any Asset Sale during such period by reducing Consolidated
EBITDA for such period by an amount equal to the Consolidated EBITDA (if
positive) directly attributable to the assets sold and by reducing Consolidated
Interest Expense by an amount equal to the Consolidated Interest Expense
directly attributable to any Indebtedness assumed by third parties or repaid
with the proceeds of such Asset Sale, in each case as if the same had occurred
at the beginning of the applicable period. For purposes of making the
computation referred to above, acquisitions that have been made by the Company
or any of its Restricted Subsidiaries, including mergers and consolidations,
subsequent to the commencement of such period but on or prior to the date on
which the event for which the calculation is being made shall be given effect
on a pro forma basis, assuming that all such acquisitions, mergers and
consolidations had occurred on the first day of such period. Without limiting
the foregoing, the financial information of the Company with respect to any
portion of such four fiscal quarters that falls before the Closing Date shall
be adjusted to give pro forma effect to the issuance of the Notes and the
application of the proceeds therefrom as if they had occurred at the beginning
of such four fiscal quarters.
"Inventory" shall mean, as to any Person, all now owned and
hereafter acquired goods including, without limitation, parts and goods in the
possession of such Person or of a bailee or other Person for sale, storage,
transit, processing, use or otherwise, and supplies, finished goods, parts and
components, that are: (a) held for sale or lease, (b) furnished or to be
furnished under contracts of services, or (c) raw materials, work-in-process or
materials used or consumed in its business.
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<PAGE> 17
"Investments" means, with respect to any Person, all
investments by such Person in other Persons (including Affiliates) in the forms
of loans, Guarantees, advances or capital contributions (excluding (i)
commission, travel and similar advances to officers and employees of such
Person made in the ordinary course of business and (ii) bona fide accounts
receivable arising from the sale of goods or services in the ordinary course of
business consistent with past practice), purchases or other acquisitions for
consideration of Indebtedness, Equity Interests or other securities, and any
other items that are or would be classified as investments on a balance sheet
prepared in accordance with GAAP.
"Legal Holiday" means a Saturday, a Sunday or a day on which
banking institutions in the City of New York or at a place of payment are
authorized by law, regulation or executive order to remain closed.
"Lien" means any mortgage, lien, pledge, charge, security
interest or encumbrance of any kind, whether or not filed, recorded or
otherwise perfected under applicable law (including any conditional sale or
other title retention agreement, any lease in the nature thereof, any option or
other agreement to sell or give a security interest in and any filing of or
agreement to give any financing statement under the Uniform Commercial Code (or
equivalent statutes) of any jurisdiction).
"Liquidated Damages" has the meaning set out in the
Registration Rights Agreement.
"Management Investors" means the individuals listed as of the
Closing Date on Schedule I of the Securities Purchase and Holders Agreement,
dated the Closing Date, by and among Holdings, CVC and the Management
Investors.
"Material Subsidiary" means any Subsidiary (a) that is a
"Significant Subsidiary" of the Company as defined in Rule 1-02 of Regulation
S-X promulgated by the Commission or (b) is otherwise material to the business
of the Company.
"Net Income" means, with respect to any Person for any period,
the net income (loss) of such Person for such period, determined in accordance
with GAAP, excluding any gain or loss, together with any related provision for
taxes on such gain or loss, realized in connection with any Asset Sales and
dispositions pursuant to sale and leaseback transactions, and excluding any
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<PAGE> 18
extraordinary gain or loss, together with any related provision for taxes on
such gain or loss.
"Net Proceeds" means the aggregate proceeds received in the
form of cash or Cash Equivalents in respect of any Asset Sale (including
payments in respect of deferred payment obligations when received), net of (a)
the reasonable and customary direct out-of-pocket costs relating to such Asset
Sale (including, without limitation, legal, accounting and investment banking
fees and sales commissions), other than any such costs payable to an Affiliate
of the Company, (b) taxes actually payable directly as a result of such Asset
Sale (after taking into account any available tax credits or deductions and any
tax sharing arrangements), (c) amounts required to be applied to the permanent
repayment of Indebtedness in connection with such Asset Sale, and (d)
appropriate amounts provided as a reserve by the Company or any Restricted
Subsidiary, in accordance with GAAP, against any liabilities associated with
such Asset Sale and retained by the Company or such 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
arising from such Asset Sale.
"Notes" means, collectively, the Series A Notes and the
Series B Notes.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other obligations and liabilities
of the Company or any of the Guarantors under this Indenture, the Notes or the
Guarantees of the Notes.
"Officers" means the Chairman of the Board, the President, the
Chief Financial Officer, Chief Operating Officer, the Treasurer, any Assistant
Treasurer, Controller, Secretary, any Assistant Secretary or any Vice-President
of the Company.
"Officers' Certificate" means a certificate signed on behalf
of the Company by two Officers of the Company, one of whom must be the
President, Chief Financial Officer, Treasurer, Controller or a Vice President
of the Company.
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"Opinion of Counsel" means an opinion from legal counsel who
is reasonably acceptable to the Trustee. Such counsel may be an employee of or
counsel to the Company, any Subsidiary of the Company or the Trustee.
"Permitted Investments" means (a) Investments in the Company,
any Guarantor or any Wholly Owned Subsidiary (including without limitation,
Guarantees of Indebtedness of any such Person), (b) Investments in Cash
Equivalents, (c) Investments in a Person, if as a result of such Investment (i)
such Person becomes a Wholly Owned Subsidiary or (ii) such Person is merged,
consolidated or amalgamated with or into, or transfers or conveys substantially
all of its assets to, or is liquidated into, the Company or a Wholly Owned
Subsidiary, (d) Floor Plan Guarantees permitted to be incurred in compliance
with Section 4.9 of this Indenture, (e) Hedging Obligations, (f) 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 and (g) Investments as a result of consideration
received in connection with an Asset Sale made in compliance with Section 4.10
of this Indenture.
"Permitted Liens" means (i) Liens in favor of the Company
and/or its Restricted Subsidiaries other than with respect to intercompany
Indebtedness, (ii) Liens on property of a Person existing at the time such
Person is acquired by, merged into or consolidated with the Company or any
Restricted Subsidiary, provided, that such Liens were not created in
contemplation of such acquisition and do not extend to assets other than those
subject to such Liens immediately prior to such acquisition, (iii) Liens on
property existing at the time of acquisition thereof by the Company or any
Restricted Subsidiary, provided, that such Liens were not created in
contemplation of such acquisition and do not extend to assets other than those
subject to such Liens immediately prior to such acquisition, (iv) Liens
incurred in the ordinary course of business in respect of Hedging Obligations
and Floor Plan Guarantees, (v) Liens to secure Indebtedness for borrowed money
of a Subsidiary in favor of the Company or a Wholly Owned Subsidiary, (vi)
Liens incurred in the ordinary course of business to secure the performance of
statutory obligations, surety or appeal bonds, performance bonds or other
obligations (exclusive of obligations constituting Indebtedness) of a like
nature, (vii) Liens existing or created on the date of this Indenture, (viii)
Liens for taxes, assessments or governmental charges or claims that are not yet
delinquent or that are being contested or remedied in good faith by appropriate
proceedings promptly instituted and diligently concluded, provided, that any
reserve or other appropriate provision as may be required in conformity with
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<PAGE> 20
GAAP has been made therefor, (ix) Liens arising by reason of any judgment,
decree or order of any court with respect to which the Company or any of its
Restricted Subsidiaries is then in good faith prosecuting an appeal or other
proceedings for review, the existence of which judgment, order or decree is not
an Event of Default under this Indenture, (x) encumbrances consisting of zoning
restrictions, survey exceptions, utility easements, licenses, rights of way,
easements of ingress or egress over property of the Company or any of its
Restricted Subsidiaries, rights or restrictions of record on the use of real
property, minor defects in title, landlord's and lessor's liens under leases on
property located on the premises rented, mechanics' liens, vendors' liens, and
similar encumbrances, rights or restrictions on personal or real property, in
each case not interfering in any material respect with the ordinary conduct of
the business of the Company or any of its Restricted Subsidiaries, (xi) Liens
incidental to the conduct of business or the ownership of properties incurred
in the ordinary course of business in connection with workers' compensation,
unemployment insurance and other types of social security, or to secure the
performance of tenders, bids, and government contracts and leases and
subleases, (xii) Liens for any interest or title of a lessor under any
Capitalized Lease Obligation permitted to be incurred under this Indenture;
provided, that such Liens do not extend to any property or asset that is not
leased property subject to such Capitalized Lease Obligation, (xiii) any
extension, renewal, or replacement (or successive extensions, renewals or
replacements), in whole or in part, of Liens described in clauses (i) through
(xii) above and (xiv) Liens in addition to the foregoing, which in the
aggregate, are secured by assets with a fair market value not in excess of
$100,000 at any time.
"Permitted Transactions" means bona fide purchases and sales
of Inventory or of machining, assembly, testing and fabrication services, in
any such case made in the ordinary course of business; provided, that such
transactions are conducted in good faith and on terms that are no less
favorable to the Company or the relevant Restricted Subsidiary than those that
would have been obtained in a comparable transaction with an unrelated Person.
"Person" means any individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof, or any other entity.
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<PAGE> 21
"Public Equity Offering" means a bona fide underwritten public
offering of Qualified Capital Stock of Holdings or the Company, pursuant to a
registration statement filed with and declared effective by the Commission in
accordance with the Securities Act; provided, that in the event of a Public
Equity Offering by Holdings, Holdings contributes to the capital of the Company
the portion of the net cash proceeds of such Public Equity Offering necessary
to pay the aggregate redemption price, plus accrued and unpaid interest, if
any, to the redemption date of the Notes to be redeemed pursuant to Section
3.7(b) of this Indenture.
"Purchase Money Liens" means Liens to secure or securing
Purchase Money Obligations permitted to be incurred under this Indenture.
"Purchase Money Obligations" means Indebtedness representing,
or incurred to finance, the cost (i) of acquiring or improving any assets and
(ii) of construction or build-out of manufacturing, distribution or
administrative facilities (including Purchase Money Obligations of any other
Person at the time such other Person is merged with or into or is otherwise
acquired by the Company), provided, that (a) the principal amount of such
Indebtedness does not exceed 100% of such cost, including construction charges,
(b) any Lien securing such Indebtedness does not extend to or cover any other
asset or property other than the asset or property being so acquired or
improved and (c) such Indebtedness is incurred, and any Liens with respect
thereto are granted, within 180 days of the acquisition or improvement of such
property or asset.
"QIB" shall mean "qualified institutional buyer" as defined
in Rule 144A.
"Qualified Capital Stock" means, with respect to any Person,
Capital Stock of such Person other than Disqualified Capital Stock.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the Closing Date, by and between the Company and the
Initial Purchasers as such agreement may be amended, modified or supplemented
from time to time.
"Responsible Officer" when used with respect to the Trustee,
means any officer within the corporate trust department of the Trustee located
at the Corporate Trust Office (or any successor group of the Trustee) or any
other officer of the Trustee customarily performing functions similar to those
per-
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formed by any of the designated officers, and also means, with respect to a
particular corporate trust matter, any other officer to whom such matter is
referred because of his knowledge of and familiarity with the particular
subject.
"Restricted Investment" means any Investment other than a
Permitted Investment. The aggregate amount of each Investment constituting a
Restricted Payment since the date of this Indenture shall be reduced by the
aggregate after-tax amount of all payments made to the Company and its
Restricted Subsidiaries with respect to such Investments; provided, that (a)
the maximum amount of such payments so applied shall not exceed the original
amount of such Investment and (b) such payments shall be excluded from the
calculations contemplated by clauses (w) through (z) under Section
4.7(a)(iv)(3) of this Indenture.
"Restricted Securities" means Notes that bear or are required
to bear the legends set forth in Exhibit A hereto.
"Restricted Subsidiary" means a Subsidiary other than an
Unrestricted Subsidiary.
"Revolving Credit Facility" means the Loan and Security
Agreement, entered into on the Closing Date between the Company and the lenders
named therein as the same may be amended, modified, renewed, refunded, replaced
or refinanced from time to time, including (i) any related notes, letters of
credit, guarantees, collateral documents, instruments and agreements executed
in connection therewith, and in each case as amended, modified, renewed,
refunded, replaced or refinanced from time to time, and (ii) any notes,
guarantees, collateral documents, instruments and agreements executed in
connection with such amendment, modification, renewal, refunding, replacement
or refinancing.
"Rule 144A" means Rule 144A under the Securities Act, as such
Rule may be amended from time to time, or under any similar rule or regulation
hereafter adopted by the Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Series A Notes" means the Company's 10 3/4% Series A Senior
Notes due 2006, as authenticated and issued under this Indenture.
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"Series B Notes" means the Company's 10 3/4% Series B Senior
Notes due 2006, as authenticated and issued under this Indenture.
"subsidiary" means, with respect to any Person, (i) any
corporation, association or other business entity of which more than 50% of the
total voting power of shares of Voting Stock thereof is at the time owned or
controlled, directly or indirectly, by such Person or one or more of the other
subsidiaries of that Person or a combination thereof and (ii) any partnership
in which such Person or any of its subsidiaries is a general partner.
"Subsidiary" means any subsidiary of the Company.
"Tax Sharing Agreement" means the Tax Sharing Agreement, dated
as of the Closing Date, by and between the Company and Holdings as in effect on
the date hereof.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C.
Sections 77aaa-77bbbb), as amended, as in effect on the date hereof until such
time as this Indenture is qualified under the TIA, and thereafter as in effect
on the date on which this Indenture is qualified under the TIA.
"transfer" means any sale, assignment, transfer, lease,
conveyance, or other disposition (including, without limitation, by way of
merger or consolidation).
"Trustee" means the party named as such above until a
successor replaces it in accordance with the applicable provisions of this
Indenture and thereafter means the successor serving hereunder.
"Unrestricted Subsidiary" means any Subsidiary that has been
designated by the Company (by written notice to the Trustee as provided below)
as an Unrestricted Subsidiary; provided, that a Subsidiary may not be
designated as an "Unrestricted Subsidiary" unless (a) such Subsidiary does not
own any Capital Stock of, or own or hold any Lien on any property of, the
Company or any Restricted Subsidiary (other than such Subsidiary), (b) neither
immediately prior thereto nor after giving pro forma effect to such
designation, would there exist a Default or Event of Default, (c) immediately
after giving effect to such designation on a pro forma basis, the Company could
incur at least $1.00 of Indebtedness pursuant to Section 4.9(a) of this
Indenture and (d) the creditors of such Subsidiary have no direct or indirect
recourse (including, without limitation,
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<PAGE> 24
recourse with respect to the payment of principal or interest on Indebtedness
of such Subsidiary) to the assets of the Company or of a Restricted Subsidiary
(other than such Subsidiary). The Board of Directors of the Company may
designate any Unrestricted Subsidiary to be a Restricted Subsidiary only if (i)
no Default or Event of Default is existing or will occur as a consequence
thereof and (ii) immediately after giving effect to such designation, on a pro
forma basis, the Company could incur at least $1.00 of Indebtedness pursuant to
Section 4.9(a) of this Indenture. Each such designation shall be evidenced by
filing with the Trustee a certified copy of the Board Resolution giving effect
to such designation and an Officers' Certificate certifying that such
designation complied with the foregoing conditions. The Company shall be
deemed to make an Investment in each Subsidiary designated as an "Unrestricted
Subsidiary" immediately following such designation in an amount equal to the
Investment in such Subsidiary and its subsidiaries immediately prior to such
designation; provided, that if such Subsidiary is subsequently redesignated as
a Restricted Subsidiary, the amount of such Investment shall be deemed to be
reduced (but not below zero) by the fair market value of the net consolidated
assets of such Subsidiary on the date of such redesignation.
"U.S. Government Obligations" means direct obligations of the
United States of America, or any agency or instrumentality thereof for the
payment of which the full faith and credit of the United States of America is
pledged.
"Voting Stock" means, with respect to any Person, (i) one or
more classes of the Capital Stock of such Person having general voting power to
elect at least a majority of the board of directors, managers or trustees of
such Person (irrespective of whether or not at the time Capital Stock of any
other class or classes have or might have voting power by reason of the
happening of any contingency) and (ii) any Capital Stock of such Person
convertible or exchangeable without restriction at the option of the holder
thereof into Capital Stock of such Person described in clause (i) above.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years (rounded to the nearest
one-twelfth) obtained by dividing (i) the then outstanding principal amount of
such Indebtedness into (ii) the total of the products obtained by multiplying
(x) the amount of each then remaining installment, sinking fund, serial
maturity or other required payments of principal, including payment at final
maturity, in respect
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<PAGE> 25
thereof, by (y) the number of years (calculated to the nearest one-twelfth)
that will elapse between such date and the making of such payment.
"Wholly Owned Subsidiary" means a Restricted Subsidiary all
the Capital Stock of which (other than directors' qualifying shares) is owned
by the Company or one or more Wholly Owned Subsidiaries.
Section 1.2. Other Definitions.
<TABLE>
<CAPTION>
Defined in
Term Section
-------- ----------
<S> <C>
"Affiliate Transaction" . . . . . . . . . . . . . . . . . 4.11
"Change of Control Offer" . . . . . . . . . . . . . . . . 4.14
"Change of Control Payment" . . . . . . . . . . . . . . . 4.14
"Change of Control Payment Date" . . . . . . . . . . . . . 4.14
"Definitive Notes" . . . . . . . . . . . . . . . . . . . . 2.1
"Event of Default" . . . . . . . . . . . . . . . . . . . . 6.1
"Excess Proceeds" . . . . . . . . . . . . . . . . . . . . 4.10
"Excess Proceeds Offer" . . . . . . . . . . . . . . . . . 4.10
"Excess Proceeds Offer Period" . . . . . . . . . . . . . . 4.10
"Excess Proceeds Payment Date" . . . . . . . . . . . . . . 4.10
"Global Note" . . . . . . . . . . . . . . . . . . . . . . 2.1
"Guaranty" . . . . . . . . . . . . . . . . . . . . . . . . 10.2
"Hedging Obligations" . . . . . . . . . . . . . . . . . . 4.9(b)
"Paying Agent" . . . . . . . . . . . . . . . . . . . . . . 2.3
"Purchase Amount" . . . . . . . . . . . . . . . . . . . . 4.10
"Purchase Money Indebtedness" . . . . . . . . . . . . . . 4.9(b)
"Refinance" . . . . . . . . . . . . . . . . . . . . . . . 4.9(b)
"Refinancing Indebtedness" . . . . . . . . . . . . . . . . 4.9(b)
"Registrar" . . . . . . . . . . . . . . . . . . . . . . . 2.3
"Restricted Payments" . . . . . . . . . . . . . . . . . . 4.7
</TABLE>
Section 1.3. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the
following meanings:
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"indenture securities" means the Notes;
"indenture security holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
"obligor" on the Notes means the Company, the Guarantors and any
successor obligor upon the Notes.
All other terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by Commission rule
under the TIA have the meanings so assigned to them.
Section 1.4. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural
include the singular; and
(5) provisions apply to successive events and transactions.
ARTICLE 2
THE NOTES
Section 2.1. Form and Dating.
The Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A attached hereto, the terms of
which are incorporated in and made a part of this Indenture. Each Note shall
include the
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Guaranty executed by each of the Guarantors, if any, in the form of Exhibit C
attached hereto, the terms of which are incorporated and made a part of this
Indenture. The Notes may have notations, legends or endorsements required by
law, stock exchange rule, agreements to which the Company is subject or usage.
Each Note shall be dated the date of its authentication. The Notes shall be
issued in denominations of $1,000 and integral multiples thereof.
The Notes will be issued (i) in global form (the "Global
Note"), substantially in the form of Exhibit A attached hereto (including the
text referred to in footnotes 1 and 2 thereto) and (ii) in definitive form (the
"Definitive Notes"), substantially in the form of Exhibit A attached hereto
(excluding the text referred to in footnotes 1 and 2 thereto). The Global Note
shall represent the aggregate amount of outstanding Notes from time to time
endorsed thereon; provided, that the aggregate amount of outstanding Notes
represented thereby may from time to time be reduced or increased, as
appropriate, to reflect exchanges and redemptions. Any endorsement of the
Global Note to reflect the amount of any increase or decrease in the amount of
outstanding Notes represented thereby shall be made by the Trustee, in
accordance with instructions given by the Holder thereof as required by Section
2.6 hereof.
Section 2.2. Execution and Authentication.
Two Officers shall sign the Notes for the Company by manual or
facsimile signature. If an Officer whose signature is on a Note no longer
holds that office at the time the Note is authenticated, the Note shall
nevertheless be valid.
A Note shall not be valid until authenticated by the manual
signature of the Trustee. The signature of the Trustee shall be conclusive
evidence that the Note has been authenticated under this Indenture. The form
of Trustee's certificate of authentication to be borne by the Notes shall be
substantially as set forth in Exhibit A attached hereto.
The Trustee shall, upon a Company Order, authenticate for
original issue up to $130,000,000 aggregate principal amount of the Notes. The
aggregate principal amount of Notes outstanding at any time may not exceed
$130,000,000 except as provided in Section 2.7 hereof.
The Trustee may appoint an authenticating agent acceptable to
the Company to authenticate Notes. Unless limited by the terms of such
appointment,
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<PAGE> 28
an authenticating agent may authenticate Notes whenever the Trustee may do so.
Each reference in this Indenture to authenticating by the Trustee includes
authenticating by such agent. An authenticating agent has the same rights as
an Agent to deal with the Company or an Affiliate of the Company.
The Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name any Note is registered as the owner
of such Note for the purpose of receiving payment of principal of and (subject
to the provisions of this Indenture and the Notes with respect to record dates)
interest on such Note and for all other purposes whatsoever, whether or not
such Note is overdue, and neither the Company, the Trustee nor any agent of the
Company or the Trustee shall be affected by notice to the contrary.
Section 2.3. Registrar, Paying Agent and Depository.
The Company shall maintain (i) an office or agency where Notes
may be presented for registration of transfer or for exchange ("Registrar") and
(ii) an office or agency where Notes may be presented for payment ("Paying
Agent"). The Company initially appoints the Trustee as Registrar and Paying
Agent. The Registrar shall keep a register of the Notes and of their transfer
and exchange. The Company may appoint one or more co-registrars and one or
more additional paying agents. The term "Registrar" includes any co-registrar
and the term "Paying Agent" includes any additional paying agent. The Company
may change any Paying Agent or Registrar without notice to any Holder. The
Company shall notify the Trustee of the name and address of any Agent not a
party to this Indenture. If the Company fails to appoint or maintain another
entity as Registrar or Paying Agent, the Trustee shall act as such. The
Company or any of its Subsidiaries may act as Paying Agent or Registrar, except
that for purposes of Articles Three and Eight and Sections 4.1, 4.10 and 4.14
neither the Company nor any of its Subsidiaries shall act as Paying Agent.
The Company shall enter into an appropriate agency agreement
with any Agent not a party to this Indenture, which shall incorporate the
provisions of the TIA. The agreement shall implement the provisions of this
Indenture that relate to such Agent.
The Company initially appoints DTC to act as Depository with
respect to the Global Notes. The Trustee shall act as custodian for the
Depository with respect to the Global Notes.
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<PAGE> 29
Section 2.4. Paying Agent to Hold Money in Trust.
The Company shall require each Paying Agent other than the
Trustee to agree in writing that the Paying Agent shall hold in trust for the
benefit of the Holders or the Trustee all money held by the Paying Agent for
the payment of principal, premium, if any, or interest on the Notes and shall
notify the Trustee of any default by the Company in making any such payment.
While any such default continues, the Trustee may require a Paying Agent to pay
all money held by it to the Trustee. The Company at any time may require a
Paying Agent to pay all money held by it to the Trustee. Upon payment over to
the Trustee, the Paying Agent (if other than the Company or a Subsidiary of the
Company) shall have no further liability for the money delivered to the
Trustee. If the Company or a Subsidiary of the Company acts as Paying Agent
(subject to Section 2.3), it shall segregate and hold in a separate trust fund
for the benefit of the Holders all money held by it as Paying Agent.
Section 2.5. Holder Lists.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of all Holders and shall otherwise comply with TIA Section 312(a).
If the Trustee is not the Registrar, the Company shall furnish to the Trustee
at least seven Business Days before each interest payment date and at such
other times as the Trustee may request in writing a list in such form and as of
such date as the Trustee may reasonably require of the names and addresses of
the Holders, including the aggregate principal amount thereof, and the Company
shall otherwise comply with TIA Section 312(a).
Section 2.6. Transfer and Exchange.
(a) Transfer and Exchange of Definitive Notes. When
Definitive Notes are presented by a Holder to the Registrar with a request (1)
to register the transfer of the Definitive Notes or (2) to exchange such
Definitive Notes for an equal principal amount of Definitive Notes of other
authorized denominations, the Registrar shall register the transfer or make the
exchange as requested if its requirements for such transactions are met;
provided, that the Definitive Notes so presented (A) have been duly endorsed or
accompanied by a written instruction of transfer in form satisfactory to the
Registrar duly executed by such Holder or by his attorney, duly authorized in
writing; and (B) in the case of a Restricted
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<PAGE> 30
Security, such request shall be accompanied by the following additional
documents:
(i) if such Restricted Security is being delivered to the
Registrar by a Holder for registration in the name of such Holder,
without transfer, a certification to that effect (in substantially the
form of Exhibit B attached hereto); or
(ii) if such Restricted Security is being transferred to a
QIB in accordance with Rule 144A or pursuant to an effective
registration statement under the Securities Act, a certification to
that effect (in substantially the form of Exhibit B attached hereto);
or
(iii) if such Restricted Security is being transferred in
reliance on another exemption from the registration requirements of
the Securities Act, a certification to that effect (in substantially
the form of Exhibit B attached hereto) and an opinion of counsel
reasonably acceptable to the Company and the Registrar to the effect
that such transfer is in compliance with the Securities Act.
(b) Transfer of a Definitive Note for a Beneficial
Interest in a Global Note. A Definitive Note may be exchanged for a beneficial
interest in a Global Note only upon receipt by the Trustee of a Definitive
Note, duly endorsed or accompanied by appropriate instruments of transfer, in
form satisfactory to the Trustee, together with:
(i) written instructions directing the Trustee to make an
endorsement on the Global Note to reflect an increase in the aggregate
principal amount of the Notes represented by the Global Note, and
(ii) if such Definitive Note is a Restricted Security, a
certification (in substantially the form of Exhibit B attached hereto)
to the effect that such Definitive Note is being transferred to a QIB
in accordance with Rule 144A;
in which case the Trustee shall cancel such Definitive Note and cause the
aggregate principal amount of Notes represented by the Global Note to be
increased accordingly. If no Global Note is then outstanding, the Company
shall issue and the Trustee shall authenticate a new Global Note in the
appropriate principal amount.
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<PAGE> 31
(c) Transfer and Exchange of Global Notes. The transfer and
exchange of Global Notes or beneficial interests therein shall be effected
through the Depository in accordance with this Indenture and the procedures of
the Depository therefor, which shall include restrictions on transfer
comparable to those set forth herein to the extent required by the Securities
Act.
(d) Transfer of a Beneficial Interest in a Global Note for a
Definitive Note. Upon receipt by the Trustee of written transfer instructions
(or such other form of instructions as is customary for the Depository), from
the Depository (or its nominee) on behalf of any Person having a beneficial
interest in a Global Note, the Trustee shall, in accordance with the standing
instructions and procedures existing between the Depository and the Trustee,
cause the aggregate principal amount of Global Notes to be reduced accordingly
and, following such reduction, the Company shall execute and the Trustee shall
authenticate and deliver to the transferee a Definitive Note in the appropriate
principal amount; provided, that in the case of a Restricted Security, such
instructions shall be accompanied by the following additional documents:
(i) if such beneficial interest is being transferred to
the Person designated by the Depository as being the beneficial owner,
a certification to that effect (in substantially the form of Exhibit B
attached hereto); or
(ii) if such beneficial interest is being transferred to a
QIB in accordance with Rule 144A or pursuant to an effective
registration statement under the Securities Act, a certification to
that effect (in substantially the form of Exhibit B attached hereto);
or
(iii) if such beneficial interest is being transferred in
reliance on another exemption from the registration requirements of
the Securities Act, a certification to that effect (in substantially
the form of Exhibit B attached hereto) and an opinion of counsel
reasonably acceptable to the Company and to the Registrar to the
effect that such transfer is in compliance with the Securities Act.
Definitive Notes issued in exchange for a beneficial interest
in a Global Note shall be registered in such names and in such authorized
denominations as the Depository shall instruct the Trustee.
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<PAGE> 32
(e) Transfer and Exchange of Global Notes. Notwithstanding
any other provision of this Indenture, the Global Note may not be transferred
as a whole except by the Depository to a nominee of the Depository or by a
nominee of the Depository to the Depository or another nominee of the
Depository or by the Depository or any such nominee to a successor Depository
or a nominee of such successor Depository; provided, that if:
(i) the Depository notifies the Company that the Depository
is unwilling or unable to continue as Depository and a successor
Depository is not appointed by the Company within 90 days after
delivery of such notice; or
(ii) the Company, at its sole discretion, notifies the
Trustee in writing that it elects to cause the issuance of Definitive
Notes under this Indenture,
then the Company shall execute and the Trustee shall authenticate and deliver,
Definitive Notes in an aggregate principal amount equal to the aggregate
principal amount of the Global Note in exchange for such Global Note.
(f) Cancellation and/or Adjustment of Global Notes. At such
time as all beneficial interests in the Global Note have either been exchanged
for Definitive Notes, redeemed, repurchased or cancelled, the Global Note
shall be returned to or retained and cancelled by the Trustee. At any time
prior to such cancellation, if any beneficial interest in the Global Note is
exchanged for Definitive Notes, redeemed, repurchased or cancelled, the
aggregate principal amount of Notes represented by such Global Note shall be
reduced accordingly and an endorsement shall be made on such Global Note by the
Trustee to reflect such reduction.
(g) General Provisions Relating to Transfers and Exchanges.
To permit registrations of transfers and exchanges, the Company shall execute
and the Trustee shall authenticate Definitive Notes and Global Notes at the
Registrar's request. All Definitive Notes and Global Notes issued upon any
registration of transfer or exchange of Definitive Notes or Global Notes shall
be legal, valid and binding obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Definitive
Notes or Global Notes surrendered upon such registration of transfer or
exchange.
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<PAGE> 33
No service charge shall be made to a Holder for any
registration of transfer or exchange, but the Company may require payment of a
sum sufficient to cover any transfer tax or similar governmental charge payable
in connection therewith (other than any such transfer taxes or similar
governmental charge payable upon exchange (without transfer to another person)
pursuant to Sections 2.10, 3.7, 4.10, 4.14 and 9.5 of this Indenture).
The Company shall not be required to (i) issue, register the
transfer of or exchange Notes during a period beginning at the opening of
business 15 days before the day of any selection of Notes for redemption under
Section 3.2 hereof and ending at the close of business on the day of selection;
or (ii) register the transfer of or exchange any Note so selected for
redemption in whole or in part, except the unredeemed portion of any Note being
redeemed in part; or (iii) register the transfer of or exchange a Note between
a record date and the next succeeding interest payment date.
Prior to due presentment for the registration of a transfer of
any Note, the Trustee, any Agent and the Company may deem and treat the Person
in whose name any Note is registered as the absolute owner of such Note for the
purpose of receiving payment of principal of, premium, if any, and interest on
such Notes, and neither the Trustee, any Agent nor the Company shall be
affected by notice to the contrary.
(h) Exchange of Series A Notes for Series B Notes. The
Series A Notes may be exchanged for Series B Notes pursuant to the terms of the
Exchange Offer. The Trustee and Registrar shall make the exchange as follows:
The Company shall present the Trustee with an Officers'
Certificate certifying the following:
(A) upon issuance of the Series B Notes, the transactions
contemplated by the Exchange Offer have been
consummated; and
(B) the principal amount of Series A Notes properly
tendered in the Exchange Offer that are represented
by a Global Note and the principal amount of Series A
Notes properly tendered in the Exchange Offer that
are represented by Definitive Notes, the name of each
Holder of such Definitive Notes, the principal amount
at maturity properly tendered in
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<PAGE> 34
the Exchange Offer by each such Holder and the name
and address to which Definitive Notes for Series B
Notes shall be registered and sent for each such
Holder.
The Trustee, upon receipt of (i) such Officers' Certificate,
(ii) an Opinion of Counsel (x) to the effect that the Series B Notes have been
registered under Section 5 of the Securities Act and this Indenture has been
qualified under the TIA and (y) with respect to the matters set forth in
Section 6(p) of the Registration Rights Agreement and (iii) a Company Order,
shall authenticate (A) a Global Note for Series B Notes in aggregate principal
amount equal to the aggregate principal amount of Series A Notes represented by
a Global Note indicated in such Officers' Certificate as having been properly
tendered and (B) Definitive Notes representing Series B Notes registered in the
names of, and in the principal amounts indicated in such Officers' Certificate.
If the principal amount at maturity of the Global Note for the
Series B Notes is less than the principal amount at maturity of the Global Note
for the Series A Notes, the Trustee shall make an endorsement on such Global
Note for Series A Notes indicating a reduction in the principal amount at
maturity represented thereby.
The Trustee shall deliver such Definitive Notes for Series B
Notes to the Holders thereof as indicated in such Officers' Certificate.
Section 2.7. Replacement Notes.
If any mutilated Note is surrendered to the Trustee, or the
Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Note, the Company shall issue and the Trustee
shall authenticate a replacement Note if the Trustee's requirements for
replacements of Notes are met. If required by the Trustee or the Company, an
indemnity bond must be supplied by the Holder that is sufficient in the
judgment of the Trustee and the Company to protect the Company, the Trustee,
any Agent or any authenticating agent from any loss that any of them may suffer
if a Note is replaced. The Company or the Trustee may charge for its expenses
in replacing a Note.
Every replacement Note is an obligation of the Company and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
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Section 2.8. Outstanding Notes.
The Notes outstanding at any time are all the Notes
authenticated by the Trustee except for those cancelled by it, those delivered
to it for cancellation, those reductions in the interest in a Global Note
effected by the Trustee in accordance with the provisions hereof, and those
described in this Section as not outstanding.
If a Note is replaced pursuant to Section 2.7 hereof, the
replaced Note ceases to be outstanding unless the Trustee receives proof
satisfactory to it that the replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under
Section 4.1 hereof, it ceases to be outstanding and interest on it ceases to
accrue.
Subject to Section 2.9 hereof, a Note does not cease to be
outstanding because the Company or an Affiliate of the Company holds the Note.
Section 2.9. Treasury Notes.
In determining whether the Holders of the required principal
amount of Notes have concurred in any direction, waiver or consent, Notes owned
by the Company or any Affiliate of the Company shall be considered as though
not outstanding, except that for purposes of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Notes that a Trustee knows to be so owned shall be considered as not
outstanding.
Section 2.10. Temporary Notes.
Pending the preparation of Definitive Notes, the Company (and
the Guarantors, if any) may execute, and upon Company Order the Trustee shall
authenticate and deliver, temporary Notes that are printed, lithographed,
typewritten, mimeographed or otherwise reproduced, in any authorized
denomination, substantially of the tenor of the Definitive Notes in lieu of
which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Notes may
determine, as conclusively evidenced by their execution of such Notes.
If temporary Notes are issued, the Company (and the
Guarantors, if any) shall cause Definitive Notes to be prepared without
unreasonable delay. The
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Definitive Notes shall be printed, lithographed or engraved, or provided by any
combination thereof, or in any other manner permitted by the rules and
regulations of any principal national securities exchange, if any, on which the
Notes are listed, all as determined by the Officers executing such Definitive
Notes. After the preparation of Definitive Notes, the temporary Notes shall be
exchangeable for Definitive Notes upon surrender of the temporary Notes at the
office or agency maintained by the Company for such purpose pursuant to Section
4.2 hereof, without charge to the Holder. Upon surrender for cancellation of
any one or more temporary Notes, the Company (and the Guarantors, if any) shall
execute, and the Trustee shall authenticate and deliver, in exchange therefor
the same aggregate principal amount of Definitive Notes of authorized
denominations. Until so exchanged, the temporary Notes shall in all respects
be entitled to the same benefits under this Indenture as Definitive Notes.
Section 2.11. Cancellation.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment.
The Trustee and no one else shall cancel all Notes surrendered for registration
of transfer, exchange, payment, replacement or cancellation and shall retain or
destroy cancelled Notes in accordance with its normal practices (subject to the
record retention requirement of the Exchange Act) unless the Company directs
them to be returned to it. The Company may not issue new Notes to replace
Notes that have been redeemed or paid or that have been delivered to the
Trustee for cancellation. All cancelled Notes held by the Trustee shall be
destroyed and certification of their destruction delivered to the Company
unless by a written order, signed by one Officer of the Company, the Company
shall direct that cancelled Notes be returned to it.
Section 2.12. Defaulted Interest.
If the Company defaults in a payment of interest on the Notes,
it shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Holders on a subsequent special record date, which date shall be at the
earliest practicable date but in all events at least five Business Days prior
to the payment date, in each case at the rate provided in the Notes and in
Section 4.1 hereof. The Company shall, with the consent of the Trustee, fix or
cause to be fixed each such special record date and payment date. At least 15
days before the special record date, the
30
<PAGE> 37
Company (or the Trustee, in the name of and at the expense of the Company)
shall mail to the Holders a notice that states the special record date, the
related payment date and the amount of such interest to be paid.
Section 2.13. Legends.
(a) Except as permitted by subsections (b) or (c) hereof,
each Note shall bear legends relating to restrictions on transfer pursuant to
the securities laws in substantially the form set forth on Exhibit A attached
hereto.
(b) Upon any sale or transfer of a Restricted Security
(including any Restricted Security represented by a Global Note) pursuant to
Rule 144 under the Securities Act or pursuant to an effective registration
statement under the Securities Act:
(i) in the case of any Restricted Security that is a
Definitive Note, the Registrar shall permit the Holder thereof to
exchange such Restricted Security for a Definitive Note that does not
bear the legends required by subsection (a) above; and
(ii) in the case of any Restricted Security represented by
a Global Note, such Restricted Security shall not be required to bear
the legends required by subsection (a) above, but shall continue to be
subject to the provisions of Section 2.6(c) hereof; provided, that
with respect to any request for an exchange of a Restricted Security
that is represented by a Global Note for a Definitive Note that does
not bear the legends required by subsection (a) above, which request
is made in reliance upon Rule 144, the Holder thereof shall certify in
writing to the Registrar that such request is being made pursuant to
Rule 144.
(c) The Company (and the Guarantors, if any) shall issue
and the Trustee shall authenticate Series B Notes in exchange for Series A
Notes accepted for exchange in the Exchange Offer. The Series B Notes shall
not bear the legends required by subsection (a) above unless the Holder of such
Series A Notes is either (A) a broker-dealer who purchased such Series A Notes
directly from the Company to resell pursuant to Rule 144A or any other
available exemption under the Securities Act, (B) a Person participating in the
distribution of the Series A Notes or (C) a Person who is an affiliate (as
defined in Rule 144A) of the Company.
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<PAGE> 38
ARTICLE 3
REDEMPTION
Section 3.1. Notices to Trustee.
If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.7 hereof, it shall furnish to the Trustee,
at least 45 days but not more than 60 days before a redemption date, an
Officers' Certificate setting forth (i) the clause of Section 3.7 pursuant to
which the redemption shall occur, (ii) the redemption date, (iii) the principal
amount of Notes to be redeemed and (iv) the redemption price.
Section 3.2. Selection of Notes to Be Redeemed.
If less than all the Notes are to be redeemed, the Trustee
shall select the Notes to be redeemed in compliance with the requirements of
the principal national securities exchange, if any, on which the Notes are
listed, or, if the Notes are not so listed, pro rata, by lot or by such method
as the Trustee deems to be fair and reasonable.
The Trustee shall promptly notify the Company in writing of
the Notes selected for redemption and, in the case of any Note selected for
partial redemption, the principal amount thereof to be redeemed. Notes and
portions of Notes selected shall be in amounts of $1,000 or whole multiples of
$1,000. Provisions of this Indenture that apply to Notes called for redemption
also apply to portions of Notes called for redemption.
Section 3.3. Notice of Redemption.
At least 30 days but not more than 60 days before a redemption
date, the Company shall mail a notice of redemption by first class mail to each
Holder whose Notes are to be redeemed at such Holder's registered address.
The notice shall identify the Notes to be redeemed and shall
state:
(1) the redemption date;
(2) the redemption price;
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<PAGE> 39
(3) if any Note is being redeemed in part only, the
portion of the principal amount of such Note to be redeemed and that,
after the redemption date, upon cancellation of the original Note, a
new Note or Notes in principal amount equal to the unredeemed portion
shall be issued;
(4) the name and address of the Paying Agent;
(5) that Notes called for redemption must be
surrendered to the Paying Agent to collect the redemption price;
(6) that, unless the Company defaults in making such
redemption payment, interest on Notes or portions of Notes called for
redemption ceases to accrue on and after the redemption date;
(7) the paragraph of the Notes and/or the section of
this Indenture pursuant to which the Notes called for redemption are
being redeemed; and
(8) the CUSIP number of the Notes to be redeemed.
At the Company's request, the Trustee shall give the notice of
redemption in the name of the Company and at its expense; provided that the
Company shall deliver to the Trustee, at least 45 days (unless a shorter period
is acceptable to the Trustee) prior to the redemption date, an Officers'
Certificate requesting that the Trustee give such notice and setting forth the
information to be stated in such notice as provided in the preceding paragraph.
Section 3.4. Effect of Notice of Redemption.
Once notice of redemption has been mailed to the Holders in
accordance with Section 3.3 herein, Notes called for redemption become due and
payable on the redemption date at the redemption price. At any time prior to
the mailing of a notice of redemption to the Holders pursuant to Section 3.3,
the Company may withdraw, revoke or rescind any notice of redemption delivered
to the Trustee without any continuing obligation to redeem the Notes as
contemplated by such notice of redemption.
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<PAGE> 40
Section 3.5. Deposit of Redemption Price.
On or before the redemption date, the Company shall deposit
with the Trustee (to the extent not already held by the Trustee) or with the
Paying Agent money in immediately available funds sufficient to pay the
redemption price of and accrued interest on all Notes to be redeemed on that
date. The Trustee or the Paying Agent shall return to the Company any money
deposited with the Trustee or the Paying Agent by the Company in excess of the
amounts necessary to pay the redemption price of, and accrued interest on, all
Notes to be redeemed.
Interest on the Notes to be redeemed shall cease to accrue on
the applicable redemption date, whether or not such Notes are presented for
payment, if the Company makes or deposits the redemption payment in accordance
with this Section 3.5. If any Note called for redemption shall not be paid
upon surrender for redemption because of the failure of the Company to comply
with the preceding paragraph, interest shall be paid on the unpaid principal,
from the redemption date until such principal is paid, and to the extent lawful
on any interest not paid on such unpaid principal, in each case at the rate
provided in the Notes.
Section 3.6. Notes Redeemed in Part.
Upon surrender of a Note that is redeemed in part, the Company
shall issue and the Trustee shall authenticate for the Holder at the expense of
the Company a new Note equal in principal amount to the unredeemed portion of
the Note surrendered.
Section 3.7. Optional Redemption.
(a) Except as set forth in Section 3.7(b), the Notes are
not redeemable at the Company's option prior to November 15, 2001. Thereafter,
the Notes will be subject to redemption at the option of the Company, in whole
or in part, at the redemption prices (expressed as percentages of principal
amount) set forth below plus accrued and unpaid interest thereon, if any, to
the applicable redemption date, if redeemed during the 12-month period
beginning on November 15 of the years indicated below:
34
<PAGE> 41
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2001 105.375%
2002 102.688
2003 and thereafter 100.000
</TABLE>
(b) At any time or from time to time prior to November
15, 1999, the Company may, at its option, redeem up to one-third of the
original principal amount of the Notes, at a redemption price of 110.75% of the
principal amount thereof, plus accrued and unpaid interest, if any, to the
applicable redemption date, with the net cash proceeds of one or more Public
Equity Offerings; provided, that (a) such redemption shall occur within 90 days
of the date of closing of such public offering and (b) at least $86.7 million
aggregate principal amount of Notes remains outstanding immediately after
giving effect to each such redemption.
(c) The restrictions on optional redemptions set forth in
this Section 3.7 shall not limit the Company's right to make open market
purchases of the Notes from time to time; provided, that neither the Company
nor any of its Subsidiaries may use the proceeds of a Public Equity Offering
made prior to November 15, 1999 to make open market purchases of the Notes.
ARTICLE 4
COVENANTS
Section 4.1. Payment of Notes.
The Company shall pay the principal and premium, if any, of,
and interest on, the Notes on the dates and in the manner provided in the
Notes. Principal, premium, if any, and interest shall be considered paid on
the date due if the Paying Agent, other than the Company or a Subsidiary of the
Company, holds on or before that date money deposited by the Company in
immediately available funds and designated for and sufficient to pay all
principal, premium, if any, and interest then due. Such Paying Agent shall
return to the Company, no later than three Business Days following the date of
payment, any money that exceeds such amount of principal, premium, if any, and
interest then due and payable on the Notes. The Company shall pay any and all
amounts, including without limitation Liquidated Damages, if any, on the dates
and in the manner required under the Registration Rights Agreement.
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<PAGE> 42
The Company shall pay interest (including post-petition
interest) on overdue principal at the rate equal to 1% per annum in excess of
the then applicable interest rate on the Notes to the extent lawful; it shall
pay interest (including post-petition interest) on overdue installments of
interest (without regard to any applicable grace period) at the same rate to
the extent lawful.
Section 4.2. Maintenance of Office or Agency.
The Company shall maintain an office or agency (which may be
an office of the Trustee, Registrar or co-registrar) in the Borough of
Manhattan, the City of New York where Notes may be surrendered for registration
of transfer or exchange and where notices and demands to or upon the Company in
respect of the Notes and this Indenture may be served. The Company shall give
prompt written notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or more
other offices or agencies where the Notes may be presented or surrendered for
any or all such purposes and may from time to time rescind such designations;
provided, that no such designation or rescission shall in any manner relieve
the Company of its obligation to maintain an office or agency for such
purposes. The Company shall give prompt written notice to the Trustee of any
such designation or rescission and of any change in the location of any such
other office or agency.
The Company hereby designates the Corporate Trust Office of
the Trustee as one such office or agency of the Company in accordance with
Section 2.3.
Section 4.3. Reports.
(a) The Company shall file with the Trustee, within 15
days after the time of filing with the Commission, copies of the reports,
information and other documents (or copies of such portions of any of the
foregoing as the Commission may by rules and regulations prescribe) that the
Company is required to file with the Commission pursuant to Section 13 or 15(d)
of the Exchange Act. If the Company is not subject to the requirements of
Section 13 or 15(d) of the Exchange Act, the Company shall file with the
Commission and the Trustee all
36
<PAGE> 43
such reports, information and other documents as it would be required to file
if it were subject to the requirements of Section 13 or 15(d) of the Exchange
Act; provided, that the Company shall not be in default of the provisions of
this Section 4.3 for any failure to file reports with the Commission solely by
refusal by the Commission to accept the same for filing. The Company shall
deliver (or cause the Trustee to deliver) copies of all reports, information
and documents required to be filed with the Trustee pursuant to this Section
4.3 to the Holders at their addresses appearing in the register of Notes
maintained by the Registrar. The Company shall also comply with the provisions
of TIA Section 314(a).
(b) If the Company is required to furnish annual,
quarterly or current reports to its stockholders pursuant to the Exchange Act,
the Company shall cause any annual, quarterly, current or other financial
report furnished by it generally to its stockholders to be filed with the
Trustee and mailed to the Holders at their addresses appearing in the register
of Notes maintained by the Registrar. If the Company is not required to
furnish annual, quarterly or current reports to its stockholders pursuant to
the Exchange Act, the Company shall cause the financial statements of the
Company and its consolidated Subsidiaries (and similar financial statements for
all unconsolidated Subsidiaries, if any), including any notes thereto (and,
with respect to annual reports, an auditors' report by an accounting firm of
established national reputation), and a "Management's Discussion and Analysis
of Financial Condition and Results of Operations," comparable to that which
would have been required to appear in annual or quarterly reports filed under
Section 13 or 15(d) of the Exchange Act to be so filed with the Trustee and
mailed to the Holders promptly, but in any event, within 90 days after the end
of each of the fiscal years of the Company and within 45 days after the end of
each of the first three quarters of each such fiscal year.
(c) So long as is required for an offer or sale of the
Notes to qualify for an exemption under Rule 144A, the Company (and the
Guarantors, if any) shall, upon request, provide the information required by
clause (d)(4) thereunder to each Holder and to each prospective purchaser of
Notes identified by any Holder of Restricted Securities.
Section 4.4. Compliance Certificate.
(a) The Company shall deliver to the Trustee, within 120
days after the end of each fiscal year, an Officers' Certificate (provided,
however, that one of the signatories to such Officers' Certificate shall be the
Company's principal executive officer, principal financial officer or principal
accounting
37
<PAGE> 44
officer) stating that a review of the activities of the Company and its
Subsidiaries during the preceding fiscal year has been made under the
supervision of the signing Officers with a view to determine whether each has
kept, observed, performed and fulfilled its obligations under this Indenture,
and further stating, as to each such Officer signing such certificate, that to
the best of his knowledge each of the Company and its Subsidiaries has kept,
observed, performed and fulfilled each and every covenant contained in this
Indenture and is not in default in the performance or observance of any of the
terms, provisions and conditions hereof or thereof (or, if a Default or Event
of Default shall have occurred, describing all such Defaults or Events of
Default of which he may have knowledge and what action each is taking or
proposes to take with respect thereto).
(b) The year-end financial statements delivered pursuant
to Section 4.3 above shall be accompanied by a written statement of the
independent public accountants of the Company (which shall be a firm of
established national reputation reasonably satisfactory to the Trustee) that in
making the examination necessary for certification of such financial statements
nothing has come to their attention which would lead them to believe that
either the Company or any of its Subsidiaries has violated any provisions of
this Indenture or, if any such violation has occurred, specifying the nature
and period of existence thereof, it being understood that such accountants
shall not be liable directly or indirectly to any Person for any failure to
obtain knowledge of any such violation.
(c) So long as any of the Notes are outstanding, the
Company shall deliver to the Trustee forthwith upon any Officer becoming aware
of (i) any Default or Event of Default or (ii) any event of default under any
mortgage, indenture or instrument referred to in Section 6.1(5) hereof, an
Officers' Certificate specifying such Default, Event of Default or other event
of default and what action the Company is taking or proposes to take with
respect thereto.
Section 4.5. Taxes.
The Company shall, and shall cause its Subsidiaries to, file
all tax returns required to be filed and to pay prior to delinquency all
material taxes, assessments and governmental levies except as contested in good
faith and by appropriate proceedings and for which reserves have been
established in accordance with GAAP.
38
<PAGE> 45
Section 4.6. Stay, Extension and Usury Laws.
The Company (and each Guarantor, if any) covenants (to the
extent that it may lawfully do so) that it shall not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay, extension or usury law wherever enacted, now or at any time hereafter
in force, which may affect the covenants or the performance of this Indenture;
and the Company and each Guarantor (to the extent that it may lawfully do so)
hereby expressly waives all benefit or advantage of any such law and covenants
that it shall not, by resort to any such law, hinder, delay or impede the
execution of any power herein granted to the Trustee but shall suffer and
permit the execution of every such power as though no such law has been
enacted.
Section 4.7. Limitation on Restricted Payments.
(a) The Company shall not, and shall not permit any of
its Restricted Subsidiaries to, directly or indirectly:
(i) declare or pay any dividend or make any
distribution on account of any Equity Interests of the Company or any
of its Subsidiaries (other than (x) dividends or distributions payable
in Equity Interests (other than Disqualified Stock) of the Company or
(y) dividends or distributions payable to the Company or any Wholly
Owned Subsidiary),
(ii) purchase, redeem or otherwise acquire or retire
for value any Equity Interest of the Company, any Subsidiary or any
other Affiliate of the Company (other than any such Equity Interest
owned by the Company or any Wholly Owned Subsidiary),
(iii) make any principal payment on, or purchase,
redeem, defease or otherwise acquire or retire for value any
Indebtedness of the Company or any Guarantor that is subordinated in
right of payment to the Notes or such Guarantor's Guarantee thereof,
as the case may be, prior to any scheduled principal payment, sinking
fund payment or other payment at the stated maturity thereof, or
(iv) make any Restricted Investment
39
<PAGE> 46
(all such payments and other actions set forth in clauses (i) through
(iv) above being collectively referred to as "Restricted Payments")
unless, at the time of such Restricted Payment:
(1) no Default or Event of Default has occurred
and is continuing or would occur as a consequence thereof,
(2) immediately after giving effect thereto on a
pro forma basis, the Company could incur at least $1.00 of additional
Indebtedness under Section 4.9(a) hereof, and
(3) such Restricted Payment (the value of any
such payment, if other than cash, being determined in good faith by
the Board of Directors and evidenced by a resolution set forth in an
Officers' Certificate delivered to the Trustee), together with the
aggregate of all other Restricted Payments made after the date of this
Indenture (including Restricted Payments permitted by clauses (i) and
(ii) of Section 4.7(b) and excluding Restricted Payments permitted by
the other clauses therein), is less than the sum of (w) 50% of the
Consolidated Net Income of the Company for the period (taken as one
accounting period) from the beginning of the first quarter commencing
immediately after the date of this Indenture to the end of the
Company's most recently ended fiscal quarter for which internal
financial statements are available at the time of such Restricted
Payment (or, if such Consolidated Net Income for such period is a
deficit, 100% of such deficit), plus (x) 100% of the aggregate net
cash proceeds (or of the net cash proceeds received upon the
conversion of non-cash proceeds into cash) received by the Company
from the issuance or sale, other than to a Subsidiary, of Equity
Interests of the Company (other than Disqualified Stock) after the
date of this Indenture and on or prior to the time of such Restricted
Payment, plus (y) 100% of the aggregate net cash proceeds (or of the
net cash proceeds received upon the conversion of non-cash proceeds
into cash) received by the Company from the issuance or sale, other
than to a Subsidiary, of any convertible or exchangeable debt security
of the Company that has been converted or exchanged into Equity
Interests of the Company (other than Disqualified Stock) pursuant to
the terms thereof after the date of this Indenture and on or prior to
the time of such Restricted Payment (including any additional net cash
proceeds received by the Company upon such conversion or exchange)
plus (z) 100% of the aggregate after-tax net cash proceeds (or of the
after-tax net cash proceeds received upon the conversion of non-cash
proceeds into cash) received by
40
<PAGE> 47
the Company or a Restricted Subsidiary from the sale or other
disposition of any Investment constituting a Restricted Payment that
was made after the date of this Indenture; provided, that the gain on
such sale or disposition, if any, shall be excluded in determining
Consolidated Net Income for purpose of clause (w) above.
(b) The provisions of subsection (a) above shall not
prohibit:
(i) the payment of any dividend within 60 days after
the date of declaration thereof, if at said date of declaration such
payment would not have been prohibited by the provisions of this
Indenture,
(ii) the redemption, purchase, retirement or other
acquisition of any Equity Interests of the Company in exchange for, or
out of the proceeds of the substantially concurrent sale (other than
to a Subsidiary) of, other Equity Interests of the Company (other than
Disqualified Stock),
(iii) the redemption, repurchase or payoff of any
Indebtedness (1) with proceeds of any Refinancing Indebtedness
permitted to be incurred pursuant to the provisions of Section
4.9(b)(xi) hereof or (2) solely in exchange for, or out of the
proceeds of the substantially concurrent sale (other than to a
Subsidiary) of, any Equity Interests of the Company (other than
Disqualified Stock),
(iv) Investments by the Company or any Restricted
Subsidiary, in an aggregate amount not to exceed $5.0 million, in an
Unrestricted Subsidiary formed primarily for the purpose of financing
purchases and leases of inventory manufactured by the Company or any
of its Restricted Subsidiaries,
(v) payments by the Company to Holdings pursuant
to the Tax Sharing Agreement,
(vi) distributions, loans or advances to Holdings in
an aggregate amount not to exceed $500,000 per fiscal year; provided,
that such amounts are used by Holdings to pay ordinary operating
expenses (including, without limitation, reasonable directors' fees
and expenses, indemnification obligations, professional fees and
expenses and manage-
41
<PAGE> 48
ment compensation expenses relating to employees of Holdings and the
Company),
(vii) (A) payments to, and promptly used by, Holdings
to repurchase Capital Stock or Indebtedness of Holdings from
directors, officers and employees of the Company and its Subsidiaries,
including Management Investors, who have died or whose employment has
been terminated, and (B) loans or advances to employees of the Company
or any of its Subsidiaries; provided that the aggregate amount of such
payments, loans and advances in any fiscal year shall not exceed the
lesser of (x) $500,000 plus any amount available for such payments
pursuant to this clause (x) since the date of this Indenture that have
not been used for such purpose and (y) $2.0 million,
(viii) Permitted Transactions or
(ix) other Restricted Payments in an aggregate
amount not to exceed $3.0 million;
provided, that with respect to clauses (iv), (vii) and (ix) above, no
Default or Event of Default shall have occurred and be continuing at
the time, or shall occur as a consequence thereof.
(c) Not later than the date of making each Restricted
Payment, the Company shall deliver to the Trustee an Officers' Certificate
stating that such Restricted Payment was permitted, and setting forth the basis
upon which the calculations required by this Section 4.7 were computed, which
calculations may be based upon the Company's latest available financial
statements.
Section 4.8. Limitation on Restrictions on Subsidiary Dividends.
The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary
(a) to (1) pay dividends or make any other distributions
to the Company or any of its Restricted Subsidiaries (A) on such Restricted
Subsidiary's Capital Stock or (B) with respect to any other interest or
participation in, or
42
<PAGE> 49
measured by, such Restricted Subsidiary's profits or (2) pay any indebtedness
owed to the Company or any of its Restricted Subsidiaries, or
(b) to make loans or advances to the Company or any of
its Restricted Subsidiaries, or
(c) to transfer any of its assets to the Company or any
of its Restricted Subsidiaries,
except for such encumbrances or restrictions existing under or by reason of:
(i) the Revolving Credit Facility, as in effect on
the Closing Date, or any refinancing thereof containing restrictions
that are not materially more restrictive than those contained in the
Revolving Credit Facility on the Closing Date,
(ii) customary net worth restrictions on the actions
specified in clause (a)(1) above contained in the German Subsidiary
Facilities,
(iii) this Indenture and the Notes,
(iv) applicable law,
(v) restrictions with respect to a Subsidiary that
was not a Subsidiary on the Closing Date in existence at the time such
Person becomes a Subsidiary (but not created as a result of or in
anticipation of such Person becoming a Subsidiary); provided, that
such restrictions are not applicable to any other Person or the
properties or assets of any other Person,
(vi) customary non-assignment and net worth
provisions of any contract or lease entered into in the ordinary
course of business,
(vii) customary restrictions on the transfer of
assets subject to a Lien permitted under this Indenture imposed by the
holder of such Lien,
(viii) restrictions imposed by any agreement to sell
assets or Capital Stock to any Person pending the closing of such
sale, and
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<PAGE> 50
(ix) permitted Refinancing Indebtedness (including
Indebtedness Refinancing Acquired Debt), provided, that such
restrictions contained in any agreement governing such Refinancing
Indebtedness are not materially more restrictive than those contained
in any agreements governing the Indebtedness being Refinanced.
Section 4.9. Limitation on Incurrence of Indebtedness.
(a) The Company shall not, and shall not permit any of
its Restricted Subsidiaries to, directly or indirectly, (1) create, incur,
issue, assume, guaranty or otherwise become directly or indirectly liable,
contingently or otherwise (collectively, "incur"), with respect to any
Indebtedness (including Acquired Debt) or (2) issue any Disqualified Stock;
provided, that the Company may incur Indebtedness (including Acquired Debt) or
issue shares of Disqualified Stock and any Restricted Subsidiary may incur
Acquired Debt, in each case if (x) no Default or Event of Default shall have
occurred and be continuing at the time of, or would occur after giving effect
on a pro forma basis to such incurrence or issuance, and (y) the Interest
Coverage Ratio for the Company's most recently ended four full fiscal quarters
for which internal financial statements are available immediately preceding the
date on which such additional Indebtedness is incurred or such Disqualified
Stock is issued would have been at least equal to the ratio set forth below
opposite the period in which such incurrence or issuance occurs, determined on
a pro forma basis (including a pro forma application of the net proceeds
therefrom), as if the additional Indebtedness had been incurred, or the
Disqualified Stock had been issued, as the case may be, at the beginning of
such four-quarter period:
<TABLE>
<CAPTION>
PERIOD ENDING RATIO
------------- -----
<S> <C>
November 15, 1998 . . . . . . . . . . . . . . . . 2.00
Thereafter . . . . . . . . . . . . . . . . . . . . 2.50
</TABLE>
(b) The limitations of Section 4.9(a) shall not prohibit
the incurrence of:
(i) Indebtedness of the Company under the Revolving
Credit Facility and Indebtedness of Clark Europe and its subsidiaries
under the German Subsidiary Facilities, provided, that the aggregate
principal amount of Indebtedness so incurred on any date, together
with all other Indebtedness incurred pursuant to this clause (i) and
outstanding on such date, shall
44
<PAGE> 51
not exceed the greater of (x) $40.0 million, less any required
permanent repayments (which are accompanied by a corresponding
permanent commitment reduction) thereunder, and (y) the sum, on such
date, of (i) 90% of Eligible Receivables of the Company and the
Restricted Subsidiaries, plus (ii) 65% of Eligible Inventory of the
Company and the Restricted Subsidiaries,
(ii) performance bonds, appeal bonds, surety bonds,
insurance obligations or bonds and other similar bonds or obligations
incurred in the ordinary course of business,
(iii) obligations incurred (1) to fix the interest
rate on any variable rate Indebtedness otherwise permitted by this
Indenture, (2) to hedge currency risk with respect to any receivable
or liability, the payment of which is determined by reference to a
foreign currency, or (3) to protect against fluctuations in the price
of raw materials used in the ordinary course of business of the
Company and its Restricted Subsidiaries (collectively, "Hedging
Obligations"),
(iv) Indebtedness arising out of Capital Lease
Obligations or Purchase Money Obligations (collectively, "Purchase
Money Indebtedness") in an aggregate amount not to exceed $10.0
million outstanding at any time,
(v) Indebtedness owed by (1) a Restricted Subsidiary
to the Company or to a Wholly Owned Subsidiary or (2) the Company to a
Wholly Owned Subsidiary,
(vi) Floor Plan Guarantees incurred in the ordinary
course of business,
(vii) Indebtedness outstanding on the date of this
Indenture, including the Notes,
(viii) Guarantees by the Company or any Guarantor of
Indebtedness otherwise permitted to be incurred hereunder,
(ix) 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
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funds in the ordinary course of business; provided, that such
Indebtedness is extinguished within three Business Days of incurrence,
(x) Indebtedness of the Company or any Restricted
Subsidiary in addition to that described in clauses (i) through (ix)
above, so long as the aggregate principal amount of all such
Indebtedness incurred pursuant to this clause (x) does not exceed
$10.0 million at any one time outstanding (which may be, but shall not
be required to be, incurred, in whole or in part, under the Revolving
Credit Facility or the Germany Subsidiary Facilities), and
(xi) Indebtedness issued in exchange for, or the
proceeds of which are contemporaneously used to extend, refinance,
renew, replace, or refund (collectively, "Refinance") Indebtedness
referred to in clause (vii) above or this clause (xi) or Indebtedness
incurred pursuant to Section 4.9(a) hereof ("Refinancing
Indebtedness"); provided, that (A) the principal amount of such
Refinancing Indebtedness does not exceed the principal amount of
Indebtedness so Refinanced (plus the premiums required to be paid, and
the out-of-pocket expenses (other than those payable to an Affiliate
of the Company) reasonably incurred, in connection therewith), (B) the
Refinancing Indebtedness has a final scheduled maturity that exceeds
the final stated maturity, and a Weighted Average Life to Maturity
that is equal to or greater than the Weighted Average Life to
Maturity, of the Indebtedness being Refinanced, and (C) the
Refinancing Indebtedness ranks, in right of payment, no less favorable
to the Notes as the Indebtedness being Refinanced.
Section 4.10. Limitation on Asset Sales.
The Company shall not, and shall not permit any Restricted
Subsidiary to, make any Asset Sale unless (i) the Company or such Restricted
Subsidiary receives consideration at the time of such Asset Sale at least equal
to the fair market value (as determined in good faith by the Board of Directors
as evidenced by a resolution of the Board of Directors set forth in an
Officers' Certificate delivered to the Trustee) of the assets subject to such
Asset Sale, (ii) at least 75% of the consideration for such Asset Sale is in
the form of cash, Cash Equivalents or liabilities of the Company or any
Restricted Subsidiary (other than liabilities that are by their terms
subordinated to the Notes or any Guarantee) that are assumed by the transferee
of such assets (provided, that there is no further recourse to the Company and
its Restricted Subsidiaries with respect to such
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liabilities), and (iii) within 12 months of such Asset Sale, the Net Proceeds
thereof are (a) invested in assets related to the business of the Company or
its Restricted Subsidiaries or (b) to the extent not used as provided in clause
(a), applied to make an offer to purchase Notes as described below (an "Excess
Proceeds Offer"); provided, that if the amount of Net Proceeds from any Asset
Sale not invested pursuant to clause (a) above is less than $5.0 million, the
Company shall not be required to make an offer pursuant to clause (b). Pending
the final application of any such Net Proceeds, the Company or any Restricted
Subsidiary may temporarily reduce Indebtedness under the Revolving Credit
Facility or the German Subsidiary Facilities, or temporarily invest such Net
Proceeds in Cash Equivalents.
The amount of Net Proceeds not invested as set forth in the
preceding clause (a) constitutes "Excess Proceeds." If the Company elects, or
becomes obligated to make an Excess Proceeds Offer, the Company shall offer to
purchase Notes having an aggregate principal amount equal to the Excess
Proceeds (the "Purchase Amount"), at a purchase price equal to 100% of the
aggregate principal amount thereof, plus accrued and unpaid interest, if any,
to the purchase date. The Company must commence such Excess Proceeds Offer not
later than 30 days after the expiration of the 12-month period following the
Asset Sale that produced Excess Proceeds. If the aggregate purchase price for
the Notes tendered pursuant to the Excess Proceeds Offer is less than the
Excess Proceeds, the Company and its Restricted Subsidiaries may use the
portion of the Excess Proceeds remaining after payment of such purchase price
for general corporate purposes.
Each Excess Proceeds Offer shall remain open for a period of
20 Business Days and no longer, unless a longer period is required by law (the
"Excess Proceeds Offer Period"). Promptly after the termination of the Excess
Proceeds Offer Period (the "Excess Proceeds Payment Date"), the Company shall
purchase and mail or deliver payment for the Purchase Amount for the Notes or
portions thereof tendered, pro rata or by such other method as may be required
by law, or, if less than the Purchase Amount has been tendered, all Notes
tendered pursuant to the Excess Proceeds Offer. The principal amount of Notes
to be purchased pursuant to an Excess Proceeds Offer may be reduced by the
principal amount of Notes acquired by the Company through purchase or
redemption (other than pursuant to a Change of Control Offer) subsequent to the
date of the Asset Sale and surrendered to the Trustee for cancellation.
Each Excess Proceeds Offer shall be conducted in compliance
with all applicable laws, including without limitation, Regulation 14E of the
Exchange
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Act and the rules thereunder and all other applicable Federal and state
securities laws. To the extent that the provisions of any securities laws or
regulations conflict with the provisions of this Section 4.10, the Company
shall comply with the applicable securities laws and regulations and shall not
be deemed to have breached its obligations under this Section 4.10 by virtue
thereof. The Company shall not, and shall not permit any of its Subsidiaries
to, create or suffer to exist or become effective any restriction that would
impair the ability of the Company to make an Excess Proceeds Offer upon an
Asset Sale or, if such Excess Proceeds Offer is made, to pay for the Notes
tendered for purchase.
The Company shall, no later than 30 days following the
expiration of the 12-month period following the Asset Sale that produced Excess
Proceeds, commence the Excess Proceeds Offer by mailing to the Trustee and each
Holder, at such Holder's last registered address, a notice, which shall govern
the terms of the Excess Proceeds Offer, and shall state:
(1) that the Excess Proceeds Offer is being made
pursuant to this Section 4.10, the principal amount of Notes which
shall be accepted for payment and that all Notes validly tendered
shall be accepted for payment on a pro rata basis;
(2) the purchase price and the date of purchase;
(3) that any Notes not tendered or accepted for
payment pursuant to the Excess Proceeds Offer shall continue to accrue
interest;
(4) that, unless the Company defaults in the
payment of the purchase price with respect to any Notes tendered,
Notes accepted for payment pursuant to the Excess Proceeds Offer shall
cease to accrue interest after the Excess Proceeds Payment Date;
(5) that Holders electing to have Notes purchased
pursuant to an Excess Proceeds Offer shall be required to surrender
their Notes, with the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Note completed, to the Company prior
to the close of business on the third Business Day immediately
preceding the Excess Proceeds Payment Date;
(6) that Holders shall be entitled to withdraw
their election if the Company receives, not later than the close of
business on the
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second Business Day preceding the Excess Proceeds Payment Date, a
telegram, telex, facsimile transmission or letter setting forth the
name of the Holder, the principal amount of Notes the Holder delivered
for purchase and a statement that such Holder is withdrawing his
election to have such Notes purchased;
(7) that Holders whose Notes are purchased only
in part shall be issued Notes representing the unpurchased portion of
the Notes surrendered; provided that each Note purchased and each new
Note issued shall be in principal amount of $1,000 or whole multiples
thereof; and
(8) the instructions that Holders must follow in
order to tender their Notes.
On or before the Excess Proceeds Payment Date, the Company
shall (i) accept for payment on a pro rata basis the Notes or portions thereof
tendered pursuant to the Excess Proceeds Offer, (ii) deposit with the Paying
Agent money sufficient to pay the purchase price of all Notes or portions
thereof so accepted and (iii) deliver to the Trustee the Notes so accepted,
together with an Officers' Certificate stating that the Notes or portions
thereof tendered to the Company are accepted for payment. The Paying Agent
shall promptly mail to each Holder of Notes so accepted payment in an amount
equal to the purchase price of such Notes, and the Trustee shall promptly
authenticate and mail to such Holders new Notes equal in principal amount to
any unpurchased portion of the Note surrendered.
The Company shall make a public announcement of the results of
the Excess Proceeds Offer as soon as practicable after the Excess Proceeds
Payment Date. For the purposes of this Section 4.10, the Trustee shall act as
the Paying Agent.
Section 4.11. Limitation on Transactions With Affiliates.
The Company shall not, and shall not permit any of the
Restricted Subsidiaries to, directly or indirectly, sell, lease, transfer or
otherwise dispose of any of its properties or assets to, or purchase any
property or assets from, or enter into any contract, agreement, understanding,
loan, advance or guarantee with, or for the benefit of, any Affiliate (each of
the foregoing, an "Affiliate Transaction"), except for (i) Affiliate
Transactions, which together with all Affiliate Transactions that are part of a
common plan, have an aggregate value of not more than $1.0
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million; provided, that such transactions are conducted in good faith and on
terms that are no less favorable to the Company or the relevant Restricted
Subsidiary than those that would have been obtained in a comparable transaction
at such time on an arm's-length basis from a Person that is not an Affiliate of
the Company or such Restricted Subsidiary, (ii) Affiliate Transactions, which
together with all Affiliate Transactions that are part of a common plan, have
an aggregate value of not more than $5.0 million; provided, that a majority of
the disinterested members of the Board of Directors of the Company determine
that such transactions are conducted in good faith and on terms that are no
less favorable to the Company or the relevant Restricted Subsidiary than those
that would have been obtained in a comparable transaction at such time on an
arm's-length basis from a Person that is not an Affiliate of the Company or
such Restricted Subsidiary, and (iii) Affiliate Transactions for which the
Company delivers to the Trustee an opinion as to the fairness to the Company or
such Restricted Subsidiary from a financial point of view, issued by an
investment banking firm of national standing.
Notwithstanding the foregoing, the following will not be
deemed to be Affiliate Transactions: (i) employment agreements entered into by
the Company or any Restricted Subsidiary in the ordinary course of business
with the approval of a majority of the disinterested members of the Company's
Board of Directors, (ii) transactions between or among the Company and/or its
Wholly Owned Subsidiaries, (iii) Restricted Payments permitted by Section 4.7
of this Indenture, and (iv) reasonable fees and compensation paid to and
indemnity provided on behalf of, officers, directors, employees or consultants
of the Company or any Restricted Subsidiary as determined in good faith by a
majority of the disinterested directors of the Company's Board of Directors or,
if none, unanimously by the Board of Directors.
Section 4.12. Limitation on Liens.
The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, create, incur, assume or suffer to exist
any Lien on any asset (including, without limitation, all real, tangible or
intangible property) of the Company or any Restricted Subsidiary, whether now
owned or hereafter acquired, or on any income or profits therefrom, or assign
or convey any right to receive income therefrom, except (i) Liens on accounts
receivable and inventory and proceeds thereof (and contract rights and general
intangibles relating thereto) securing Indebtedness permitted to be incurred
under the Revolving Credit Facility, (ii) Liens on property, plant, equipment,
accounts receivable and inventory of Clark Europe and its subsidiaries, and
proceeds thereof (and contract rights
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and general intangibles relating thereto) securing Indebtedness permitted to be
incurred under the German Subsidiary Facilities, (iii) Purchase Money Liens,
and (iv) Permitted Liens.
Section 4.13. Corporate Existence.
Subject to Article 5 of this Indenture, the Company shall do
or cause to be done all things necessary to preserve and keep in full force and
effect (i) its corporate existence, and the corporate, partnership or other
existence of each of its respective Subsidiaries, in accordance with their
respective organizational documents (as the same may be amended from time to
time) and (ii) its (and its Subsidiaries) rights (charter and statutory),
licenses and franchises; provided, that the Company shall not be required to
preserve any such right, license or franchise, or the corporate, partnership or
other existence of any Subsidiary, if the Board of Directors on behalf of the
Company shall determine in good faith that the preservation thereof is no
longer desirable in the conduct of the business of the Company and its
Subsidiaries taken as a whole and that the loss thereof is not adverse in any
material respect to the Holders.
Section 4.14. Repurchase Upon a Change of Control.
Upon the occurrence of a Change of Control, the Company shall
notify the Trustee in writing thereof and shall make an offer to purchase all
of the Notes then outstanding as described below (the "Change of Control
Offer") at a purchase price equal to 101% of the aggregate principal amount
thereof plus accrued and unpaid interest, if any, to the date of repurchase
(the "Change of Control Payment").
The Change of Control Offer shall be made in compliance with
all applicable laws, including without limitation, Regulation 14E of the
Exchange Act and the rules thereunder and all other applicable Federal and
state securities laws. To the extent that the provisions of any securities
laws or regulations conflict with the provisions of this Section 4.14, the
Company shall comply with the applicable securities laws and regulations and
shall not be deemed to have breached its obligations under this Section 4.14 by
virtue thereof.
Within 30 days following any Change of Control, the Company
shall commence the Change of Control Offer by mailing to the Trustee and each
Holder a notice, which shall govern the terms of the Change of Control Offer,
and shall state that:
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(i) the Change of Control Offer is being made
pursuant to this Section 4.14 and that all Notes tendered will be
accepted for payment,
(ii) the purchase price and the purchase date, which
shall be a Business Day no earlier than 30 days nor later than 60 days
from the date such notice is mailed (the "Change of Control Payment
Date"),
(iii) that any Note not tendered for payment
pursuant to the Change of Control Offer shall continue to accrue
interest,
(iv) that, unless the Company defaults in the
payment of the Change of Control Payment, all Notes accepted for
payment pursuant to the Change of Control Offer shall cease to accrue
interest on the Change of Control Payment Date,
(v) that any Holder electing to have Notes purchased
pursuant to a Change of Control Offer shall be required to surrender
such Notes, with the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Notes completed, to the Paying Agent
at the address specified in the notice prior to the close of business
on the third Business Day preceding the Change of Control Payment
Date,
(vi) that any Holder shall be entitled to withdraw
such election if the Paying Agent receives, not later than the close
of business on the second Business Day preceding the Change of Control
Payment Date, a telegram, telex, facsimile transmission or letter
setting forth the name of the Holder, the principal amount of Notes
such Holder delivered for purchase, and a statement that such Holder
is withdrawing his election to have such Notes purchased,
(vii) that a Holder whose Notes are being purchased
only in part shall be issued new Notes equal in principal amount to
the unpurchased portion of the Notes surrendered, which unpurchased
portion must be equal to $1,000 in principal amount or an integral
multiple thereof,
(viii) the instructions that Holders must follow in
order to tender their Notes, and
(ix) the circumstances and relevant facts regarding
such Change of Control.
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On the Change of Control Payment Date, the Company shall, to
the extent lawful, (i) accept for payment the Notes or portions thereof
tendered pursuant to the Change of Control Offer, (ii) deposit with the Paying
Agent an amount equal to the Change of Control Payment in respect of all Notes
or portions thereof so tendered and not withdrawn, and (iii) deliver or cause
to be delivered to the Trustee the Notes so accepted together with an Officers'
Certificate stating that the Notes or portions thereof tendered to the Company
are accepted for payment. The Paying Agent shall promptly mail to each Holder
of Notes so accepted payment in an amount equal to the purchase price for such
Notes, and the Trustee shall authenticate and mail to each Holder a new Note
equal in principal amount to any unpurchased portion of the Notes surrendered,
if any, provided, that each such new Note will be in principal amount of $1,000
or an integral multiple thereof.
The Company shall make a public announcement of the results of
the Change of Control Offer on or as soon as practicable after the Change of
Control Payment Date. For the purposes of this Section 4.14, the Trustee shall
act as the Paying Agent.
Section 4.15. Maintenance of Properties.
The Company shall, and shall cause each of its Subsidiaries
to, maintain their properties and assets in normal working order and condition
as on the date of this Indenture (reasonable wear and tear excepted) and make
all necessary repairs, renewals, replacements, additions, betterments and
improvements thereto, as shall be reasonably necessary for the proper conduct
of the business of the Company and its Subsidiaries taken as a whole; provided,
that nothing herein shall prevent the Company or any of its Subsidiaries from
discontinuing any maintenance of any such properties if such discontinuance is
desirable in the conduct of the business of the Company and its Subsidiaries
taken as a whole.
Section 4.16. Maintenance of Insurance.
The Company shall, and shall cause each of its Subsidiaries
to, maintain liability, casualty and other insurance (including self-insurance
consistent with prior practice) with responsible insurance companies in such
amounts and against such risks as is in accordance with customary industry
practice in the general areas in which the Company and its Subsidiaries
operate.
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Section 4.17. Restrictions on Sale and Issuance of Subsidiary Stock.
The Company shall not sell, and shall not permit any of its
Restricted Subsidiaries to issue or sell, any shares of Capital Stock of any
Restricted Subsidiary (other than directors' qualifying shares) to any Person
other than the Company or a Wholly Owned Subsidiary; provided, that the Company
and its Restricted Subsidiaries may sell all of the Capital Stock of a
Restricted Subsidiary owned by the Company and its Restricted Subsidiaries if
the Net Proceeds from such Asset Sale are used in accordance with the
provisions of Section 4.10 of this Indenture.
Section 4.18. Line of Business.
The Company shall not, and shall not permit any Restricted
Subsidiary to, engage in any business other than (a) the business conducted or
proposed to be conducted by the Company and the Restricted Subsidiaries on the
Closing Date and (b) any business that in the reasonable, good faith judgment
of the Board of Directors of the Company is ancillary, complementary,
supplementary, or related to, or an extension of, any business described in
clause (a) above.
ARTICLE 5
SUCCESSORS
Section 5.1. When the Company May Merge, etc.
The Company shall not consolidate or merge with or into
(whether or not the Company is the surviving corporation), or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
properties or assets (determined on a consolidated basis for the Company and
its Restricted Subsidiaries) in one or more related transactions to, any other
Person unless:
(i) the Company is the surviving Person or the
Person formed by or surviving any such consolidation or merger (if
other than the Company) or to which such sale, assignment, transfer,
lease, conveyance or other disposition has been made is a corporation
organized and existing under the laws of the United States, any state
thereof or the District of Columbia,
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(ii) the Person formed by or surviving any such
consolidation or merger (if other than the Company) or the Person to
which such sale, assignment, transfer, lease, conveyance or other
disposition has been made assumes all the Obligations of the Company,
pursuant to a supplemental indenture in a form reasonably satisfactory
to the Trustee, under the Notes, this Indenture and the Registration
Rights Agreement,
(iii) immediately after such transaction, no Default
or Event of Default exists, and
(iv) the Company, or any Person formed by or
surviving any such consolidation or merger, or to which such sale,
assignment, transfer, lease, conveyance or other disposition has been
made, (A) has a Consolidated Net Worth (immediately after the
transaction but prior to any purchase accounting adjustments resulting
from the transaction) equal to or greater than the Consolidated Net
Worth of the Company immediately preceding the transaction and (B)
shall be permitted, at the time of such transaction and after giving
pro forma effect thereto as if such transaction had occurred at the
beginning of the applicable four-quarter period, to incur at least
$1.00 of additional Indebtedness pursuant to Section 4.9(a) hereof.
The Company shall deliver to the Trustee prior to the
consummation of any proposed transaction an Officers' Certificate to the
foregoing effect, an Opinion of Counsel, stating all conditions precedent to
the proposed transaction provided for in this Indenture have been complied with
and a written statement from a firm of independent public accountants of
established national reputation reasonably satisfactory to the Trustee stating
that the proposed transaction complies with clause (iv).
For purposes of this Section 5.1, the sale, lease, conveyance,
assignment, transfer or other disposition of all or substantially all of the
properties and assets of one or more Subsidiaries of the Company, which
properties and assets, if held by the Company instead of such Subsidiaries,
would constitute all or substantially all of the properties and assets of the
Company on a consolidated basis, shall be deemed to be the transfer of all or
substantially all of the properties and assets of the Company.
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Section 5.2. Successor Substituted.
In the event of any transaction (other than a lease)
contemplated by Section 5.1 hereof in which the Company is not the surviving
Person, the successor formed by such consolidation or into or with which the
Company is merged or to which such sale, lease, conveyance, assignment,
transfer or other disposition is made, or formed by such reorganization, as the
case may be, shall succeed to, and be substituted for, and may exercise every
right and power of, the Company, and the Company shall be discharged from its
Obligations under this Indenture, the Notes and the Registration Rights
Agreement with the same effect as if such successor Person had been named as
the Company herein or therein.
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.1. Events of Default.
An "Event of Default" occurs if:
(1) the Company defaults in the payment of
interest on any Note when the same becomes due and payable and the
Default continues for a period of 30 days;
(2) the Company defaults in the payment of the
principal (or premium, if any) on any Note when the same becomes due
and payable at maturity, upon redemption, by acceleration, in
connection with an Excess Proceeds Offer, a Change of Control Offer or
otherwise;
(3) the Company defaults in the performance of or
breaches the provisions of Article V hereof;
(4) the Company or any Guarantor fails to comply
with any of its other agreements or covenants in, or provisions of,
the Notes or this Indenture and the Default continues for 60 days
after written notice thereof has been given to the Company by the
Trustee or to the Company and the Trustee by the Holders of at least
25% in aggregate principal amount of the then outstanding Notes, such
notice to state that it is a "Notice of Default;"
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(5) a default occurs under (after giving effect
to any applicable grace periods or any extension of any maturity date)
any mortgage, indenture or instrument under which there may be issued
or by which there may be secured or evidenced any Indebtedness for
money borrowed by the Company or any Restricted Subsidiary (or the
payment of which is guaranteed by the Company or any Restricted
Subsidiary), whether such Indebtedness or guarantee now exists or is
created after the date of this Indenture, if (a) either (i) such
default results from the failure to pay principal on such Indebtedness
or (ii) as a result of such default the maturity of such Indebtedness
has been accelerated, and (b) the principal amount of such
Indebtedness, together with the principal amount of any other such
Indebtedness with respect to which such a payment default (after the
expiration of any applicable grace period or any extension of the
maturity date) has occurred, or the maturity of which has been so
accelerated, exceeds $5.0 million in the aggregate;
(6) a final non-appealable judgment or judgments
for the payment of money (other than judgments as to which a reputable
insurance company has accepted full liability) is or are entered by a
court or courts of competent jurisdiction against the Company or any
Restricted Subsidiary and such judgment or judgments remain
undischarged, unbonded or unstayed for a period of 60 days after
entry, provided that the aggregate of all such judgments exceeds $2.5
million;
(7) written assertion by the Company or any of
the Guarantors, of the unenforceability of their obligations under the
Indenture, the Notes, or the Guarantees;
(8) the Company or any of its Restricted
Subsidiaries pursuant to or within the meaning of any Bankruptcy Law:
(a) commences a voluntary case,
(b) consents to the entry of an order
for relief against it in an
involuntary case,
(c) consents to the appointment of a
Custodian of it or for all or
substantially all of its property,
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(d) makes a general assignment for the
benefit of its creditors,
(e) admits in writing its inability to
pay debts as the same become due; or
(9) a court of competent jurisdiction enters an
order or decree under any Bankruptcy Law that:
(a) is for relief against the Company or
any of its Restricted Subsidiaries
in an involuntary case,
(b) appoints a Custodian of the Company
or any of its Restricted
Subsidiaries or for all or
substantially all of their property,
(c) orders the liquidation of the
Company, or any of its Restricted
Subsidiaries, and the order or
decree remains unstayed and in
effect for 60 days.
The Company shall, upon becoming aware that a Default or Event
of Default has occurred, deliver to the Trustee a statement specifying such
Default or Event of Default and what action the Company is taking or proposes
to take with respect thereto.
Section 6.2. Acceleration.
If an Event of Default (other than an Event of Default
specified in clauses (8) and (9) of Section 6.1) occurs and is continuing, the
Trustee by written notice to the Company, or the Holders of at least 25% in
principal amount of the then outstanding Notes by written notice to the Company
and the Trustee, may declare the unpaid principal of and any accrued interest
on all the Notes to be due and payable. Upon such declaration the principal
and interest shall be due and payable immediately. If an Event of Default
specified in clause (8) or (9) of Section 6.1 with respect to the Company
occurs, such an amount 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. At any time after a declaration of acceleration, but before a judgment
or decree for payment of the money due has been obtained by the Trustee, the
Holders of a majority in principal amount of the
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Notes outstanding, by written notice to the Company and the Trustee, may
rescind and annul such declaration and its consequences if (a) the Company has
paid or deposited with the Trustee a sum sufficient to pay (i) all sums paid or
advanced by the Trustee and the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, (ii) all
overdue interest (including any interest accrued subsequent to an Event of
Default specified in clauses (8) and (9) of Section 6.1) on all Notes, (iii)
the principal of and premium, if any, on any Notes that have become due
otherwise than by such declaration or occurrence of acceleration and interest
thereon at the rate borne by the Notes, and (iv) to the extent that payment of
such interest is lawful, interest upon overdue interest at the rate borne by
the Notes; (b) all Events of Default, other than the non-payment of principal
of and interest on the Notes that have become due solely by such declaration or
occurrence of acceleration, have been cured or waived; and (c) the rescission
would not conflict with any judgment, order or decree of any court of competent
jurisdiction.
Section 6.3. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee
may pursue any available remedy (under this Indenture or otherwise) to collect
the payment of principal or interest on the Notes to enforce the performance of
any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Notes or does not produce any of them in the proceeding. A
delay or omission by the Trustee or any Holder in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in the Event of Default. All
remedies are cumulative to the extent permitted by law.
Section 6.4. Waiver of Past Defaults.
Holders of a majority of the aggregate principal amount of the
then outstanding Notes by written notice to the Company and the Trustee may on
behalf of the Holders of all of the Notes (a) waive any existing Default or
Event of Default and its consequences under this Indenture except a continuing
Default or Event of Default in the payment of the principal of, or interest on,
any Note or a Default or an Event of Default with respect to any covenant or
provision which cannot be modified or amended without the consent of the Holder
of each outstanding Note affected, and/or (b) rescind an acceleration and its
consequences if
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the rescission would not conflict with any judgment or decree if all existing
Events of Default (except nonpayment of principal or interest that has become
due solely because of the acceleration) have been cured or waived. Upon any
such waiver, such Default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been cured for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other Default
or impair any right consequent thereon.
Section 6.5. Control by Majority.
The Holders of a majority in principal amount of the then
outstanding Notes may 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 it. However, the Trustee may refuse to follow any direction
that conflicts with law or this Indenture, that the Trustee determines may be
unduly prejudicial to the rights of other Holders, or that may involve the
Trustee in personal liability.
Section 6.6. Limitation on Suits.
A Holder may pursue a remedy with respect to this Indenture or
the Notes only if:
(a) the Holder gives to the Trustee written notice of a
continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the
then outstanding Notes make a written request to the Trustee to pursue
the remedy;
(c) such Holder or Holders offer and, if requested, provide
to the Trustee indemnity satisfactory to the Trustee against any loss,
liability or expense;
(d) the Trustee does not comply with the request within 60
days after receipt of the request and the offer and, if requested, the
provision of indemnity; and
(e) during such 60-day period the Holders of a majority in
principal amount of the then outstanding Notes do not give the Trustee
a direction inconsistent with the request.
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A Holder may not use this Indenture to prejudice the rights of another Holder
or to obtain a preference or priority over another Holder.
Section 6.7. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the
right of any Holder of a Note to receive payment of principal and interest on
the Note, on or after the respective due dates expressed in the Note, or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of the Holder.
Section 6.8. Collection Suit by Trustee.
If an Event of Default specified in Section 6.1(1) or (2)
occurs and is continuing, the Trustee is authorized to recover judgment in its
own name and as trustee of an express trust against the Company for the whole
amount of principal and interest remaining unpaid on the Notes and interest on
overdue principal (and premium, if any) and, to the extent lawful, interest and
such further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.
Section 6.9. Trustee May File Proofs of Claim.
The Trustee is authorized to file such proofs of claim and
other papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel)
and the Holders allowed in any judicial proceedings relative to the Company (or
any other obligor under the Notes), their creditors or their property and shall
be entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any
such judicial proceeding is hereby authorized by each Holder to make such
payments to the Trustee, and in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay to the Trustee any
amount due to it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 7.7 hereof. To the extent that the payment of any such
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.7 hereof out
of the estate in any such
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proceeding, shall be denied for any reason, payment of the same shall be
secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties that the Holders of the Notes
may be entitled to receive in such proceeding whether in liquidation or under
any plan of reorganization or arrangement or otherwise. Nothing herein
contained shall be deemed to authorize the Trustee to authorize or consent to
or accept or adopt on behalf of any Holder any plan of reorganization,
arrangement, adjustment or composition affecting the Notes or the rights of any
Holder thereof, or to authorize the Trustee to vote in respect of the claim of
any Holder in any such proceeding.
Section 6.10. Priorities.
If the Trustee collects any money pursuant to this Article, it
shall pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts
due under Section 7.7, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;
Second: to Holders for amounts due and unpaid on the Notes
for principal and interest, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Notes for principal and
interest, respectively;
Third: without duplication, to Holders for any other
Obligations owing to the Holders under the Notes or this Indenture; and
Fourth: to the Company or to such party as a court of
competent jurisdiction shall direct.
The Trustee may fix a record date and payment date for any
payment to Holders.
Section 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action taken or
omitted by it as a Trustee, a court in its discretion may require the filing by
any party litigant in
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the suit of an undertaking to pay the costs of the suit, and the court in its
discretion may assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in the suit, having due regard to the merits and
good faith of the claims or defenses made by the party litigant. This Section
does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section
6.6, or a suit by Holders of more than 10% in principal amount of the then
outstanding Notes.
ARTICLE 7
TRUSTEE
Section 7.1. Duties of Trustee.
(1) If an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers vested in
it by this Indenture and use the same degree of care and skill in their
exercise as a prudent person would exercise or use under the circumstances in
the conduct of his or her own affairs.
(2) Except during the continuance of an Event of
Default:
(a) The duties of the Trustee shall be
determined solely by the express provisions of this Indenture, and the
Trustee need perform only those duties that are specifically set forth
in this Indenture, and no others, and no implied covenants or
obligations shall be read into this Indenture against the Trustee.
(b) In the absence of bad faith on its
part, the Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Trustee and conforming to
the requirements of this Indenture. However, the Trustee shall
examine the certificates and opinions to determine whether or not they
conform to the requirements of this Indenture.
(3) The Trustee may not be relieved from
liabilities for its own negligent action, its own negligent failure to act, or
its own willful misconduct, except that:
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(a) This paragraph does not limit the
effect of paragraph (2) of this Section.
(b) The Trustee shall not be liable for
any error of judgment made in good faith by a Responsible Officer,
unless it is proved that the Trustee was negligent in ascertaining the
pertinent facts.
(c) The Trustee shall not be liable with
respect to any action it takes or omits to take in good faith in
accordance with a direction received by it pursuant to Section 6.5.
(4) Whether or not therein expressly so provided,
every provision of this Indenture that in any way relates to the Trustee is
subject to paragraphs (1), (2) and (3) of this Section.
(5) No provision of this Indenture shall require the
Trustee to expend or risk its own funds or incur any liability. The Trustee
may refuse to perform any duty or exercise any right or power unless it
receives indemnity satisfactory to it against any loss, liability or expense.
(6) The Trustee shall not be liable for interest on
any money received by it except as the Trustee may agree in writing with the
Company. Money held in trust by the Trustee need not be segregated from other
funds except to the extent required by law.
Section 7.2. Rights of Trustee.
(1) The Trustee may conclusively rely upon any
document believed by it to be genuine and to have been signed or presented by
the proper Person. The Trustee need not investigate any fact or matter stated
in the document.
(2) Before the Trustee acts or refrains from acting,
it may require an Officers' Certificate or an Opinion of Counsel or both. The
Trustee shall not be liable for any action it takes or omits to take in good
faith in reliance on such Officers' Certificate or Opinion of Counsel. The
Trustee may consult with counsel and the advice of such counsel or any Opinion
of Counsel shall be full and complete authorization and protection from
liability in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon.
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(3) The Trustee may act through agents and shall not
be responsible for the misconduct or negligence of any agent appointed with due
care.
(4) The Trustee shall not be liable for any action
it takes or omits to take in good faith which it believes to be authorized or
within its rights or powers conferred upon it by this Indenture.
(5) Unless otherwise specifically provided in this
Indenture, any demand, request, direction or notice from the Company shall be
sufficient if signed by an Officer of the Company, on behalf of the Company.
(6) Except with respect to Section 4.1, the Trustee
shall have no duty to inquire as to the performance of the Company's covenants
in Article 4 hereof. In addition, the Trustee shall not be deemed to have
knowledge of any Default or Event of Default except (i) any Event of Default
occurring pursuant to Sections 6.1(1), 6.1(2) and 4.1, or (ii) any Default or
Event of Default of which the Trustee shall have received written notification
or obtained actual knowledge.
Section 7.3. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Notes and may otherwise deal with the Company or an
Affiliate of the Company with the same rights it would have if it were not
Trustee. Any Agent may do the same with like rights. However, the Trustee is
subject to Sections 7.10 and 7.11.
Section 7.4. Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of this Indenture or the Notes,
it shall not be accountable for the Company's use of the proceeds from the
Notes or any money paid to the Company or upon the Company's direction under
any provision hereof, it shall not be responsible for the use or application of
any money received by any Paying Agent other than the Trustee and it shall not
be responsible for any statement or recital herein or any statement in the
Notes or any other document in connection with the sale of the Notes or
pursuant to this Indenture other than its certificate of authentication.
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Section 7.5. Notice of Defaults.
If a Default or Event of Default occurs and is continuing and
if the Trustee has knowledge thereof (within the meaning of Section 7.2(b)),
the Trustee shall mail to the Holders a notice of the Default or Event of
Default within 30 days after it occurs.
Section 7.6. Reports by Trustee to Holders.
Within 60 days after each May 15 beginning with the May 15
following the date of this Indenture, the Trustee shall mail to the Holders a
brief report dated as of such reporting date that complies with TIA Section
313(a) (but if no event described in TIA Section 313(a) has occurred within the
twelve months preceding the reporting date, no report need be transmitted).
The Trustee also shall comply with TIA Section 313(b). The Trustee shall also
transmit by mail all reports as required by TIA Section 313(c).
Commencing at the time this Indenture is qualified under the
TIA, a copy of each report at the time of its mailing to the Holders shall be
filed with the Commission and each stock exchange on which the Notes are
listed. The Company shall promptly notify the Trustee when the Notes are
listed on any stock exchange.
Section 7.7. Compensation and Indemnity.
The Company shall pay to the Trustee from time to time
reasonable compensation for its acceptance of this Indenture and services
hereunder. The Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust. The Company shall reimburse the
Trustee promptly upon request for all reasonable disbursements, advances and
expenses incurred or made by it in addition to the compensation for its
services. Such expenses shall include the reasonable compensation,
disbursements and expenses of the Trustee's agents and counsel, except such
disbursements, advances and expenses as may be attributable to its negligence
or bad faith.
The Company shall indemnify the Trustee against any and all
losses, liabilities or expenses incurred by it without negligence or bad faith
on its part arising out of or in connection with the acceptance or
administration of its duties under this Indenture, except as set forth below.
The Trustee shall notify the Company promptly of any claim for which it may
seek indemnity. Failure by
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the Trustee to so notify the Company shall not relieve the Company of its
obligations hereunder. The Company shall defend the claim and the Trustee
shall cooperate in the defense. In the event that a conflict of interest or
conflicting defenses would arise in connection with the representation of the
Company and the Trustee by the same counsel, the Trustee may have separate
counsel and the Company shall pay the reasonable fees and expenses of such
counsel. The Company need not pay for any settlement made without its consent,
which consent shall not be unreasonably withheld.
The obligations of the Company under this Section 7.7 shall
survive the satisfaction and discharge of this Indenture.
The Company need not reimburse any expense or indemnify
against any loss or liability incurred by the Trustee through its own
negligence or bad faith.
To secure the Company's payment obligations in this Section,
the Trustee shall have a Lien prior to the Notes on all money or property held
or collected by the Trustee, except that held in trust to pay principal of (and
premium, if any) and interest on particular Notes. Such Lien shall survive the
satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.1(8) or (9) occurs, the expenses and
the compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
Section 7.8. Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section.
The Trustee may resign at any time and be discharged from the
trust hereby created by so notifying the Company. The Holders of a majority in
principal amount of the then outstanding Notes may remove the Trustee by so
notifying the Trustee and the Company. The Company may remove the Trustee if:
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(a) the Trustee fails to comply with Section 7.10;
(b) the Trustee is adjudged a bankrupt or an insolvent or an
order for relief is entered with respect to the Trustee under any
Bankruptcy Law;
(c) a Custodian or public officer takes charge of the Trustee
or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, the Company shall promptly appoint a
successor Trustee. Within one year after the successor Trustee takes office,
the Holders of a majority in principal amount of the then outstanding Notes may
appoint a successor Trustee to replace the successor Trustee appointed by the
Company.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company or the Holders of at least 10% in principal amount of the then
outstanding Notes may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee after written request by any Holder who has
been a Holder for at least six months fails to comply with Section 7.10, such
Holder may petition any court of competent jurisdiction for the removal of the
Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to the Holders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, provided that all sums
owing to the Trustee hereunder have been paid and subject to the Lien provided
for in Section 7.7. Notwithstanding replacement of the Trustee pursuant to
this Section 7.8, the Company's obligations under Section 7.7 hereof shall
continue for the benefit of the retiring Trustee, and the Company shall pay to
any such replaced or removed Trustee all amounts owed under Section 7.7 upon
such replacement or removal.
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Section 7.9. Successor Trustee by Merger, etc.
If the Trustee consolidates, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the successor corporation without any further act shall be the
successor Trustee.
Section 7.10. Eligibility; Disqualification.
There shall at all times be a Trustee hereunder that shall (a)
be a corporation organized and doing business under the laws of the United
States of America or of any state thereof or of the District of Columbia
authorized under such laws to exercise corporate trustee power, (b) be subject
to supervision or examination by Federal or state or the District of Columbia
authority, and (c) have a combined capital and surplus of at least $100,000,000
as set forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Sections 310(a)(1), 310(a)(2) and 310(a)(5). The Trustee
is subject to TIA Section 310(b); provided, however, that there shall be
excluded from the operations of TIA Section 310(b)(1) any indenture or
indentures under which other securities, or certificates of interest or
participation in other securities, of the Company are outstanding, if the
requirements for such exclusion set forth in TIA Section 310(b)(1) are met.
Section 7.11. Preferential Collection of Claims Against Company.
The Trustee is subject to TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated
therein. The provisions of TIA Section 311 shall apply to the Company, as
obligor on the Notes.
ARTICLE 8
DISCHARGE OF INDENTURE
Section 8.1. Termination of Company's Obligations.
This Indenture shall cease to be of further effect (except
that Section 7.7, 8.3 and 8.4 shall survive) when all outstanding Notes
theretofore authenticated and issued have been delivered (other than (i)
destroyed, lost or
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stolen Notes that have been replaced or paid and (ii) Notes for whose payment
money has theretofore been deposited in trust and thereafter repaid to the
Company pursuant to Section 8.3(b) hereof) to the Trustee for cancellation and
all sums payable by the Company hereunder have been paid. In addition, the
Company may (A) if applicable, be discharged from any and all Obligations in
respect of the Notes, other than the obligation to duly and punctually pay the
principal of, and premium, if any, and interest on the Notes, in accordance
herewith, or (B) if applicable, omit to comply with restrictive covenants, and
such omission will not be deemed to be an Event of Default if:
(1) with respect to clauses (A) and (B), the Company
irrevocably deposits in trust with the Trustee or at the option of the
Trustee, with a trustee reasonably satisfactory to the Trustee and the
Company under the terms of an irrevocable trust agreement in form and
substance satisfactory to the Trustee, money or U.S. Government
Obligations sufficient (as certified by a nationally recognized
accounting firm designated by the Company) to pay principal and
interest and premium, if any, on the Notes to maturity or redemption
and each installment of interest, if any, on the due dates thereof on
the Notes, as the case may be, and to pay all other sums payable by it
hereunder, and with respect to clause (B) the Obligations under this
Indenture other than with respect to such covenants and Events of
Default which will remain in full force and effect, provided that (i)
the trustee of the irrevocable trust shall have been irrevocably
instructed to pay such money or the proceeds of such U.S. Government
Obligations to the Trustee and (ii) the Trustee shall have been
irrevocably instructed to apply such money or the proceeds of such
U.S. Government Obligations to the payment of said principal, premium,
if any, and interest with respect to the Notes;
(2) with respect to clause (A), the Company has received
from, or there has been published by, the U.S. Internal Revenue
Service a ruling or there has been a change in laws which in the
opinion of independent counsel, which the Company shall deliver to the
Trustee, provides that holders of the Notes will not recognize income,
gain or loss for Federal income tax purposes as a result of such
deposit, defeasance and discharge and will be subject to Federal
income tax on the same amount, in the same manner and at the same
times as would have been the case if such deposit, defeasance and
discharge had not occurred and the Notes were otherwise paid or
redeemed in accordance with the provisions of this Indenture;
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(3) with respect to clause (B), the Company has delivered to
the Trustee an opinion of independent counsel to the effect that the
holders of the Notes will not recognize income, gain or loss for
Federal income tax purposes as a result of such deposit and defeasance
and will be subject to Federal income tax on the same amount, in the
same manner and at the same times as would have been the case if such
deposit and defeasance had not occurred and the Notes were redeemed
pursuant to Article 3 hereof without exercising the option of the
Company pursuant to this Section 8.1; and
(4) the Company delivers to the Trustee an Officers'
Certificate stating that all conditions precedent to satisfaction and
discharge of this Indenture have been complied with, and an Opinion of
Counsel to the same effect.
Then, this Indenture shall cease to be of further effect (except as provided in
this paragraph), and the Trustee, on demand of the Company, shall execute
proper instruments acknowledging confirmation of and discharge under this
Indenture. However, the Company's Obligations in Sections 2.3, 2.4, 2.5, 2.6,
2.7, 4.1, 4.6, 7.7, 7.8, 8.3 and 8.4, the Guarantors' Obligations, and the
Trustee's and Paying Agent's obligations in Section 8.3 shall survive until the
Notes are no longer outstanding. Thereafter, only the Company's obligations in
Section 7.7 and 8.4 and the Company's, Trustee's and Paying Agent's obligations
in Section 8.3 shall survive.
After such irrevocable deposit has been made pursuant to this
Section 8.1 and satisfaction of the other conditions set forth herein, the
Trustee upon request shall acknowledge in writing the discharge of the
Company's obligations under this Indenture except for those surviving
obligations specified above.
In order to have money available on a payment date to pay
principal, premium, if any, or interest on the Notes, the U.S. Government
Obligations shall be payable as to principal, premium, if any, or interest at
least one Business Day before such payment date in such amounts as shall
provide the necessary money. U.S. Government Obligations shall not be callable
at the issuer's option.
Section 8.2. Application of Trust Money.
The Trustee, or a trustee satisfactory to the Trustee and the
Company, shall hold in trust, money or U.S. Government Obligations deposited
with it
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pursuant to Section 8.1. It shall apply the deposited money and the money from
U.S. Government Obligations through the Paying Agent and in accordance with
this Indenture to the payment of principal, premium, if any, and interest on
the Notes.
Section 8.3. Repayment to the Company.
(a) The Trustee and the Paying Agent shall promptly pay
to the Company upon written request any excess money or securities (as
certified by an independent public accountant reasonably acceptable to the
Trustee) held by them at any time.
(b) The Trustee and the Paying Agent shall pay to the
Company upon written request any money held by them for the payment of
principal, premium, if any, or interest that remains unclaimed for two years
after the date upon which such payment shall have become due; provided that the
Company shall have either caused notice of such payment to be mailed to each
Holder entitled thereto no less than 30 days prior to such repayment or within
such period shall have published such notice in a financial newspaper of
widespread circulation published in the City of New York, including, without
limitation, The Wall Street Journal. After payment to the Company, Holders
entitled to the money must look to the Company for payment as general creditor
unless an applicable abandoned property law designates another Person, and all
liability of the Trustee and such Paying Agent with respect to such money shall
cease.
Section 8.4. Reinstatement.
If the Trustee or Paying Agent is unable to apply any money or
U.S. Government Obligations in accordance with Section 8.2 by reason of any
legal proceeding or by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, the Obligations of the Company and the Guarantors under this
Indenture and the Notes shall be revived and reinstated as though no deposit
had occurred pursuant to Section 8.1 until such time as the Trustee or Paying
Agent is permitted to apply all such money or U.S. Government Obligations in
accordance with Section 8.2; provided that if the Company has made any payment
of interest on or principal of any Notes because of the reinstatement of its
Obligations, the Company shall be subrogated to the rights of the Holders of
such Notes to receive such payment from the money or U.S. Government
Obligations held by the Trustee or Paying Agent.
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ARTICLE 9
AMENDMENTS
Section 9.1. Without Consent of Holders.
The Company and the Trustee may amend this Indenture and the
Notes without the consent of any Holder:
(1) to cure any ambiguity, defect or inconsistency;
(2) to provide for uncertificated Notes in addition
to or in place of certificated Notes;
(3) to comply with Article 5 and Section 10.1
hereof;
(4) to make any change that would provide any
additional rights or benefits to the Holders of the Notes or that does
not adversely affect the legal rights hereunder or thereunder of any
Holder;
(5) to comply with requirements of the Commission in
order to effect or maintain the qualification of this Indenture under
the TIA; or
(6) to release any Guarantee of the Notes permitted
to be released under Section 10.7 hereof.
Upon the request of the Company, accompanied by a resolution
of the Board of Directors of the Company authorizing the execution of any such
supplemental indenture or amendment, and upon receipt by the Trustee of the
documents described in Section 9.6 hereof required or requested by the Trustee,
the Trustee shall join with the Company in the execution of any supplemental
indenture or amendment authorized or permitted by the terms of this Indenture
and shall make any further appropriate agreements and stipulations which may
be therein contained, but the Trustee shall not be obligated to enter into such
supplemental indenture or amendment that affects its own rights, duties or
immunities under this Indenture or otherwise.
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Section 9.2. With Consent of Holders.
Subject to Sections 6.4 and 6.7 hereof, the Company and the
Trustee, as applicable, may amend, or waive any provision of, this Indenture or
the Notes with the written consent of the Holders of at least a majority of the
principal amount of the then outstanding Notes.
Upon the request of the Company, accompanied by a resolution
of the Board of Directors of the Company authorizing the execution of any such
supplemental indenture or amendment, and upon filing with the Trustee of
evidence satisfactory to the Trustee of the consent of the Holders as
aforesaid, and upon receipt by the Trustee of the documents described in
Section 9.6 hereof, the Trustee shall join with the Company in the execution of
such supplemental indenture or amendment unless such supplemental indenture or
amendment affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise, in which case the Trustee may in its discretion, but
shall not be obligated to, enter into such supplemental indenture.
It shall not be necessary for the consent of the Holders under
this Section to approve the particular form of any proposed supplemental
indenture or amendment, but it shall be sufficient if such consent approves the
substance thereof.
After a supplemental indenture or amendment under this Section
becomes effective, the Company shall mail to the Holders of each Note affected
thereby a notice briefly describing the amendment or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such supplemental indenture,
amendment or waiver.
Notwithstanding any other provision hereof, without the
consent of each Holder affected, an amendment or waiver under this Section may
not (with respect to any Notes held by a non-consenting Holder):
(1) reduce the principal amount of Notes whose
Holders must consent to an amendment, supplement or waiver;
(2) reduce the rate of or change the time for
payment of interest, including default interest, on any Note;
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(3) reduce the principal of, or the premium on, or
change the fixed maturity of any Note or alter Article III hereof or
numbered paragraphs 5 or 6 of Exhibit A to this Indenture or the price
at which the Company shall offer to purchase such Notes pursuant to
Sections 4.10 or 4.14 hereof;
(4) waive a Default or Event of Default in the
payment of principal of or premium, if any, or interest on, or
redemption payment with respect to, any Note (other than a Default in
the payment of an amount due as a result of an acceleration if the
Holder rescinds such acceleration pursuant to Section 6.2);
(5) make any Note payable in money other than that
stated in the Notes;
(6) make any change in Section 6.4 or 6.7 hereof or
in this Section 9.2; or
(7) make any change adversely affecting the
contractual ranking of the Obligations.
Section 9.3. Compliance with Trust Indenture Act.
If, at the time of an amendment to this Indenture or the
Notes, this Indenture shall be qualified under the TIA, every amendment to this
Indenture or the Notes shall be set forth in a supplemental indenture that
complies with the TIA as then in effect.
Section 9.4. Revocation and Effect of Consents.
Until a supplemental indenture, an amendment or waiver becomes
effective, a consent to it by a Holder of a Note is a continuing consent by the
Holder and every subsequent Holder of a Note or portion of a Note that
evidences the same debt as the consenting Holder's Note, even if notation of
the consent is not made on any Note. A supplemental indenture, amendment or
waiver becomes effective in accordance with its terms and thereafter binds
every Holder.
The Company may fix a record date for determining which
Holders must consent to such supplemental indenture, amendment or waiver. If
the Company fixes a record date, the record date shall be fixed at (i) the
later of 30
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days prior to the first solicitation of such consent or the date of the most
recent list of Holders furnished to the Trustee prior to such solicitation
pursuant to Section 2.5, or (ii) such other date as the Company shall
designate.
Section 9.5. Notation on or Exchange of Notes.
The Trustee may place an appropriate notation about a
supplemental indenture, amendment or waiver on any Note thereafter
authenticated. The Company in exchange for all Notes may issue and the Trustee
shall authenticate new Notes that reflect the amendment or waiver.
Failure to make the appropriate notation or issue a new Note
shall not affect the validity and effect of such amendment or waiver.
Section 9.6. Trustee to Sign Amendments, etc.
The Trustee shall sign any amendment or supplemental indenture
authorized pursuant to this Article 9 if the amendment does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. If it
does, the Trustee may, but need not, sign it. In signing or refusing to sign
such amendment or supplemental indenture, the Trustee shall be entitled to
receive, if requested, an indemnity reasonably satisfactory to it and to
receive and, subject to Section 7.1, shall be fully protected in relying upon,
an Officers' Certificate and an Opinion of Counsel as conclusive evidence that
such amendment or supplemental indenture is authorized or permitted by this
Indenture, that it is not inconsistent herewith, and that it shall be valid and
binding upon the Company in accordance with its terms. The Company may not
sign an amendment or supplemental indenture until the Board of Directors of the
Company approves it.
ARTICLE 10
GUARANTY
Section 10.1. Guarantors.
The Company shall:
(a) cause each Restricted Subsidiary that is not a Foreign
Subsidiary to become a Guarantor hereunder and execute and deliver to the
Trustee a Guaranty in the form of Exhibit C attached hereto and a supplemental
indenture in
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<PAGE> 83
form reasonably satisfactory to the Trustee pursuant to which such Restricted
Subsidiary shall unconditionally guarantee all of the Company's Obligations as
set forth in Section 10.2 of this Indenture; and
(b) cause such Restricted Subsidiary to deliver to the Trustee
an Opinion of Counsel, in form reasonably satisfactory to the Trustee, that (i)
such supplemental indenture and such Guaranty have been duly authorized,
executed and delivered by such Restricted Subsidiary and (ii) this Indenture
and such Guaranty constitute a legal, valid, binding and enforceable obligation
of such Restricted Subsidiary, subject to customary exceptions for bankruptcy,
fraudulent transfer and equitable principles.
Each Note issued after the date of execution by any Guarantor
of a Guaranty shall be endorsed with a form of Guaranty that has been executed
by such Guarantor. However, the failure of any Note to have endorsed thereon a
Guaranty executed by such Guarantor shall not affect the validity or
enforceability of such Guaranty against such Guarantor.
Section 10.2. Guaranty.
For good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, subject to Section 10.4 hereof,
each Guarantor, jointly and severally, hereby unconditionally guarantees (such
guarantees granted from time to time pursuant to Section 10.6, being the
"Guaranty") to each Holder and the Trustee, irrespective of the validity or
enforceability of this Indenture, the Notes or the Obligations hereunder or
thereunder: (i) the due and punctual payment of the principal and premium, if
any, of, and interest on, the Notes (including, without limitation, interest
after the filing of a petition initiating any proceedings referred to in clause
(8) or (9) of Section 6.1 hereof), whether at maturity or on an interest
payment date, by acceleration, call for redemption or otherwise; (ii) the due
and punctual payment of interest on the overdue principal and premium, if any,
of, and interest on, the Notes, if lawful; (iii) the due and punctual payment
and performance of all other Obligations, all in accordance with the terms set
forth herein and in the Notes; and (iv) in case of any extension of time of
payment or renewal of any Notes or any of such other Obligations, the due and
punctual payment or performance thereof in accordance with the terms of the
extension or renewal, whether at stated maturity, by acceleration or otherwise.
Failing payment when due by the Company of any amount so guaranteed for
whatever reason, the Guarantors shall be jointly and severally obligated to pay
the same immediately.
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Each Guarantor hereby agrees that (i) its obligations
hereunder shall be unconditional, irrespective of the validity, regularity or
enforceability of the Notes, this Indenture or the Obligations hereunder or
thereunder, the absence of any action to enforce the same, any waiver or
consent by any Holder with respect to any provisions hereof or thereof, any
amendment of this Indenture or the Notes, the recovery of any judgment against
the Company or any of its Subsidiaries, any action to enforce the same, or any
other circumstance that might otherwise constitute a legal or equitable
discharge or defense of a guarantor and (ii) this Guaranty will not be
discharged except by complete performance of the Obligations.
Each Guarantor hereby agrees that it shall not be entitled to
and irrevocably waives (i) diligence, presentment, demand of payment, filing of
claim with a court in the event of insolvency or bankruptcy of the Company, any
Guarantor, any other Subsidiary of the Company or any other obligor under the
Notes, any right to require a proceeding first against the Company, any
Guarantor, any other Subsidiary of the Company or any other obligor under this
Indenture or the Notes, protest, notice and all demands whatsoever, (ii) any
right of subrogation, reimbursement, exoneration, contribution or
indemnification in respect of any Obligations guaranteed hereby and (iii) any
claim or other rights that it may now or hereafter acquire against the Company
or any of its Subsidiaries that arise from the existence or performance of its
Obligations under this Guaranty, including, without limitation, any right to
participate in any claim or remedy of a Holder against the Company or any of
its Subsidiaries, whether or not such claim, remedy or right arises in equity
or under contract, statute or common law, by any payment made hereunder or
otherwise, and including, without limitation, the right to take or receive from
the Company or any of its Subsidiaries, directly or indirectly, in cash or
other property, by setoff or in any other manner, payment or security on
account of such claim or other rights.
If any Holder or the Trustee is required by any court or
otherwise to return to the Company, any Guarantor, any other Subsidiary of the
Company or any other obligor under this Indenture or the Notes, trustee,
liquidator, or other similar official, any amount paid by the Company, any
Guarantor, any other Subsidiary of the Company or any other obligor under this
Indenture or the Notes to the Trustee or such Holder, this Guaranty, to the
extent theretofore discharged, shall be reinstated in full force and effect.
Each Guarantor hereby agrees that, as between the Guarantors,
on the one hand, and the Holders and the Trustee, on the other hand, (i) the
maturity
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of the Obligations guaranteed hereby may be accelerated as provided in Section
6.2 for the purposes of this Guaranty, notwithstanding any stay, injunction or
other prohibition preventing such acceleration as to the Company of the
Obligations guaranteed hereby, and (ii) in the event of any declaration of
acceleration of those Obligations as provided in Section 6.2, those Obligations
(whether or not due and payable) will forthwith become due and payable by each
of the Guarantors for the purpose of this Guaranty.
Section 10.3. Execution and Delivery of Guaranty.
To evidence the Guaranty set forth in Section 10.2, the
Company and each Guarantor hereby agrees that (a) a notation of such Guaranty
substantially as set forth on Exhibit C attached hereto shall be endorsed on
each Note authenticated and delivered by the Trustee such endorsement shall be
executed on behalf of each Guarantor by its Chairman of the Board, President,
Chief Financial Officer, Chief Operating Officer, Treasurer, Secretary or any
Vice-President and (b) a counterpart signature page to this Indenture shall be
executed on behalf of each Guarantor by its Chairman of the Board, President or
one of its Vice Presidents and attested to by another officer acknowledging
such Guarantor's agreement to be bound by the provisions hereof and thereof.
Each Guarantor hereby agrees that its Guaranty set forth in
Section 10.7 shall remain in full force and effect notwithstanding any failure
to endorse on each Note a notation of such Guaranty.
If an officer whose signature is on this Indenture no longer
holds that office at the time the Trustee authenticates the Notes on which a
Guaranty is endorsed, the Guaranty shall nevertheless be valid.
The delivery of any Note by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of the Guaranty
set forth in this Indenture on behalf of the Guarantor.
Section 10.4. Limitation on Guarantor's Liability.
Each Guarantor and by its acceptance hereof each Holder hereby
confirms that it is the intention of all such parties that the guarantee by
such Guarantor pursuant to its Guaranty not constitute a fraudulent transfer or
conveyance for purposes of any Federal or state law. To effectuate the
foregoing inten-
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tion, the Holders and any Guarantors hereby irrevocably agree that the
obligations of each Guarantor under its Guaranty shall be limited to the
maximum amount as will, after giving effect to all other contingent and fixed
liabilities of such Guarantor and after giving effect to any collections from
or payments made by or on behalf of any other Guarantor in respect of the
obligations of such other Guarantor under its Guaranty, result in the
Obligations of such Guarantor under the Guaranty not constituting a fraudulent
conveyance or fraudulent transfer under Federal or state law.
Section 10.5. Rights under the Guaranty.
(a) No payment by any Guarantor pursuant to the provisions
hereof shall give rise to any claim of the Guarantors against the Trustee or
any Holder.
(b) Each Guarantor waives notice of the issuance, sale and
purchase of the Notes and notice from the Trustee or the Holders from time to
time of any of the Notes of their acceptance and reliance on this Guaranty.
(c) No set-off, counterclaim, reduction or diminution of any
obligation or any defense of any kind or nature (other than performance by the
Guarantors of their obligations hereunder) that any Guarantor may have or
assert against the Trustee or any Holder shall be available hereunder to such
Guarantor.
(d) Each Guarantor shall pay all costs, expenses and fees,
including all reasonable attorneys' fees, that may be incurred by the Trustee
in enforcing or attempting to enforce the Guaranty or protecting the rights of
the Trustee or the Holder, if any, in accordance with this Indenture.
Section 10.6. Primary Obligations.
The Obligations of each Guarantor hereunder shall constitute a
guaranty of payment and not of collection. Each Guarantor hereby agrees that
it is directly liable to each Holder hereunder, that the Obligations of each
Guarantor hereunder are independent of the Obligations of the Company or any
other Guarantor, and that a separate action may be brought against each
Guarantor, whether such action is brought against the Company or any other
Guarantor or whether the Company or any other Guarantor is joined in such
action. Each Guarantor will agree that its liability hereunder shall be
immediate and shall not be contingent upon the exercise or enforcement by the
Trustee or the Holders of whatever remedies they may have against the Company
or any other Guarantor, or
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the enforcement of any lien or realization upon any security Trustee may at any
time possess. Each Guarantor hereby agrees that any release that may be given
by the Trustee or the Holders to the Company or any other Guarantor shall not
release such Guarantor.
Section 10.7. Release of Guarantors.
If all of the Capital Stock of any Guarantor is sold to a
Person (other than the Company or any of its Restricted Subsidiaries) and the
Net Proceeds from such Asset Sale are used in accordance with Section 4.10,
then such Guarantor will be released and discharged from all of its obligations
under its Guarantee of the Notes and this Indenture.
ARTICLE 11
MISCELLANEOUS
Section 11.1. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or
conflicts with the duties imposed by TIA Section 318(c), the imposed duties
shall control.
Section 11.2. Notices.
Any notice or communication by the Company or the Trustee to
the others is duly given if in writing and delivered in Person or mailed by
first-class mail (registered or certified, return receipt requested), telex,
telecopier or overnight air courier guaranteeing next day delivery, to the
others' addresses:
If to the Company:
CLARK Material Handling Company
172 Trade Street
Lexington, Kentucky 40508
Attention: Chief Executive Officer
Telecopier No.: (606) 288-1813
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If to the Trustee:
United States Trust Company of New York
114 West 47th Street
New York, New York 10036
Attention: Corporate Trust Division
Telecopier No.: (212) 852-1625
The Company or the Trustee by notice to the others may
designate additional or different addresses for subsequent notices or
communications.
All notices and communications (other than those sent to
Holders) shall be deemed to have been duly given: at the time delivered by
hand, if personally delivered; upon receipt, if deposited in the mail, postage
prepaid; when answered back, if telexed; when receipt acknowledged, if
telecopied; and the next Business Day after timely delivery to the courier, if
sent by overnight air courier guaranteeing next day delivery. All notices and
communications to the Trustee shall be deemed to have been duly given only if
actually received by the Trustee.
Any notice or communication to a Holder shall be mailed by
first-class mail, certified or registered, return receipt requested, to his
address shown on the register kept by the Registrar. Failure to mail a notice
or communication to a Holder or any defect in it shall not affect its
sufficiency with respect to other Holders.
If a notice communication is mailed in the manner provided
above within the time prescribed, it is duly given, whether or not the
addressee receives it.
If the Company mails a notice or communication to Holders, it
shall mail a copy to the Trustee and each Agent at the same time.
Section 11.3. Communication by Holders with Other Holders.
Holders may communicate pursuant to TIA Section 312(b) with
other Holders with respect to their rights under this Indenture or the Notes.
The Company, the Trustee, the Registrar and any other person shall have the
protection of TIA Section 312(c).
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<PAGE> 89
Section 11.4. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee
to take any action under this Indenture, the Company shall furnish to the
Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set
forth in Section 11.5) stating that, in the opinion of the signers,
all conditions precedent and covenants, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set
forth in Section 11.5) stating that, in the opinion of such counsel,
all such conditions precedent and covenants have been complied with.
Section 11.5. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA Section 314(a)(4)) shall include:
(a) a statement that the Person making such certificate or
opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he has
made such examination or investigation as is necessary to enable him
to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(d) a statement as to whether or not, in the opinion of such
Person, such condition or covenant has been complied with,
provided that with respect to matters of fact, an Opinion of Counsel may rely
upon an Officers' Certificate or a certificate of a public official.
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Section 11.6. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a
meeting of Holders. The Registrar or Paying Agent may make reasonable rules
and set reasonable requirements for its functions.
Section 11.7. Legal Holidays.
If a payment date is a Legal Holiday at a place of payment,
payment may be made at that place on the next succeeding day that is not a
Legal Holiday, and no interest shall accrue for the intervening period.
Section 11.8. No Recourse Against Others.
No director, officer, employee, incorporator, stockholder or
controlling person of the Company or any Guarantor, as such, shall have any
liability for any obligations of the Company under the Notes, this Indenture or
the Registration Rights Agreement or for any claim based on, in respect of, or
by reason of such obligations or their creation. Each Holder by accepting a
Note waives and releases all such liability. The waiver and release shall be
part of the consideration for the issuance of the Notes and the Guarantees.
Notwithstanding the foregoing, nothing in this provision shall be construed as
a waiver or release of any claims under the Federal securities laws.
Section 11.9. Governing Law.
THIS AGREEMENT SHALL BE CONSTRUED, INTERPRETED AND THE RIGHTS
OF THE PARTIES DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK,
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THE COMPANY HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN
THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING
IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF ANY SUIT,
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND
IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS. THE COMPANY IRREVOCABLY
WAIVES, TO THE FULLEST
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EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, TRIAL BY JURY AND ANY
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY
SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT
ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM. THE COMPANY IRREVOCABLY CONSENTS, TO THE FULLEST
EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, TO THE SERVICE OF PROCESS
OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE
MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO
THE COMPANY AT ITS ADDRESS SET FORTH HEREIN, SUCH SERVICE TO BECOME EFFECTIVE
30 DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY
PURCHASER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE
LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY IN ANY OTHER
JURISDICTION.
Section 11.10. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture,
loan or debt agreement of the Company or any of its Subsidiaries. Any such
indenture, loan or debt agreement may not be used to interpret this Indenture.
Section 11.11. Successors.
All agreements of the Company and any Guarantors in this
Indenture and the Notes shall bind their respective successors. All agreements
of the Trustee in this Indenture shall bind its successor.
Section 11.12. Severability.
In case any provision in this Indenture or in the Notes shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
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Section 11.13. Counterpart Originals.
The parties may sign any number of copies of this Indenture.
Each signed copy shall be an original, but all of them together represent the
same agreement.
Section 11.14. Table of Contents, Headings, etc.
The Table of Contents, Cross-Reference Table and Headings of
the Articles and Sections of this Indenture have been inserted for convenience
of reference only, are not to be considered a part hereof and shall in no way
modify or restrict any of the terms or provisions hereof.
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<PAGE> 93
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Indenture as of the date first written above.
CLARK MATERIAL HANDLING
COMPANY
Attest: By: /s/
-----------------------------
Name:
Title:
/s/
- -----------------------------
Name:
Title:
UNITED STATES TRUST COMPANY
OF NEW YORK, as Trustee
Attest:
By: /s/
-----------------------------
Name:
Title:
/s/
- ----------------------------
Name:
Title:
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<PAGE> 94
EXHIBIT A
(Face of Security)
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY
TRUST COMPANY (THE "DEPOSITORY") TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE
OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY OR BY
THE DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF
SUCH SUCCESSOR DEPOSITORY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TO THE COMPANY OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DEPOSITORY (AND ANY PAYMENT HEREON IS MADE TO
CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DEPOSITORY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.(1)
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS. NEITHER THIS NOTE NOR ANY
INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
REGISTRATION.
THE HOLDER OF THIS NOTE BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER SUCH NOTE, PRIOR TO THE DATE WHICH IS THREE YEARS (OR SUCH
SHORTER PERIOD THAT MAY HEREAFTER BE PROVIDED UNDER RULE 144(K) AS PERMITTING
RESALES BY NON-AFFILIATES OF RESTRICTED SECURITIES WITHOUT RESTRICTION) AFTER
THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE
COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS NOTE (OR ANY
PREDECESSOR OF SUCH NOTE) ONLY (A) TO THE COMPANY, (B) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, (C) FOR SO LONG AS THE NOTES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE
144A, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER"
(AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) THAT PURCHASES FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS
GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO
OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES
WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(A)(1), (2),
(3) OR (7) UNDER THE SECURITIES ACT THAT IS PURCHASING THE NOTE FOR ITS OWN
ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL "ACCREDITED INVESTOR," FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION
WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT OR (F) PURSUANT TO
ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY
SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D), (E) OR (F) TO REQUIRE THE
DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION
SATISFACTORY TO EACH OF THEM, AND IN EACH OF THE FOREGOING CASES, A CERTIFICATE
OF TRANSFER IN THE FORM APPEARING ON THIS NOTE IS COMPLETED AND DELIVERED BY
THE TRANSFEROR TO THE TRUSTEE.
- ----------------
(1) This paragraph should be included only if the Note is issued in
global form.
A-1
<PAGE> 95
CLARK MATERIAL HANDLING COMPANY
10 3/4% [SERIES A] [SERIES B] SENIOR NOTE
DUE 2006
NO. $___________
CUSIP NO.
CLARK Material Handling Company, a Delaware corporation (the
"Company"), as obligor, for value received promises to pay to ______________ or
registered assigns, the principal sum of [ ] Dollars on November
15, 2006. Interest Payment Dates: May 15 and November 15 and on the maturity
date. Record Dates: May 1 and November 1 (whether or not a Business Day).
Reference is hereby made to the further provisions of this
Note set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
IN WITNESS WHEREOF, the Company has caused this Note to be
signed manually or by facsimile by its duly authorized officers.
Dated:
CLARK Material Handling Company
By:
--------------------------------
Name:
Title:
By:
--------------------------------
Name:
Title:
Trustee's Certificate of Authentication:
This is one of the Notes referred to
in the within-mentioned Indenture:
UNITED STATES TRUST COMPANY OF
NEW YORK, as Trustee
By:
------------------------------
Authorized Signature
A-2
<PAGE> 96
(Back of Security)
10 3/4% [SERIES A] [SERIES B] SENIOR NOTE
DUE NOVEMBER 15, 2006
1. Interest. CLARK Material Handling Company, a Delaware
corporation (the "Company"), as obligor, promises to pay interest on the
principal amount of this Note at the rate and in the manner specified below.
The Company shall pay, in cash, interest on the principal
amount of this Note, at the rate of 10 3/4% per annum. The Company shall pay
interest semi-annually on May 15 and November 15 of each year, and on the
maturity date, commencing on May 15, 1997, or if any such day is not a Business
Day, on the next succeeding Business Day (each an "Interest Payment Date").
Interest shall be computed on the basis of a 360-day year
consisting of twelve 30-day months. Interest shall accrue from the most recent
date to which interest has been paid or, if no interest has been paid, from
November 27, 1996. To the extent lawful, the Company shall pay interest on
overdue principal at the rate of 1% per annum in excess of the then applicable
interest rate on the Notes; the Company shall pay interest on overdue
installments of interest (without regard to any applicable grace periods) at
the same rate to the extent lawful.
2. Method of Payment. The Company shall pay interest on the
Notes (except defaulted interest) to the Persons who are registered Holders of
Notes at the close of business on the record date next preceding the Interest
Payment Date, even if such Notes are cancelled after such record date and on or
before such Interest Payment Date. The Holder must surrender this Note to a
Paying Agent to collect principal payments. The Company shall pay principal
and interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts. The Company, however, may pay
principal and interest by check to a Holder's registered address.
3. Paying Agent and Registrar. Initially, the Trustee shall
act as Paying Agent and Registrar. The Company may change any Paying Agent,
Registrar or co-registrar without notice to any Holder. Subject to certain
exceptions, the Company or any of its Subsidiaries may act in any such
capacity.
4. Indenture. The Company issued the Notes under an
Indenture dated as of November 27, 1996 (the "Indenture") between the Company
and the Trustee. The terms of the Notes include those stated in the Indenture
and those made part of the Indenture by reference to the Trust Indenture Act of
1939 (the "TIA") (15 U.S. Code Sections 77aaa-77bbbb) as in effect on the date
of the Indenture until such time as the Indenture is qualified under the TIA
and thereafter as in effect on the date the Indenture is so qualified. The
Notes are subject to all such terms, and Holders are referred to the Indenture
and such act for a statement of such terms. The terms of the Indenture shall
govern any inconsistencies between the Indenture and the Notes. Terms not
otherwise defined herein shall have the meanings assigned in the Indenture.
The Notes are limited to $130,000,000 in aggregate principal amount.
5. Optional Redemption. The Notes are not redeemable at
the Company's option prior to November 15, 2001. Thereafter, the Notes will be
subject to redemption at the option of the Company, in whole or in part, at the
redemption prices (expressed as percentages of principal amount) set forth
below plus accrued and unpaid interest thereon, if any, to the applicable
A-3
<PAGE> 97
redemption date, if redeemed during the 12-month period beginning on November
15 of the years indicated below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2001 . . . . . . . . . . . . . . . . 105.375%
2002 . . . . . . . . . . . . . . . . 102.688
2003 and thereafter . . . . . . . . 100.000
</TABLE>
Notwithstanding the foregoing, at any time or from time to
time prior to November 15, 1999, the Company may, at its option, redeem up to
one-third of the original principal amount of the Notes, at a redemption price
of 110.75% of the principal amount thereof, plus accrued and unpaid interest,
if any, to the applicable redemption date, with the net cash proceeds of one or
more Public Equity Offerings; provided, that (a) such redemption shall occur
within 90 days of the date of closing of such public offering and (b) at least
$86.7 million aggregate principal amount of Notes remains outstanding
immediately after giving effect to each such redemption.
6. Mandatory Redemption. There shall be no mandatory
redemption of the Notes.
7. Denominations, Transfer, Exchange. The Notes are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. The transfer of Notes may be registered and Notes may be
exchanged as provided in the Indenture. The Registrar and the Trustee may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and the Company may require a Holder to pay any taxes and
fees required by law or permitted by the Indenture. The Registrar and the
Company need not exchange or register the transfer (i) of any Note or portion
of a Note selected for redemption or (ii) of any Notes for a period of 15 days
before a selection of Notes to be redeemed or during the period between a
record date and the corresponding Interest Payment Date.
8. Persons Deemed Owners. The registered Holder of a Note
may be treated as its owner for all purposes, subject to the provisions of the
Indenture with respect to the record dates for the payment of interest.
9. Amendments and Waivers. Subject to certain exceptions,
the Indenture or the Notes may be amended with the written consent of the
Holders of at least a majority in principal amount of the then outstanding
Notes (including consents obtained in connection with a tender offer or
exchange offer for Notes), and any existing Default or Event of Default (except
a payment default) may be waived with the consent of the Holders of a majority
in principal amount of the then outstanding Notes (including consents obtained
in connection with a tender offer or exchange offer for Notes). Without the
consent of any Holders, the Indenture and the Notes may be amended or
supplemented to cure any ambiguity, defect or inconsistency, to provide for
assumption of the Company's obligations to the Holders in the case of a merger
or consolidation, to provide for uncertificated Notes in addition to or in
place of certificated Notes, to make any change that would provide any
additional rights or benefits to the Holders of the Notes, or that does not
adversely affect the legal rights of any Holder, or to comply with requirements
of the Commission in order to effect or maintain the qualification of the
Indenture under the TIA.
10. Defaults and Remedies. If an Event of Default occurs
and is continuing, the Trustee or the Holders of at least 25% in principal
amount of the then outstanding Notes may declare all the Notes to be due and
payable immediately, except that in the case of an Event of
A-4
<PAGE> 98
Default arising from certain events of bankruptcy or insolvency, all
outstanding Notes become due and payable immediately without further action or
notice. Holders may not enforce the Indenture or the Notes except as provided
in the Indenture. The Trustee may require indemnity satisfactory to it before
it enforces the Indenture or the Notes. Subject to certain limitations,
Holders of a majority in principal amount of the then outstanding Notes may
direct the Trustee in its exercise of any trust or power. The Company must
furnish an annual compliance certificate to the Trustee.
11. Trustee Dealings with Company. The Trustee under the
Indenture, in its individual or any other capacity, may make loans to, accept
deposits from, and perform services for the Company or its Affiliates, and may
otherwise deal with the Company or its Affiliates, as if it were not Trustee.
12. No Recourse Against Others. No director, officer,
employee, incorporator, stockholder or controlling person of the Company or
Guarantor, as such, shall have any liability for any obligations of the Company
under the Notes, the Indenture or the Registration Rights Agreement or for any
claim based on, in respect of, or by reason of such obligations or their
creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the
issuance of the Notes and the Guarantees. Notwithstanding the foregoing,
nothing in this provision shall be construed as a waiver or release of any
claims under the Federal securities laws.
13. Authentication. This Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating
agent.
14. Abbreviations. Customary abbreviations may be used in
the name of a Holder or an assignee, such as: TEN COM (= tenants in common),
TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (=
Uniform Gifts to Minors Act).
15. CUSIP Numbers. Pursuant to a recommendation promulgated
by the Committee on Uniform Security Identification Procedures, the Company has
caused CUSIP numbers to be printed on the Notes and have directed the Trustee
to use CUSIP numbers in notices of redemption as a convenience to Holders. No
representation is made as to the accuracy of such numbers either as printed on
the Notes or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
16. Holders' Compliance with Registration Rights Agreement.
Each Holder of a Note, by his acceptance thereof, acknowledges and agrees to
the provisions of the Registration Rights Agreement, dated as of November 27,
1996, among the Company and the parties named on the signature page thereof
(the "Registration Rights Agreement"), including but not limited to the
obligations of the Holders with respect to a registration and the
indemnification of the Company and the Purchasers (as defined therein) to the
extent provided therein.
The Company shall furnish to any Holder upon written request
and without charge a copy of the Indenture and/or the Registration Rights
Agreement. Requests may be made to: CLARK Material Handling Company, 172
Trade Street, Lexington, Kentucky 40508, Attention: Chief Executive Officer.
A-5
<PAGE> 99
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign
and transfer this Note to
- ------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint______________________________
agent to transfer this Note on the books of the Company. The agent may
substitute another to act for him.
- ------------------------------------------------------------------------------
Date:
---------------------
Your Signature:
------------------------
(Sign exactly as your name appears
on the face of this Note)
Signature Guarantee*
- -----------------
* NOTICE: The signature must be guaranteed by an institution which is a
member of one of the following recognized signature guarantee
programs:
(1) The Securities Transfer Agent Medallian
Program (STAMP);
(2) The New York Stock Exchange Medallian Program
(MSP);
(3) The Stock Exchange Medallian Program (SEMP).
A-6
<PAGE> 100
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have all or any part of this Note purchased by
the Company pursuant to Section 4.10 or Section 4.14 of the Indenture, as the
case may be, state the amount you elect to have purchased (if all, write
"ALL"): $______________
Date:
--------------------------
Your Signature:
---------------------------
(Sign exactly as your name appears
on the face of this Note)
Signature Guarantee*
- --------------
* NOTICE: The signature must be guaranteed by an institution which is a
member of one of the following recognized signature guarantee
programs:
(1) The Securities Transfer Agent Medallian
Program (STAMP);
(2) The New York Stock Exchange Medallian Program
(MSP);
(3) The Stock Exchange Medallian Program (SEMP).
A-7
<PAGE> 101
SCHEDULE OF EXCHANGES OF DEFINITIVE NOTES(2)
The following exchanges of a part of this Global Note for
Definitive Notes have been made:
<TABLE>
<S> <C> <C> <C> <C>
Principal Amount of this
Amount of decrease in Amount of increase in Global Note following
Principal Amount of this Principal Amount of this such decrease (or Signature of authorized
Date of Exchange Global Note Global Note increase) officer of Trustee
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------------------
(2) This should be included only if the Note is issued in global form.
A-8
<PAGE> 102
EXHIBIT B
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER OF NOTES
Re: [Series A] [Series B] 10 3/4% Senior Notes due November 15, 2006 (the
"Notes") of CLARK Material Handling Company
This Certificate relates to $______ principal amount of Notes held in
* [ ] book-entry or * [ ] definitive form by _______________________ (the
"Transferor").
The Transferor, by written order, has requested the Trustee:
[ ] to deliver in exchange for its beneficial interest in the Global Note
held by the depository, a Note or Notes in definitive, registered form
of authorized denominations and an aggregate principal amount equal to
its beneficial interest in such Global Note (or the portion thereof
indicated above); or
[ ] to exchange or register the transfer of a Note or Notes. In
connection with such request and in respect of each such Note, the
Transferor does hereby certify that Transferor is familiar with the
Indenture relating to the above captioned Notes and, the transfer of
this Note does not require registration under the Securities Act of
1933, as amended (the "Securities Act") because such Note:
[ ] is being acquired for the Transferor's own account, without transfer;
[ ] is being transferred pursuant to an effective registration statement;
[ ] is being transferred to a "qualified institutional buyer" (as defined
in Rule 144A under the Securities Act), in reliance on such Rule 144A;
[ ] is being transferred pursuant to an exemption from registration in
accordance with Rule 904 under the Securities Act;**
[ ] is being transferred pursuant to Rule 144 under the Securities Act;**
or
[ ] is being transferred pursuant to another exemption from the
registration requirements of the Securities Act (explain: ______
________________________________________________________________).**
------------------------------------
[INSERT NAME OF TRANSFEROR]
By:
--------------------------------
Date:
----------------------
* Check applicable box.
** If this box is checked, this certificate must be accompanied
by an opinion of counsel to the effect that such transfer is
in compliance with the Securities Act.
B-1
<PAGE> 103
EXHIBIT C
[FORM OF GUARANTY]
GUARANTY
For good and valuable consideration received from the Company
by the undersigned (hereinafter referred to as the "Guarantor," which term
includes any successor or additional Guarantor), the receipt and sufficiency of
which is hereby acknowledged, subject to Section 10.4 of the Indenture, each
Guarantor, jointly and severally, hereby unconditionally guarantees,
irrespective of the validity or enforceability of the Indenture, the Notes or
the Obligations, (a) the due and punctual payment of the principal and premium,
if any, of and interest on the Notes (including, without limitation, interest
after the filing of a petition initiating any proceedings referred to in
Sections 6.1(8) or (9) of the Indenture), whether at maturity or on an interest
payment date, by acceleration, call for redemption or otherwise, (b) the due
and punctual payment of interest on the overdue principal and premium, if any,
of and interest, if any, on the Notes, if lawful, (c) the due and punctual
payment and performance of all other Obligations, all in accordance with the
terms set forth in the Indenture and the Notes, and (d) in case of any
extension of time of payment or renewal of any Notes or any of such other
Obligations, the due and punctual payment or performance thereof in accordance
with the terms of the extension or renewal, whether at stated maturity, by
acceleration or otherwise.
No director, officer, employee, incorporator, stockholder or
controlling person of the Guarantor, as such, shall have any liability under
this Guaranty for any obligations of the Guarantor under the Notes, the
Indenture or the Registration Rights Agreement or for any claim based on, in
respect of, or by reason of, such obligations or their creation. Each Holder
of the Notes by accepting a Note waives and releases all such liability.
[SUBSIDIARY]
By:
----------------------
Its:
----------------------
C-1
<PAGE> 1
EXHIBIT 4.2
CLARK MATERIAL HANDLING COMPANY
$130,000,000 10 3/4% Senior Notes due 2006
REGISTRATION RIGHTS AGREEMENT
November 27, 1996
JEFFERIES & COMPANY, INC.
11100 Santa Monica Boulevard
10th Floor
Los Angeles, California 90025
BEAR, STEARNS & CO. INC.
245 Park Avenue
New York, New York 10167
Ladies and Gentlemen:
CLARK Material Handling Company, a Delaware corporation (the
"Company"), is issuing and selling to Jefferies & Company, Inc. and Bear,
Stearns & Co. Inc. (collectively, the "Purchasers"), upon the terms set forth
in a purchase agreement, dated as of November 22, 1996 (the "Purchase
Agreement"), $130,000,000 aggregate principal amount of the Company's 10 3/4%
Senior Notes due 2006, Series A (the "Notes"). As an inducement to the
Purchasers to enter into the Purchase Agreement, the Company agrees with the
Purchasers, for the benefit of the holders of the Securities (defined below)
(including, without limitation, the Purchasers), as follows:
1. Definitions
Capitalized terms used herein without definition shall have their
respective meanings set forth in the Purchase Agreement. As used in this
Agreement, the following terms shall have the following meanings:
<PAGE> 2
Advice: See Section 6.
Agreement: This Registration Rights Agreement.
Applicable Period: See Section 2(f).
Business Days: Any day other than (i) Saturday or Sunday, or (ii) a
day on which banking institutions in the State of New York are authorized or
obligated by law, governmental regulation or executive order to be closed.
Closing Date: November 27, 1996.
Effectiveness Date: March 27, 1997
Effectiveness Period: See Section 3(a).
Exchange Act: The Securities Exchange Act of 1934, as amended, and
the rules and regulations of the SEC promulgated thereunder.
Exchange Offer: See Section 2(a).
Exchange Offer Registration Statement: See Section 2(a).
Exchange Securities: 10 3/4 Senior Notes due 2006 of the Company
that are identical in all material respects to the Notes, except for
references to series and restrictive legends.
Filing Date: January 26, 1997.
Guarantors: Any future Guarantors appointed in accordance with the
terms of the Indenture.
Holder: Each registered holder of Registrable Securities.
2
<PAGE> 3
Indenture: The Indenture, dated the date hereof, between the
Company and United States Trust Company of New York, as trustee, pursuant to
which the Notes are being issued, as amended or supplemented from time to
time, in accordance with the terms thereof.
Initial Shelf Registration: See Section 3(a).
Losses: See Section 8(a).
Maximum Contribution Amount: See Section 8(d).
NASD: The National Association of Securities Dealers, Inc.
Participating Broker-Dealer: See Section 2(f).
Person: An individual, trustee, corporation, partnership, joint
stock company, joint venture, trust, unincorporated organization or government
or any agency or political subdivision thereof, union, business association,
firm or other entity.
Private Exchange: See Section 2(g).
Private Exchange Securities: See Section 2(g).
Prospectus: The prospectus included in any Registration Statement
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Securities covered
by such Registration Statement, and all other amendments and supplements to
the Prospectus, including post-effective amendments, and all material
incorporated by reference or deemed to be incorporated by reference in such
Prospectus.
Registration Default: See Section 4(a).
Registrable Securities: (a) Notes, (b) Private Exchange Securities
and (c) Exchange Securities received by a Holder in the Exchange Offer that
may not be sold without restriction under state and federal securities laws
(other than due solely to the status of such Holder as an affiliate of the
Company within the
3
<PAGE> 4
meaning of the Securities Act), in each case until (i) a Registration
Statement covering such Notes, Private Exchange Securities or Exchange
Securities has been declared effective by the SEC and such Notes, Private
Exchange Securities or Exchange Securities, as the case may be, have been
disposed of in accordance with the effective Registration Statement, (ii) such
Notes have been exchanged pursuant to the Exchange Offer for Exchange
Securities that may be resold without restriction under state or federal
securities laws, or (iii) such Notes, Private Exchange Securities or Exchange
Security, as the case may be, cease to be outstanding for purposes of the
Indenture.
Registration Statement: Any registration statement of the Company
that covers any of the Registrable Securities pursuant to the provisions of
this Agreement, including the Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits, and
all material incorporated by reference or deemed to be incorporated by
reference in such registration statement.
Review: See Section 6(a).
Rule 144: Rule 144 under the Securities Act, as such Rule may be
amended from time to time, or any similar rule (other than Rule 144A) or
regulation hereafter adopted by the SEC.
Rule 144A: Rule 144A under the Securities Act, as such Rule may be
amended from time to time, or any similar rule (other than Rule 144) or
regulation hereafter adopted by the SEC.
Rule 415: Rule 415 under the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the SEC.
SEC: The Securities and Exchange Commission.
Securities: The Notes, the Private Exchange Securities and the
Exchange Securities, collectively.
Securities Act: The Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
Shelf Notice: See Section 2(i).
4
<PAGE> 5
Shelf Registration: The Initial Shelf Registration and any
Subsequent Shelf Registration.
Special Counsel: Counsel chosen by the holders of a majority in
aggregate principal amount of Securities.
Subsequent Shelf Registration: See Section 3(b).
TIA: The Trust Indenture Act of 1939, as amended.
Trustee: The trustee under the Indenture and, if any, the trustee
under any indenture governing the Exchange Securities or the Private Exchange
Securities.
Underwritten Registration or Underwritten Offering: A registration
in which securities of the Company are sold to an underwriter for reoffering
to the public.
Weekly Liquidated Damages Amount: See Section 4(a).
2. Exchange Offer
(a) The Company shall (i) prepare and file with the SEC promptly
after the date hereof, but in no event later than the Filing Date, a
registration statement (the "Exchange Offer Registration Statement") on an
appropriate form under the Securities Act with respect to a proposed offer
(the "Exchange Offer") to the Holders to issue and deliver to such Holders, in
exchange for the Notes, a like aggregate principal amount of Exchange
Securities, (ii) use its best efforts to cause the Exchange Offer Registration
Statement to become effective as promptly as practicable after the filing
thereof, but in no event later than the Effectiveness Date, (iii) keep the
Exchange Offer Registration Statement effective until the consummation of the
Exchange Offer pursuant to its terms, and (iv) unless the Exchange Offer would
not be permitted by a policy of the SEC, commence the Exchange Offer and use
its best efforts to issue, on or prior to 30 business days after the date on
which the Exchange Offer Registration Statement is declared effective,
Exchange Securities in exchange for all Notes tendered prior thereto in the
Exchange Offer.
The Exchange Offer shall not be subject to any conditions, other
than that (i) the Exchange Offer does not violate applicable law or any
applicable
5
<PAGE> 6
interpretation of the Staff of the SEC, (ii) no action or proceeding shall
have been instituted or threatened in any court or by any governmental agency
that could reasonably be expected to materially impair the ability of the
Company to proceed with the Exchange Offer, and no material adverse
development shall have occurred in any such existing action or proceeding with
respect to the Company, and (iii) all governmental approvals necessary for the
consummation of the Exchange Offer shall have been obtained.
(b) The Exchange Securities shall be issued under, and entitled to
the benefits of, the Indenture or a trust indenture that is identical to the
Indenture (with such changes to the Indenture that are necessary to comply
with any requirements of the SEC to effect or maintain the qualification
thereof under the TIA).
(c) In connection with the Exchange Offer, the Company shall:
(i) mail to each Holder a copy of the Prospectus forming
part of the Exchange Offer Registration Statement, together with an
appropriate letter of transmittal that is an exhibit thereto and related
documents;
(ii) keep the Exchange Offer open for not less than 20
Business Days after the date notice thereof is mailed to the Holders (or
longer if required by applicable law);
(iii) utilize the services of a depository for the Exchange
Offer with an address in the Borough of Manhattan, The City of New York;
(iv) permit Holders to withdraw tendered Notes at any time
prior to the close of business, New York time, on the last Business Day on
which the Exchange Offer shall remain open; and
(v) otherwise comply in all material respects with all
laws applicable to the Exchange Offer.
(d) As soon as practicable after the close of the Exchange Offer,
the Company shall:
(i) accept for exchange all Notes validly tendered and
not validly withdrawn pursuant to the Exchange Offer;
6
<PAGE> 7
(ii) deliver to the Trustee for cancellation all Notes so
accepted for exchange; and
(iii) cause the Trustee promptly to authenticate and
deliver to each Holder of Notes, Exchange Securities equal in aggregate
principal amount to the Notes of such Holder so accepted for exchange.
(e) Interest on each Exchange Security and Private Exchange
Security will accrue from the last interest payment date on which interest was
paid on the Notes surrendered in exchange therefor or, if no interest has been
paid on the Notes, from November 27, 1996.
(f) The Company shall include within the Prospectus contained in
the Exchange Offer Registration Statement a section entitled "Plan of
Distribution," containing a summary statement of the positions taken or
policies made by the Staff of the SEC with respect to the potential
"underwriter" status of any broker-dealer that is the beneficial owner (as
defined in Rule 13d-3 under the Exchange Act) of Exchange Securities received
by such broker-dealer in the Exchange Offer (a "Participating Broker-Dealer").
Such "Plan of Distribution" section shall also allow the use of the Prospectus
by Participating Brokers-Dealers, and include a statement describing the means
by which Participating Broker-Dealers may resell the Exchange Securities.
If any Holder participating in the Exchange Offer makes the
representations contemplated by Section 2(h) (iv) hereof, the Company shall
use its best efforts to keep the Exchange Offer Registration Statement
effective and to amend and supplement the Prospectus to be lawfully delivered
by all Persons subject to the prospectus delivery requirement of the
Securities Act for a period of 180 days from the consummation of the Exchange
Offer (as such period may be extended pursuant to the last paragraph of
Section 6 hereof) (the "Applicable Period") or such earlier date as the
Company shall be notified in writing that such requesting Participating
Broker-Dealer has resold all Exchange Securities acquired in the Exchange
Offer.
(g) If, prior to consummation of the Exchange Offer, any Purchaser
holds any Notes acquired by it and having the status as an unsold allotment in
the initial distribution, the Company shall, upon the request of such
Purchaser, simultaneously with the delivery of the Exchange Securities in the
Exchange Offer, issue (pursuant to the same indenture as the Exchange
Securities) and deliver to such Purchaser, in exchange (the "Private
Exchange") for the
7
<PAGE> 8
Notes held by such Purchaser, a like principal amount of debt securities of
the Company that are identical to the Exchange Securities (the "Private
Exchange Securities"). The Private Exchange Securities shall bear the same
CUSIP number as the Exchange Securities.
(h) Each Holder participating in the Exchange Offer will be
required to represent to the Company in writing that (i) any Exchange
Securities received by such holder in the Exchange Offer will be acquired in
the ordinary course of its business, (ii) at the time of the consummation of
the Exchange Offer such Holder will have no arrangement or understanding with
any Person to participate in the distribution of the Exchange Securities
within the meaning of the Securities Act or resale of the Exchange Securities
in violation of the Securities Act, (iii) if such Holder is not a
broker-dealer, that it is not engaged in and does not intend to engage in, the
distribution of the Exchange Securities, (iv) if such Holder is a
broker-dealer that will receive Exchange Securities for its own account in
exchange for Notes that were acquired as a result of market-making or other
trading activities, that it will deliver a prospectus, as required by law, in
connection with any resale of such Exchange Securities, and (v) such Holder is
not an "affiliate" of the Company within the meaning of the Securities Act or,
if such Holder is an affiliate, that it will comply with the registration and
prospectus delivery requirements of the Securities Act applicable to it.
(i) If (i) prior to the consummation of the Exchange Offer, the
Company in its reasonable judgment determines that a majority in aggregate
principal amount of the Exchange Securities would not, upon receipt, be
tradeable by the holders thereof without restriction under the Securities Act
and the Exchange Act and without material restrictions under applicable Blue
Sky or state securities laws, (ii) applicable interpretations of the Staff of
the SEC would not permit the consummation of the Exchange Offer prior to the
Effectiveness Date, (iii) subsequent to the consummation of the Private
Exchange but within one year of the Closing Date, the Purchasers so request,
(iv) the Exchange Offer is not consummated within 240 days of the Closing Date
for any reason or (v) in the case of any Holder not permitted to participate
in the Exchange Offer or of any Holder participating in the Exchange Offer
that receives Exchange Securities that may not be sold without restriction
under state and federal securities laws (other than due solely to the status
of such Holder as an affiliate of the Company within the meaning of the
Securities Act) and, in either case contemplated by this clause (v), such
Holder notifies the Company within six months of consummation of the Exchange,
then the Company shall promptly deliver to the Holders (or in the case of any
occurrence of the event described in clause (iii) or (v) hereof, to the
8
<PAGE> 9
Purchasers or any such Holder, as applicable) and the Trustee (in the case of
clauses (i), (ii), (iii) and (iv)) notice thereof (the "Shelf Notice") and
shall as promptly as possible thereafter file an Initial Shelf Registration
pursuant to Section 3 hereof.
3. Shelf Registration
If a Shelf Notice is required to be delivered pursuant to Section
2(i) (i), (ii), or (iv), then this Section 3 shall apply to all Registrable
Securities. If a Shelf Notice is required to be delivered pursuant to Section
2(i)(iii), then this Section 3 shall apply solely to Private Exchange
Securities. If a Shelf Notice is required to be delivered pursuant to Section
2(i)(v), then this Section 3 shall apply solely to (i) Notes held by any
Holder thereof not permitted to participate in the Exchange Offer and (ii)
Exchange Securities that are not freely tradeable as contemplated by Section
2(i)(v) hereof.
(a) Initial Shelf Registration. The Company shall prepare and file
with the SEC a Registration Statement for an offering to be made on a
continuous basis pursuant to Rule 415 covering all of the Registrable
Securities (the "Initial Shelf Registration"). The Initial Shelf Registration
shall be on Form S-1 or another appropriate form permitting registration of
such Registrable Securities for resale by such holders in the manner or
manners designated by them (including, without limitation, one or more
underwritten offerings). The Company shall (i) not permit any securities
other than the Registrable Securities to be included in any Shelf
Registration, and (ii) use its best efforts to cause the Initial Shelf
Registration to be declared effective under the Securities Act as promptly as
practicable after the filing thereof, and to keep the Initial Shelf
Registration continuously effective under the Securities Act until the third
year anniversary of the Closing Date (the "Effectiveness Period"), or such
shorter period ending when (i) all Registrable Securities covered by the
Initial Shelf Registration have been sold pursuant to the Shelf Registration
or (ii) a Subsequent Shelf Registration covering all of the Registrable
Securities covered by and not sold under the Initial Shelf Registration or an
earlier Subsequent Shelf Registration has been declared effective under the
Securities Act; provided, that the Company may suspend the effectiveness of a
Shelf Registration for a period not to exceed 45 days in any calendar year (a
"Shelf Blackout Period"), and the three year period specified above shall be
extended by the number of days in the Shelf Blackout Period, if (i) an event
occurs and is continuing as a result of which the Shelf Registration would, in
the Company's good faith judgment, contain an untrue statement of a material
fact or omit to state a material fact necessary in
9
<PAGE> 10
order to make the statements therein not misleading and (ii) (A) the Company
determines in good faith that the disclosure of such event at such time would
have a material adverse effect on the business, operations or prospects of the
Company and its subsidiaries, taken as a whole, or (B) the disclosure
otherwise relates to a pending material business transaction that has not yet
been publicly disclosed.
(b) Subsequent Shelf Registrations. If any Shelf Registration
ceases to be effective for any reason at any time during the Effectiveness
Period (other than because of the sale of all of the securities registered
thereunder), the Company shall use its best efforts to obtain the prompt
withdrawal of any order suspending the effectiveness thereof, as soon as
practicable after such cessation of effectiveness, to amend the Shelf
Registration in a manner reasonably expected to obtain the withdrawal of the
order suspending the effectiveness thereof, or to file an additional "shelf"
Registration Statement pursuant to Rule 415 covering all of the Registrable
Securities covered by and not sold under the Initial Shelf Registration or an
earlier Subsequent Shelf Registration (a "Subsequent Shelf Registration"). If
a Subsequent Shelf Registration is filed, the Company shall use its best
efforts to cause the Subsequent Shelf Registration to be declared effective as
soon as practicable after such filing and to keep such Subsequent Shelf
Registration continuously effective for a period equal to the number of days
in the Effectiveness Period less the aggregate number of days during which the
Initial Shelf Registration, and any Subsequent Shelf Registration, was
previously continuously effective.
4. Liquidated Damages.
(a) The Company acknowledges and agrees that the holders of
Registrable Securities will suffer damages, and that it would not be feasible
to ascertain the extent of such damages with precision, if the Company fails
to fulfill its obligations hereunder. Accordingly, in the event of such
failure by the Company to fulfill such obligations, the Company hereby agrees
to pay liquidated damages to each holder of Registrable Securities under the
circumstances and to the extent set forth below:
(i) if neither the Exchange Offer Registration Statement nor
the Initial Shelf Registration has been filed with the SEC on or prior to
the Filing Date; or
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<PAGE> 11
(ii) if neither the Exchange Offer Registration Statement nor
the Initial Shelf Registration is declared effective by the SEC on or
prior to the Effectiveness Date; or
(iii) if the Company has not exchanged Exchange Securities for
all Notes validly tendered in accordance with the terms of the Exchange
Offer within 30 days after the date on which an Exchange Offer
Registration Statement is declared effective by the SEC; or
(iv) the Initial Shelf Registration is filed and declared
effective by the SEC but thereafter ceases to be effective without
being succeeded within 30 days by a Subsequent Shelf Registration
filed and declared effective;
(each of the foregoing, a "Registration Default").
Accordingly, upon the occurrence of a Registration Default, the
Company shall pay, or cause to be paid, as liquidated damages, and not as a
penalty, to each holder of a Registrable Security, an additional amount (the
"Weekly Liquidated Damages Amount") equal to (A) for each weekly period
beginning on the date such Registration Default occurs for the first 90-day
period immediately following such date, $.05 per week per $1,000 principal
amount of Registrable Securities held by such holder, and (B) for each weekly
period beginning with the first full week after the 90-day period set forth in
the foregoing clause (A), $.10 per week per $1,000 principal amount of
Registrable Securities held by such holder; provided that such liquidated
damages will, in each case, cease to accrue (subject to the occurrence of
another Registration Default) on the date on which all Registration Defaults
have been cured. A Registration Default under clause (i) above shall be cured
on the date that either the Exchange Offer Registration Statement or the
Initial Shelf Registration is filed with the SEC; a Registration Default under
clause (ii) above shall be cured on the date that either the Exchange Offer
Registration Statement or the Initial Shelf Registration is declared effective
by the SEC; a Registration Default under clause (iii) above shall be cured on
the earlier of the date (A) the Exchange Offer is consummated with respect to
all Notes validly tendered or (B) the Company delivers a Shelf Notice to the
Holders of Registrable Securities; and a Registration Default under clause
(iv) above shall be cured on the earlier of (A) the date on which the
applicable Shelf Registration is no longer subject to an order suspending the
effectiveness thereof or proceedings relating thereto or (B) a new Subsequent
Shelf Registration is declared effective.
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<PAGE> 12
(b) The Company shall notify the Trustee within five Business Days
after each Registration Default. The Company shall pay the liquidated damages
due on the Registrable Securities by depositing with the Trustee, in trust,
for the benefit of the Holders thereof, by 12:00 noon, New York City time, on
the applicable payment dates specified in the Indenture (or other indenture
relating to the Registrable Securities), immediately available funds in sums
sufficient to pay the liquidated damages then due. The liquidated damages
amount due shall be payable semi-annually on each such interest payment date
to the record holder of Registrable Securities entitled to receive the
interest payment to be made on such date as set forth in the Indenture,
commencing with the first payment date occurring after any Registration
Default.
5. [Intentionally Left Blank]
6. Registration Procedures
In connection with the registration of any Securities pursuant to
Sections 2 or 3 hereof, the Company shall effect such registrations to permit
the sale of such Securities in accordance with the intended method or methods
of disposition thereof, and pursuant thereto the Company shall:
(a) Prepare and file with the SEC, on or prior to the Filing Date,
a Registration Statement or Registration Statements as prescribed by Section 2
or 3, and use its best efforts to cause each such Registration Statement to
become effective and remain effective as provided herein; provided, that, if
(i) such filing is pursuant to Section 3 or (ii) a Prospectus contained in an
Exchange Offer Registration Statement filed pursuant to Section 2 is required
to be delivered under the Securities Act by any Participating Broker-Dealer
who seeks to sell Exchange Securities during the Applicable Period relating
thereto, before filing any Registration Statement or Prospectus or any
amendments or supplements thereto, the Company shall, if requested, furnish to
and afford the Holders of the Registrable Securities covered by such
Registration Statement, their Special Counsel, each Participating
Broker-Dealer, the managing underwriters, if any, and their counsel a
reasonable opportunity to review copies of all such documents (including
copies of any documents to be incorporated by reference therein and all
exhibits thereto) proposed to be filed, such financial and other information
and books and records of the Company, and cause the officers, directors and
employees of the Company, Company counsel and the independent certified public
accountants of the Company to respond to such inquiries (such actions are
hereinafter collectively referred to as the "Review"), as shall be reasonably
neces-
12
<PAGE> 13
sary, in the opinion of respective counsel to such holders, Participating
Broker-Dealer and underwriters, to conduct a reasonable investigation within
the meaning of the Securities Act. The Company may require each Holder to
agree to keep confidential any non-public information relating to the Company
received by such Holders and not disclose such information (other than to an
Affiliate or prospective purchaser who agrees to respect the confidentiality
provisions of this Section 6(a)) until such information has been made
generally available to the public unless the release of such information is
required by law or necessary to respond to inquiries of regulatory authorities
(including the National Association of Insurance Commissioners, or similar
organizations or their successors). The Company shall not file any
Registration Statement or Prospectus or any amendments or supplements thereto
in respect of which the Holders must be afforded an opportunity to Review
prior to the filing of such document, if the Holders of a majority in
aggregate principal amount of the Registrable Securities covered by such
Registration Statement, their Special Counsel, any Participating Broker-Dealer
or the managing underwriters, if any, or their counsel shall reasonably object
to the Company if such objection states that the person or persons making such
objection believe that such Registration Statement, Prospectus or amendment
does not comply in any material respect with any applicable law.
(b) Provide an indenture trustee for the Registrable Securities or
the Exchange Securities, as the case may be, and cause the Indenture (or other
indenture relating to the Registrable Securities) to be qualified under the
TIA not later than the effective date of the first Registration Statement; and
in connection therewith, use its best efforts to effect such changes to such
indenture as may be required for such indenture to be so qualified in
accordance with the terms of the TIA; and execute, and use its best efforts to
cause such trustee to execute, all documents as may be required to effect such
changes, and all other forms and documents required to be filed with the SEC
to enable such indenture to be so qualified in a timely manner.
(c) Prepare and file with the SEC such amendments and
post-effective amendments to the Registration Statement as may be necessary to
keep such Registration Statement continuously effective for the time periods
required hereby; cause the related Prospectus to be supplemented by any
Prospectus supplement required by Applicable Law, and as so supplemented to be
filed pursuant to Rule 424 (or any similar provisions then in force) under the
Securities Act; and comply in all material respects with the provisions of the
Securities Act and the Exchange Act applicable thereto with respect to the
disposition of all securities covered by such Registration Statement, as so
amended, or in such
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<PAGE> 14
Prospectus, as so supplemented, in accordance with the intended methods of
distribution set forth in such Registration Statement or Prospectus as so
amended.
(d) Furnish to such selling Holders and Participating
Broker-Dealers who so request (i) upon the Company's receipt, a copy of the
order of the SEC declaring such Registration Statement and any post-effective
amendment thereto effective and (ii) such reasonable number of copies of such
Registration Statement and of each amendment and supplement thereto (in each
case including any documents incorporated therein by reference and all
exhibits), (iii) such reasonable number of copies of the Prospectus included
in such Registration Statement (including each preliminary Prospectus), and
such reasonable number of copies of the final Prospectus as filed by the
Company pursuant to Rule 424(b) under the Securities Act, in conformity with
the requirements of the Securities Act, and (iv) such other documents
(including any amendments required to be filed pursuant to clause (c) of this
Section), as any such Person may reasonably request. The Company hereby
consents to the use of the Prospectus by each of the selling Holders of
Registrable Securities or each such Participating Broker-Dealer, as the case
may be, and the underwriters or agents, if any, and dealers (if any), in
connection with the offering and sale of the Registrable Securities covered
by, or the sale by Participating Broker-Dealers of the Exchange Securities
pursuant to, such Prospectus and any amendment thereto.
(e) If (A) a Shelf Registration is filed pursuant to Section 3 or
(B) a Prospectus contained in an Exchange Offer Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Securities during
the Applicable Period, notify the selling Holders of Registrable Securities,
their Special Counsel, each Participating Broker-Dealer and the managing
underwriters, if any, as promptly as possible, and confirm such notice in
writing, (i) when a Prospectus has been filed, and, with respect to a
Registration Statement or any post-effective amendment, when the same has
become effective under the Securities Act, (ii) of the issuance by the SEC of
any stop order suspending the effectiveness of a Registration Statement or of
any order preventing or suspending the use of any Prospectus or the initiation
of any proceedings for that purpose, (iii) if, at any time when a Prospectus
is required by the Securities Act to be delivered in connection with sales of
Registrable Securities, the representations and warranties of the Company
contained in any agreement (including any underwriting agreement) contemplated
by Section 6(n) below cease to be true and correct in any material respect,
(iv) of the receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of a
14
<PAGE> 15
Registration Statement or any of the Registrable Securities or the Exchange
Securities to be sold by any Participating Broker-Dealer for offer or sale in
any jurisdiction, or the contemplation, initiation or threatening of any
proceeding for such purpose, (v) of the happening of any event that makes any
statement made in such Registration Statement or related Prospectus or any
document incorporated or deemed to be incorporated therein by reference untrue
in any material respect or that requires the making of any changes in such
Registration Statement, Prospectus or documents so that it will not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, and
(vi) of the Company's reasonable determination that a post-effective amendment
to a Registration Statement would be appropriate.
(f) Prior to any public offering of Registrable Securities or any
delivery of a Prospectus contained in the Exchange Offer Registration
Statement by any Participating Broker-Dealer who seeks to sell Exchange
Securities during the Applicable Period, use its best efforts to register or
qualify, and, if applicable, to cooperate with the selling Holders of
Registrable Securities, the underwriters, if any, and their respective counsel
in connection with the registration or qualification (or exemption from such
registration or qualification) of, such Registrable Securities to be included
in a Registration Statement for offer and sale under the securities or Blue
Sky laws of such jurisdictions in the United States as any selling Holder,
Participating Broker-Dealer or the managing underwriters, if any, reasonably
request in writing; and, if Securities are offered other than through an
Underwritten Offering, the Company shall cause its counsel to perform Blue Sky
investigations and file registrations and qualifications required to be filed
pursuant to this Section 6(f) at the expense of the Company; keep each such
registration or qualification (or exemption therefrom) effective during the
period such Registration Statement is required to be kept effective and do any
and all other acts or things reasonably necessary or advisable to enable the
disposition in such jurisdictions of the Securities covered by the applicable
Registration Statement; provided, that the Company shall not be required in
connection therewith to file any general consent to service of process or to
qualify as a foreign corporation or as a dealer in securities in any
jurisdiction where it is not now so qualified or to subject itself to taxation
in respect of doing business in any jurisdiction in which it is not otherwise
so subject.
(g) If (A) a Shelf Registration is filed pursuant to Section 3 or
(B) a Prospectus contained in an Exchange Offer Registration Statement filed
15
<PAGE> 16
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Securities during
the Applicable Period, use its best efforts to prevent the issuance of any
order suspending the effectiveness of a Registration Statement or of any order
preventing or suspending the use of a Prospectus or suspending the
qualification (or exemption from qualification) of any of the Registrable
Securities for sale in any jurisdiction, and, if any such order is issued, to
use its best efforts to obtain the withdrawal of any such order at the
earliest practicable time.
(h) If (A) a Shelf Registration is filed pursuant to Section 3 or
(B) a Prospectus contained in an Exchange Offer Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Securities during
the Applicable Period, and if requested by the managing underwriters, if any,
or the Holders of a majority in aggregate principal amount of the Registrable
Securities, (i) promptly incorporate in a Prospectus or post-effective
amendment such information as the managing underwriters, if any, or such
Holders reasonably request to be included therein required to comply with any
applicable law and (ii) make all required filings of such Prospectus or such
post-effective amendment as soon as practicable after the Company has received
notification of such matters required by applicable law to be incorporated in
such Prospectus or post-effective amendment; provided, that the Company shall
not be required to take any action under this clause (h) that would, in the
opinion of counsel to the Company, violate applicable law.
(i) If (A) a Shelf Registration is filed pursuant to Section 3 or
(B) a Prospectus contained in an Exchange Offer Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Securities during
the Applicable Period, cooperate with the selling Holders and the managing
underwriters, if any, to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold, which
certificates shall not bear any restrictive legends and shall be in a form
eligible for deposit with The Depository Trust Company ("DTC"); and enable
such Registrable Securities to be in such denominations and registered in such
names as the managing underwriters, if any, or Holders may request at least
two Business Days prior to any sale of Registrable Securities.
(j) If (A) a Shelf Registration is filed pursuant to Section 3 or
(B) a Prospectus contained in an Exchange Offer Registration Statement filed
16
<PAGE> 17
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Securities during
the Applicable Period, upon the occurrence of any event contemplated by
paragraph 6(e)(v) or 6(e)(vi) above, as promptly as practicable prepare a
supplement or post-effective amendment to the Registration Statement or a
supplement to the related Prospectus or any document incorporated or deemed to
be incorporated therein by reference, or file any other required document so
that, as thereafter delivered to the purchasers of the Registrable Securities
being sold thereunder or to the purchasers of the Exchange Securities to whom
such Prospectus will be delivered by a Participating Broker-Dealer, such
Prospectus will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(k) Use its best efforts to cause the Securities covered by a
Registration Statement to be rated with the appropriate rating agencies, if
appropriate, if so requested by the Holders of a majority in aggregate
principal amount of Securities covered by such Registration Statement or the
managing underwriters, if any.
(l) Prior to the effective date of the first Registration Statement
relating to the Registrable Securities, (i) provide the Trustee with
certificates for the Registrable Securities in a form eligible for deposit
with DTC and (ii) provide a CUSIP number for the Registrable Securities.
(m) [Intentionally Left Blank]
(n) If a Shelf Registration is filed pursuant to Section 3, enter
into such agreements (including an underwriting agreement in form, scope and
substance as is customary in Underwritten Offerings) and take all such other
actions in connection therewith (including those reasonably requested by the
managing underwriters, if any, or the Holders of a majority of the Registrable
Securities being sold) in order to expedite or facilitate the registration or
the disposition of such Registrable Securities, and in such connection,
whether or not an underwriting agreement is entered into and whether or not
the registration is an Underwritten Registration, (i) make such
representations and warranties to the Holders and the underwriters, if any,
with respect to the business of the Company and its subsidiaries, and the
Registration Statement, Prospectus and documents, if any, incorporated or
deemed to be incorporated by reference therein, in each case, in form,
substance and scope as are customarily made by issuers to under-
17
<PAGE> 18
writers in Underwritten Offerings of debt securities similar to the Notes, and
confirm the same if and when reasonably requested; (ii) use its best efforts
to obtain opinions of counsel to the Company and updates thereof (which
counsel and opinions (in form, scope and substance) shall be reasonably
satisfactory to the managing underwriters, if any, and the Holders of a
majority in principal amount of the Registrable Securities being sold),
addressed to each selling Holder of Registrable Securities and each of the
underwriters, if any, covering the matters customarily covered in opinions
requested in Underwritten Offerings; (iii) use its best efforts to obtain
"cold comfort" letters and updates thereof (which letters and updates (in
form, scope and substance) shall be reasonably satisfactory to the managing
underwriters) from the independent certified public accountants of the Company
(and, if necessary, any other independent certified public accountants of any
subsidiary of the Company or of any business acquired by the Company for which
financial statements and financial data are, or are required to be, included in
the Registration Statement), addressed to each of the underwriters and each
selling Holder of Registrable Securities, such letters to be in customary form
and covering matters of the type customarily covered in "cold comfort" letters
in connection with Underwritten Offerings; and (iv) use its best efforts to
deliver such documents and certificates as may be reasonably requested by the
Holders of a majority in principal amount of the Registrable Securities being
sold and the managing underwriters, if any, to evidence the continued validity
of the representations and warranties of the Company and its subsidiaries made
pursuant to clause (i) above and to evidence compliance with any conditions
contained in the underwriting agreement or other similar agreement entered into
by the Company.
(o) Comply in all material respects with all applicable rules and
regulations of the SEC and make generally available to its security holders
earnings statements satisfying the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder (or any similar rule promulgated under
the Securities Act) no later than 45 days after the end of any 12-month period
(or 90 days after the end of any 12-month period if such period is a fiscal
year) (i) commencing on the first day of the fiscal quarter following each
fiscal quarter in which Registrable Securities are sold to underwriters in a
firm commitment or best efforts underwritten offering and (ii) if not sold to
underwriters in such an offering, commencing on the first day of the first
fiscal quarter of the Company after the effective date of a Registration
Statement, which statements shall cover said 12-month periods.
(p) Upon consummation of an Exchange Offer or Private Exchange,
obtain an opinion of counsel to the Company (in form, scope and sub-
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<PAGE> 19
stance customary for underwritten transactions), addressed to the Trustee for
the benefit of all Holders participating in the Exchange Offer or Private
Exchange, as the case may be, to the effect that (i) the Company has duly
authorized, executed and delivered the Exchange Securities or the Private
Exchange Securities, as the case may be, and the Indenture, and (ii) the
Exchange Securities or the Private Exchange Securities, as the case may be,
and the Indenture constitute legal, valid and binding obligations of the
Company, enforceable against the Company in accordance with their respective
terms, subject to customary exceptions and qualifications.
(q) If an Exchange Offer or Private Exchange is to be consummated,
upon delivery of the Registrable Securities by such Holders to the Company (or
to such other Person as directed by the Company) in exchange for the Exchange
Securities or the Private Exchange Securities, as the case may be, the Company
shall mark, or caused to be marked, on such Registrable Securities that such
Registrable Securities are being cancelled in exchange for the Exchange
Securities or the Private Exchange Securities, as the case may be; in no event
shall such Registrable Securities be marked as paid or otherwise satisfied.
(r) Cooperate with each seller of Registrable Securities covered by
any Registration Statement and each underwriter, if any, participating in the
disposition of such Registrable Securities and their respective counsel in
connection with any filings required to be made with the NASD.
(s) Use its best efforts to take all other steps necessary to
effect the registration of the Registrable Securities covered by a
Registration Statement contemplated hereby.
The Company may require each seller of Registrable Securities or
Participating Broker-Dealer as to which any registration is being effected to
furnish to the Company such information regarding such seller or Participating
Broker-Dealer and the distribution of such Registrable Securities or Exchange
Securities as the Company may, from time to time, reasonably request and to
provide comments with respect to the Registration Statement to be used in
connection with any Shelf Registration. The Company may exclude from such
registration the Registrable Securities or Exchange Securities of any Seller
so long as such seller fails to furnish such information.
Each Holder of Registrable Securities and each Participating
Broker-Dealer agrees by acquisition of such Registrable Securities or Exchange
19
<PAGE> 20
Securities of any Participating Broker-Dealer that, upon receipt of written
notice from the Company of the happening of any event of the kind described in
Section 6(e)(ii), 6(e)(iv), 6(e)(v) or 6(e)(vi), such Holder will forthwith
discontinue disposition (in the jurisdictions specified in a notice of a
6(e)(iv) event, and elsewhere in a notice of a 6(e)(ii), 6(e)(v) or 6(e)(vi)
event) of such Registrable Securities covered by such Registration Statement
or Prospectus to be sold by such Holder until such Holder's receipt of the
copies of the supplemented or amended Prospectus contemplated by Section 6(j),
or until it is advised in writing (the "Advice") by the Company that offers or
sales in a particular jurisdiction may be resumed or that the use of the
applicable Prospectus may be resumed, as the case may be, and has received
copies of any amendments or supplements thereto. If the Company shall give
such notice, each of the Effectiveness Period and the Applicable Period shall
be extended by the number of days during such periods from and including the
date of the giving of such notice to and including the date when each seller
of such Registrable Securities covered by such Registration Statement shall
have received (x) the copies of the supplemented or amended Prospectus
contemplated by Section 6(j) or (y) the Advice.
7. Registration Expenses
(a) All fees and expenses incident to the Company's performance of
or compliance with this Agreement shall be borne by the Company whether or not
the Exchange Offer or a Shelf Registration is filed or becomes effective,
including, without limitation:
(i) all registration and filing fees (including,
without limitation, (A) fees with respect to filings required to be made
with the NASD by the Purchasers or in connection with an underwritten
offering and (B) fees and expenses of compliance with state securities or
Blue Sky laws (including, without limitation, reasonable fees and
disbursements of counsel in connection with Blue Sky qualifications of
the Registrable Securities or Exchange Securities and determination of
the eligibility of the Registrable Securities or Exchange Securities for
investment under the laws of such jurisdictions (x) where the Holders of
Registrable Securities are located, in the case of the Exchange
Securities, or (y) as provided in Section 6(f), in the case of
Registrable Securities or Exchange Securities to be sold by a
Participating Broker-Dealer during the Applicable Period);
(ii) printing expenses (including, without
limitation, expenses of printing certificates for Registrable Securities
or Exchange
20
<PAGE> 21
Securities in a form eligible for deposit with DTC and of printing
prospectuses if the printing of prospectuses is requested by the managing
underwriters, if any, or, in respect of Registrable Securities or
Exchange Securities to be sold by a Participating Broker-Dealer during
the Applicable Period, by the holders of a majority in aggregate
principal amount of the Registrable Securities included in any
Registration Statement or of such Exchange Securities, as the case may
be);
(iii) messenger, telephone, duplication, word
processing and delivery expenses incurred by the Company in the
performance of its obligations hereunder;
(iv) fees and disbursements of counsel for the
Company;
(v) fees and disbursements of all independent
certified public accountants for the Company referred to in Section
6(n)(iii) (including, without limitation, the expenses of any special
audit and "cold comfort" letters required by or incident to such
performance);
(vi) fees and expenses of any "qualified independent
underwriter" or other independent appraiser participating in an offering
pursuant to Section 3 of Schedule E to the By-laws of the NASD, but only
where the need for such a "qualified independent underwriter" arises due
to a relationship with the Company;
(vii) Securities Act liability insurance, if the
Company so desires such insurance;
(viii) fees and expenses of all other Persons
retained by the Company; internal expenses of the Company (including,
without limitation, all salaries and expenses of officers and employees
of the Company performing legal or accounting duties); and the expense of
any annual audit; and
(ix) rating agency fees and the fees and expenses
incurred in connection with the listing of the Securities to be
registered on any securities exchange.
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<PAGE> 22
(b) The Company shall reimburse the Holders for the reasonable fees
and disbursements of not more than one counsel chosen by the holders of a
majority in aggregate principal amount of the Registrable Securities to be
included in any Registration Statement. Notwithstanding the foregoing, each
Holder shall pay all underwriting discounts and commissions of any
underwriters with respect to any Registrable Securities sold by or on its
behalf.
8. Indemnification
(a) Indemnification by the Company. The Company shall, without
limitation as to time, indemnify and hold harmless each Holder, each
Participating Broker-Dealer selling Exchange Securities, each Person who
controls each such Holder or such Participating Broker-Dealer (within the
meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange
Act) and the officers, directors, partners, employees, representatives and
agents of each such Holder, Participating Broker-Dealer and controlling
person, to the fullest extent lawful, from and against any and all losses,
claims, damages, liabilities, costs (including, without limitation, costs of
preparation and reasonable attorneys' fees) and expenses (including, without
limitation, reasonable costs and expenses incurred in connection with
investigating, preparing, pursuing or defending against any of the foregoing)
(collectively, "Losses"), as incurred, directly or indirectly caused by,
related to, based upon, arising out of or in connection with any untrue or
alleged untrue statement of a material fact contained in any Registration
Statement, Prospectus or form of prospectus, or in any amendment or supplement
thereto, or in any preliminary prospectus, or any omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which
they were made, not misleading except insofar as such Losses arise out of or
are based upon information relating to such Holder or Participating
Broker-Dealer and furnished in writing to the Company by, and relating to,
such Holder or Participating Broker-Dealer expressly for use therein. The
Company shall also indemnify underwriters, selling brokers, dealer managers
and similar securities industry professionals participating in the
distribution, their officers, directors, agents and employees and each Person
who controls such Persons (within the meaning of Section 15 of the Securities
Act or Section 20(a) of the Exchange Act) to the same extent as provided above
with respect to the indemnification of the Holders or the Participating
Broker-Dealer except insofar as such Losses are based solely upon (i)
information furnished by such party to the Company expressly for use therein
or (ii) such underwriter's gross negligence or willful misconduct. The
foregoing indemnity with respect to any preliminary prospectus shall not inure
to
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<PAGE> 23
the benefit of any indemnified person from whom the person asserting such
Losses purchased securities if such untrue statement or omission or alleged
untrue statement or omission made in such preliminary prospectus is eliminated
or remedied in the Prospectus and a copy of the Prospectus shall not have been
furnished to such person in a timely manner due to the action or inaction of
such indemnified person.
(b) Indemnification by Holder of Registrable Securities. In
connection with any Registration Statement, Prospectus or form of prospectus,
any amendment or supplement thereto, or any preliminary prospectus in which a
Holder is participating, such Holder shall furnish to the Company in writing
such information as the Company reasonably requests for use in connection with
any Registration Statement, Prospectus or form of prospectus, any amendment or
supplement thereto, or any preliminary prospectus and shall, without
limitation as to time, indemnify and hold harmless the Company, its directors,
officers, agents and employees, each Person, if any, who controls the Company
(within the meaning of Section 15 of the Securities Act and Section 20(a) of
the Exchange Act), and the directors, officers, representatives, agents or
employees of such controlling persons, to the fullest extent lawful, from and
against all Losses arising out of or based upon any untrue or alleged untrue
statement of a material fact contained in any Registration Statement,
Prospectus or form of prospectus or in any amendment or supplement thereto or
in any preliminary prospectus, or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading to the extent, but only to the extent, that such untrue
statement or alleged untrue statement of a material fact or omission or
alleged omission of a material fact is contained in any information so
furnished in writing by such holder to the Company expressly for use therein.
(c) Conduct of Indemnification Proceedings. If any Proceedings
shall be brought or asserted against any Person entitled to indemnity
hereunder (an "indemnified party"), such indemnified party shall promptly
notify the party or parties from which such indemnity is sought (the
"indemnifying parties") in writing; provided, however, that the failure to so
notify the indemnifying parties shall not relieve the indemnifying parties
from any obligation or liability except to the extent (but only to the extent)
that it shall be finally determined by a court of competent jurisdiction
(which determination is not subject to appeal) that the indemnifying parties
have been prejudiced materially by such failure.
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<PAGE> 24
The indemnifying party shall have the right, exercisable by giving
written notice to an indemnified party, within 20 business days after receipt
of written notice from such indemnified party of such Proceeding, to assume,
solely at its expense, the defense of any such Proceeding, provided, however,
that an indemnified party shall have the right to employ separate counsel in
any such Proceeding and to participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of such indemnified party
or parties unless: (1) the indemnifying party has agreed to pay such fees and
expenses; or (2) the indemnifying party shall have failed promptly to assume
the defense of such Proceeding or shall have failed to employ counsel
reasonably satisfactory to such indemnified party; or (3) the named parties to
any such Proceeding (including any impleaded parties) include both such
indemnified party and the indemnifying party or any of its affiliates or
controlling persons, and such indemnified party shall have been advised by
counsel that there may be one or more defenses available to such indemnified
party that are in addition to, or in conflict with, those defenses available
to the indemnifying party or such affiliate or controlling person (in which
case, if such indemnified party notifies the indemnifying parties in writing
that it elects to employ separate counsel at the expense of the indemnifying
parties, the indemnifying parties shall not have the right to assume the
defense thereof and the reasonable fees and expenses of such counsel shall be
at the expense of the indemnifying party; it being understood, however, that,
the indemnifying party shall not, in connection with any one such Proceeding
or separate but substantially similar or related Proceedings in the same
jurisdiction, arising out of the same general allegations or circumstances, be
liable for the fees and expenses of more than one separate firm of attorneys
(together with appropriate local counsel) at any time for such indemnified
party).
No indemnifying party shall be liable for any settlement of any such
Proceeding effected without its written consent, which consent shall not be
unreasonably withheld, but if settled with its written consent, or if there be
a final judgment for the plaintiff in any such Proceeding, each indemnifying
party jointly and severally agrees, subject to the exceptions and limitations
set forth above, to indemnify and hold harmless each indemnified party from
and against any and all Losses by reason of such settlement or judgment. The
indemnifying party shall not consent to the entry of any judgment or enter
into any settlement that does not include as an unconditional term thereof the
giving by the claimant or plaintiff to each indemnified party of a release, in
form and substance reasonably satisfactory to the indemnified party, from all
liability in respect of such Proceeding for which such indemnified party would
be entitled to indemnification hereunder (whether or not any indemnified party
is a party thereto).
24
<PAGE> 25
(d) Contribution. If the indemnification provided for in this
Section 8 is unavailable to an indemnified party or is insufficient to hold
such indemnified party harmless for any Losses in respect of which this
Section 8 would otherwise apply by its terms (other than by reason of
exceptions provided in this Section 8), then each applicable indemnifying
party, in lieu of indemnifying such indemnified party, shall have a joint and
several obligation to contribute to the amount paid or payable by such
indemnified party as a result of such Losses, (i) in such proportion as is
appropriate to reflect the relative benefits received by the indemnifying
party, on the one hand, and such indemnified party, on the other hand, from
the offering of the Notes, or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the indemnifying party, on the one hand, and such
indemnified party, on the other hand in connection with the actions,
statements or omissions that resulted in such Losses as well as any other
relevant equitable considerations. The relative fault of such indemnifying
party, on the one hand, and indemnified party, on the other hand, shall be
determined by reference to, among other things, whether any untrue or alleged
untrue statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by such indemnifying party or
indemnified party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent any such statement or
omission. The amount paid or payable by an indemnified party as a result of
any Losses shall be deemed to include any reasonable legal or other fees or
expenses actually incurred by such party in connection with any Proceeding, to
the extent such party would have been indemnified for such fees or expenses if
the indemnification provided for in Section 8(a) or 8(b) was available to such
party.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 8(d) were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 8(d), an
indemnifying party that is a selling Holder of Registrable Securities shall
not be required to contribute, in the aggregate, any amount in excess of such
Holder's Maximum Contribution Amount. A selling Holder's "Maximum
Contribution Amount" shall equal the excess of (i) the aggregate proceeds
received by such Holder pursuant to the sale of such Registrable Securities
over (ii) the aggregate amount of damages that such Holder has otherwise been
required to pay by reason of such untrue or alleged untrue statement of a
material fact or omission or alleged omission of a material fact.
25
<PAGE> 26
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation.
The indemnity and contribution agreements contained in this Section
8 are in addition to any liability that the indemnifying parties may have to
the indemnified parties, provided that any excess payment made by the Company
shall be refunded to the Company by the indemnified party receiving such
excess payment.
9. Rule 144 and Rule 144A
The Company covenants that it shall (a) file the reports required to
be filed by it (if so required) under the Securities Act and the Exchange Act
in a timely manner and, if at any time the Company is not required to file
such reports, it will, upon the request of any Holder make available other
information necessary to permit sales pursuant to Rule 144 and Rule 144A and
(b) take such further action as any Holder may reasonably request, all to the
extent required from time to time to enable such Holder to sell Registrable
Securities without registration under the Securities Act pursuant to the
exemptions provided by Rule 144 and Rule 144A. Nothing in this Section 9
shall be deemed to require the Company to register any of its securities
pursuant to the Exchange Act.
10. Underwritten Registrations
If any of the Registrable Securities covered by any Shelf
Registration are to be sold in an Underwritten Offering, the investment banker
or investment bankers and manager or managers that will manage the offering
will be selected by the Holders of a majority in aggregate principal amount of
such Registrable Securities included in such offering with the written consent
of the Company, which consent will not be unreasonably withheld.
No holder of Registrable Securities may participate in any
Underwritten Registration hereunder unless such holder (a) agrees to sell such
Holder's Registrable Securities on the basis provided in any underwriting
arrangements approved by the Persons entitled hereunder to approve such
arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.
26
<PAGE> 27
11. Miscellaneous
(a) Guarantors. If any Guarantors are appointed under the terms of
the Indenture, the Company hereby agrees to cause such Guarantor to be bound
by the terms hereof as if it was the Company hereunder and the guaranty was
the Registrable Security.
(b) Remedies. In the event of a breach by the Company of any of
its obligations under this Agreement, each Holder, in addition to being
entitled to exercise all rights provided herein, or granted by law, including
recovery of damages, will be entitled to specific performance of its rights
under this Agreement. The Company agrees that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by it of any
of the provisions of this Agreement and hereby further agrees that, in the
event of any action for specific performance in respect of such breach, it
shall waive the defense that a remedy at law would be adequate.
(c) No Inconsistent Agreements. The Company has not entered into,
as of the date hereof, and shall not enter into, after the date of this
Agreement, any agreement with respect to any of its securities that is
inconsistent with the rights granted to the holders of Registrable Securities
in this Agreement or otherwise conflicts with the provisions hereof.
(d) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Company has obtained the written consent of
Holders of at least a majority of the then outstanding aggregate principal
amount of Registrable Securities; provided, however, that Section 8 shall not
be amended, modified or supplemented, and waivers or consents to departures
from this proviso may not be given, unless the Company has obtained the
written consent of each Holder. Notwithstanding the foregoing, a waiver or
consent to depart from the provisions hereof with respect to a matter that
relates exclusively to the rights of Holders whose Registrable Securities are
being sold pursuant to a Registration Statement and that does not directly or
indirectly affect the rights of other Holders may be given by Holders of at
least a majority in aggregate principal amount of the Registrable Securities
being sold by such Holders pursuant to such Registration Statement, provided
that the provisions of this sentence may not be amended, modified or
supplemented except in accordance with the provisions of the immediately
preceding sentence.
27
<PAGE> 28
(e) Notices. All notices and other communications (including,
without limitation, any notices or other communications to the Trustee)
provided for or permitted hereunder shall be made in writing by hand-delivery,
certified first-class mail, return receipt requested, next-day air courier or
facsimile:
(i) if to a Holder, at the most current address
given by such Holder to the Company in accordance with the provisions of
this Section 11(d), which address initially is, with respect to each
holder, the address of such holder maintained by the Registrar under the
Indenture, with a copy to Skadden, Arps, Slate, Meagher & Flom, 300 South
Grand Avenue, Los Angeles, California 90071, telecopy number (213)
687-5600, Attention: Michael A. Woronoff, Esq.; and
(ii) if to the Company, 172 Trade Street, Lexington,
Kentucky 40508, Attention: Chief Executive Officer, and thereafter at
such other address, notice of which is given in accordance with the
provisions of this Section 11(d), with a copy to Dechert Price & Rhoads,
477 Madison Avenue, New York, New York 10022, Attention: Bruce B. Wood.
All such notices and communications shall be deemed to have been
duly given: when delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; one
business day after being timely delivered to a next-day air courier; and when
receipt is acknowledged by the addressee, if telecopied.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee under the
Indenture at the address specified in such Indenture.
(f) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including, without limitation and without the need for an express
assignment, subsequent Holders.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
28
<PAGE> 29
(h) Headings. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AS APPLIED TO
CONTRACTS MADE AND PERFORMED WHOLLY WITHIN THE STATE OF NEW YORK, WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THE COMPANY HEREBY IRREVOCABLY
SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH
OF MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE
BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND IRREVOCABLY
ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS. THE COMPANY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER
APPLICABLE LAW, TRIAL BY JURY AND ANY OBJECTION THAT IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT
IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. THE
COMPANY IRREVOCABLY CONSENTS, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO
UNDER APPLICABLE LAW, TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED
COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE COMPANY AT ITS SAID
ADDRESS, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING. NOTHING
HEREIN SHALL AFFECT THE RIGHT OF ANY HOLDER TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED
AGAINST THE COMPANY IN ANY OTHER JURISDICTION.
(j) Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in
29
<PAGE> 30
no way be affected, impaired or invalidated, and the parties hereto shall use
their best efforts to find and employ an alternative means to achieve the same
or substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may
be hereafter declared invalid, illegal, void or unenforceable.
(k) Entire Agreement. This Agreement is intended by the parties as
a final expression of their agreement, and is intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred
to herein, with respect to the registration rights granted by the Company in
respect of securities sold pursuant to the Purchase Agreement. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
(l) Attorneys' Fees. In any action or Proceeding brought to
enforce any provision of this Agreement, or where any provision hereof is
validly asserted as a defense, the prevailing party, as determined by the
courts, shall be entitled to recover reasonable attorneys' fees in addition to
its costs and expenses and any other available remedy.
(m) Securities Held by the Company or its Affiliates. Whenever the
consent or approval of Holders of a specified percentage of Registrable
Securities is required hereunder, Registrable Securities held by the Company
or its affiliates (as such term is defined in Rule 405 under the Securities
Act) (other than the Holders that are deemed to be such affiliates solely by
reason of their holdings of such Registrable Securities) shall not be counted
in determining whether such consent or approval was given by the holders of
such required percentage.
30
<PAGE> 31
REGISTRATION RIGHTS AGREEMENT
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
CLARK MATERIAL HANDLING COMPANY
By: /s/
-----------------------------------------
Name:
Title:
ACCEPTED AND AGREED TO:
JEFFERIES & COMPANY, INC.
By: /s/
------------------------------
Name:
Title:
BEAR, STEARNS & CO. INC.
By: /s/
------------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 10.1
CMHC ACQUISITION CORPORATION
$130,000,000 10 3/4% Senior Notes due 2006
PURCHASE AGREEMENT
November 22, 1996
JEFFERIES & COMPANY, INC.
11100 Santa Monica Boulevard
10th Floor
Los Angeles, California 90025
BEAR, STEARNS & CO. INC.
245 Park Avenue
New York, New York 10167
Ladies and Gentlemen:
CMHC Acquisition Corporation (to be renamed CLARK Material
Handling Company ), a Delaware corporation (the "ISSUER"), hereby agrees with
each of you as follows:
1. ISSUANCE OF SECURITIES. The Issuer proposes to issue
and sell to the purchasers listed on Schedule A hereto (the "PURCHASERS") (each
such Purchaser in the amount set forth opposite its name on Schedule A hereto)
$130,000,000 aggregate principal amount of 10 3/4% Senior Notes due 2006,
Series A (the "SERIES A NOTES"). The Series A Notes will be issued pursuant to
an indenture (the "INDENTURE") to be dated as of November 27, 1996 between the
Issuer and United States Trust Company of New York, as trustee (the "TRUSTEE").
The Series A Notes are being sold in connection with the
acquisition (the "ACQUISITION") of substantially all of the assets and certain
liabilities of Clark Material Handling Company ("CMH") and all of the
outstanding capital stock of certain of its affiliates (the "CMH AFFILIATES")
pursuant to the Stock and Asset Purchase and Sale Agreement dated as of
November 9, 1996 among Terex Corporation, certain of its subsidiaries and the
Issuer (the "ACQUISITION AGREEMENT"). Based on information provided to the
Issuer by CMH and its counsel in connection with the Acquisition, immediately
prior to the Acquisition CMH and the CMH Affiliates will take the actions set
forth on Schedule B hereto (the "CMH ROLL-UP").
<PAGE> 2
Concurrently with the Acquisition, the Issuer will enter into a revolving
credit facility with Congress Financial Corporation providing for borrowings of
up to $30,000,000 (the "NEW CREDIT FACILITY"). The transactions described
above, together with the offering and sale of the Series A Notes contemplated
by this Agreement, are collectively referred to as the "TRANSACTIONS."
The Series A Notes will be offered and sold to the Purchasers
pursuant to an exemption from the registration requirements under the
Securities Act of 1933, as amended (the "ACT"). The Issuer has prepared a
preliminary offering circular, dated November 11, 1996 (the "PRELIMINARY
OFFERING CIRCULAR"), and a final offering circular, dated November 22, 1996,
which has been furnished to the Purchasers for use in connection with the
offering of the Series A Notes (the "OFFERING CIRCULAR"), relating to the offer
and sale of the Series A Notes.
Upon original issuance thereof, and until such time as the
same is no longer required under the applicable requirements of the Act, the
Series A Notes shall bear the following legend:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE
SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN
THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE
DATE THAT IS THREE YEARS (OR SUCH SHORTER PERIOD THAT MAY
HEREAFTER BE PROVIDED UNDER RULE 144(K) AS PERMITTING RESALES
BY NON-AFFILIATES OF RESTRICTED SECURITIES WITHOUT
RESTRICTION) AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF
AND THE LAST DATE ON WHICH CMHC ACQUISITION CORPORATION (THE
"COMPANY") OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF
THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY) ONLY (A)
TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH
HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR
SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO
RULE 144A,
2
<PAGE> 3
TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS
GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE
144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS
THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF
REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(A)(1),
(2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS PURCHASING
THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH
AN INSTITUTIONAL "ACCREDITED INVESTOR," FOR INVESTMENT
PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN
CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,
SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY
SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (D), (E) OR
(F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY TO EACH
OF THEM, AND IN EACH OF THE FOREGOING CASES, A CERTIFICATE OF
TRANSFER IN THE FORM APPEARING ON THIS SECURITY IS COMPLETED
AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE.
2. AGREEMENTS TO SELL AND PURCHASE. On the basis of the
representations, warranties and agreements contained herein, and subject to
the terms and conditions hereof, the Issuer agrees to sell to each of the
Purchasers and each of the Purchasers agrees, severally and not jointly, to
purchase from the Issuer, the aggregate principal amount of Series A Notes set
forth opposite its name on Schedule A hereto. The purchase price for the
Series A Notes shall be 97% of the principal amount thereof.
3. TERMS OF OFFERING. The Purchasers have advised the
Issuer that the Purchasers will make offers to sell (the "EXEMPT RESALES") some
or all of the Series A Notes purchased by the Purchasers hereunder on the terms
set forth in the Offering Circular, as amended or supplemented, solely to (i)
persons whom the Purchasers reasonably believe to be "qualified institutional
buyers" as defined in Rule 144A under the Act ("QIBS") and (ii) a limited
number of institutional "accredited investors," as defined in Rule 501(a)(1),
(2), (3) or
3
<PAGE> 4
(7) under the Act ("ACCREDITED INVESTORS") (such persons specified in clauses
(i) and (ii) being referred to herein as the "ELIGIBLE PURCHASERS").
Holders of the Series A Notes (including subsequent
transferees) will have the registration rights set forth in the registration
rights agreement (the "REGISTRATION RIGHTS AGREEMENT"), to be executed on and
dated as of the Closing Date. Pursuant to the Registration Rights Agreement,
the Issuer will agree, among other things, to file with the Securities and
Exchange Commission (the "COMMISSION") (i) a registration statement under the
Act (the "EXCHANGE OFFER REGISTRATION STATEMENT") relating to, among other
things, the 10 3/4% Senior Notes due 2006, Series B, of the Issuer (the "SERIES
B NOTES" and, together with the Series A Notes, the "NOTES"), identical in all
material respects to the Series A Notes (except that the Series B Notes shall
have been registered pursuant to such registration statement) to be offered in
exchange for the Series A Notes (such offer to exchange being referred to as
the "REGISTERED EXCHANGE OFFER") and/or (ii) under certain circumstances, a
shelf registration statement pursuant to Rule 415 under the Act (the "SHELF
REGISTRATION STATEMENT") relating to the resale by certain holders of the
Series A Notes.
This Agreement, the Indenture, the Registration Rights
Agreement and the Notes are hereinafter referred to collectively as the
"OPERATIVE DOCUMENTS." The Operative Documents, the Acquisition Agreement, the
Service Agreement and the Revolving Credit Facility (each as defined in the
Offering Circular), and all material documents or instruments executed by the
Issuer or any of the Subsidiaries in connection with any of them or the
Transactions are referred to herein as the "DOCUMENTS."
4. DELIVERY AND PAYMENT. Delivery to the Purchasers of and
payment for the Series A Notes shall be made at a Closing (the "CLOSING") to be
held at 9:00 A.M., New York time, on November 27, 1996 (the" CLOSING DATE") at
the offices of Dechert Price & Rhoads, 477 Madison Avenue, New York, New York
10022. The Closing Date and the location of delivery of and the form of
payment for the Series A Notes may be varied by agreement between the
Purchasers and the Issuer. The Purchasers may withhold from the purchase price
for the Series A Notes a fee of $325,000 for financial advisory services
rendered in connection with the Acquisition.
The Issuer shall deliver to the Purchasers (i) one or more
certificates representing the Series A Notes (the "GLOBAL SECURITIES"), each in
definitive form, registered in the name of Cede & Co., as nominee of The
Depository Trust Company ("DTC"), or such other names as the Purchasers may
request upon at least two business day's notice to the Issuer, in an amount
corresponding to the aggregate principal amount of the Series A Notes sold
pursuant to Exempt Resales to QIBs, and (ii) one or more certificates
representing the Series A Notes (the "INDIVIDUAL SECURITIES") in definitive
form, registered in such names and denominations as the
4
<PAGE> 5
Purchasers may so request, in an aggregate amount corresponding to the
aggregate principal amount of Series A Notes sold pursuant to Exempt Resales to
Accredited Investors, in each case against payment by the Purchasers of the
purchase price therefor by immediately available Federal funds bank wire
transfer to such bank account as the Issuer shall designate at least two
business days prior to the Closing. In compensation of delivery of payment by
the Purchasers in same day funds, the Company hereby acknowledges that the
Purchasers will deduct from the purchase price an amount equal to Jefferies'
cost of funds with respect thereto.
The Global Securities and the Individual Securities in
definitive form shall be made available to the Purchasers for inspection at the
New York offices of Dechert Price & Rhoads (or such other place as shall be
acceptable to the Purchasers) not later than 9:30 A.M. on the business day
immediately preceding the Closing Date.
5. AGREEMENTS OF THE ISSUER. The Issuer hereby agrees with
each of the Purchasers as follows:
(a) The Issuer shall (i) advise the Purchasers
promptly after obtaining knowledge (and, if requested by the
Purchasers, confirm such advice in writing) of (A) the issuance by any
state securities commission of any stop order suspending the
qualification or exemption from qualification of any of the Notes for
offering or sale in any jurisdiction, or the initiation of any
proceeding for such purpose by any state securities commission or
other regulatory authority, or (B) the happening of any event that
makes any statement of a material fact made in the Offering Circular
untrue or that requires the making of any additions to or changes in
the Offering Circular in order to make the statements therein, in the
light of the circumstances under which they are made, not misleading,
(ii) use its best efforts to prevent the issuance of any stop order or
order suspending the qualification or exemption from qualification of
any of the Notes under any state securities or Blue Sky laws, and
(iii) if at any time any state securities commission or other
regulatory authority shall issue an order suspending the qualification
or exemption from qualification of any of the Notes under any such
laws, use its best efforts to obtain the withdrawal or lifting of such
order at the earliest possible time.
(b) The Issuer shall (i) furnish the Purchasers,
without charge, as many copies of the Offering Circular, and any
amendments or supplements thereto, as the Purchasers may request and
(ii) promptly prepare, upon the Purchasers' request, any amendment or
supplement to the Offering Circular that the Purchasers deem may be
reasonably necessary in connection with Exempt Resales. The Issuer
hereby consents to the use of the Offering Circular, and any
amendments and supplements thereto, by the Purchasers in connection
with Exempt Resales.
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<PAGE> 6
(c) The Issuer shall not amend or supplement the
Offering Circular prior to the Closing Date unless the Purchasers
shall previously have been advised thereof and shall not have
reasonably objected thereto within two business days after being
furnished a copy thereof.
(d) So long as either of the Purchasers shall hold
any Series A Notes, (i) if any event shall occur as a result of which,
in the reasonable judgment of the Issuer or the Purchasers, it becomes
necessary or advisable to amend or supplement the Offering Circular in
order to make the statements therein, in the light of the
circumstances under which they were made not misleading, or if it is
necessary to amend or supplement the Offering Circular to comply with
applicable law, the Issuer shall forthwith prepare an appropriate
amendment or supplement to the Offering Circular (in form and
substance reasonably satisfactory to the Purchasers) so that (A) as so
amended or supplemented the Offering Circular will not include an
untrue statement of material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and (B) the
Offering Circular will comply with applicable law and (ii) if it
becomes necessary or advisable to amend or supplement the Offering
Circular so that the Offering Circular will contain all of the
information specified in, and meet the requirements of, Rule
144(A)(d)(4) of the Act, the Issuer shall forthwith prepare an
appropriate amendment or supplement to the Offering Circular (in form
and substance reasonably satisfactory to the Purchasers) so that the
Offering Circular, as so amended or supplemented, will contain the
information specified in, and meet the requirements of, such Rule.
(e) The Issuer shall cooperate with the Purchasers
and the Purchasers' counsel in connection with the qualification of
the Series A Notes under the securities or Blue Sky laws of such
jurisdictions as the Purchasers may reasonably request and continue
such qualification in effect so long as reasonably required for Exempt
Resales; provided, however, that the Issuer shall not be required in
connection therewith to file any general consent to service of process
or to qualify as a foreign corporation or as a dealer in securities in
any jurisdiction where it is not now so qualified or to subject itself
to taxation in respect of doing business in any jurisdiction in which
it is not otherwise so subject.
(f) Whether or not any of the Transactions are
consummated or this Agreement is terminated, the Issuer shall pay (i)
all costs, expenses and fees incident to and in connection with: (A)
the preparation, printing and distribution of the Preliminary Offering
Circular and the Offering Circular and all amendments and supplements
thereto (including, without limitation, financial statements and
exhibits), and all preliminary and final Blue Sky memoranda and all
other agreements, memoranda, correspondence and
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<PAGE> 7
other documents prepared and delivered in connection herewith, (B) the
printing, processing and distribution (including, without limitation,
word processing and duplication costs) and delivery of each of the
Operative Documents, (C) the issuance and delivery of the Notes,
including the fees of the Trustee and the cost of its personnel, (D)
the qualification of the Notes for offer and sale under the securities
or Blue Sky laws of the several states (including, without limitation,
the reasonable fees and disbursements of the Purchasers' counsel
relating to such registration or qualification), (E) furnishing such
copies of the Preliminary Offering Circular and the Offering Circular,
and all amendments and supplements thereto, as may reasonably have
been or be requested for use by the Purchasers, and (F) the
preparation of the Notes (including, without limitation, printing and
engraving thereof), (ii) all fees and expenses of the counsel and
accountants of the Issuer, (iii) all expenses and listing fees in
connection with the application for quotation of the Notes in the
National Association of Securities Dealers, Inc. ("NASD") Automated
Quotation System - PORTAL ("PORTAL"), (iv) all fees and expenses
(including fees and expenses of counsel) of the Issuer in connection
with approval of the Notes by DTC for "book-entry" transfer, and (v)
all fees charged by rating agencies in connection with the rating of
the Notes.
(g) The Issuer shall use the proceeds from the sale
of the Series A Notes in the manner described in the Offering Circular
under the caption "Use of Proceeds."
(h) To the extent it may lawfully do so, the Issuer
shall not insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay, extension, usury or other
law, wherever enacted, now or at any time hereafter in force, that
would prohibit or forgive the payment of all or any portion of the
principal of or interest on the Notes, or that may affect the
covenants or the performance of the Indenture. To the extent that it
may lawfully do so, the Issuer hereby expressly waives all benefit or
advantage of any such law, and covenants that it shall not, by resort
to any such law, hinder, delay or impede the execution of any power
granted to the Trustee in the Indenture but shall suffer and permit
the execution of every such power as though no such law had been
enacted.
(i) The Issuer shall do and perform all things
required to be done and performed under the Documents by it prior to
and after the Closing Date.
(j) The Issuer shall not, and shall ensure that no
affiliate (as defined in Rule 501(b) of the Act) of the Issuer will,
sell, offer for sale or solicit offers to buy or otherwise negotiate
in respect of any "security" (as defined in the Act) that would be
integrated with the sale of the Series A Notes in a manner that would
require the regis-
7
<PAGE> 8
tration under the Act of the sale to the Purchasers or to the Eligible
Purchasers of the Series A Notes.
(k) For so long as any of the Series A Notes remain
outstanding and are "restricted securities" within the meaning of Rule
144(a)(3) under the Act, during any period in which it is not subject
to Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT"), the Issuer shall make available, upon
request, to any owner of the Series A Notes in connection with any
sale thereof and any prospective Eligible Purchaser of such Series A
Notes from such owner, the information required by Rule 144A(d)(4)
under the Act.
(l) The Issuer shall comply with all of its
agreements set forth in the representation letter of the Issuer to DTC
relating to the approval of the Notes by DTC for "book entry"
transfer.
(m) The Issuer shall use its best efforts to
effect the inclusion of the Series A Notes in PORTAL.
(n) The Issuer shall, so long as the Notes are
outstanding, and whether or not it is required to do so by the rules
and regulations of the Commission, furnish to the Trustee and deliver
or cause to be delivered to the holders of the Notes and each
Purchaser (i) 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 Issuer were required to file such Forms,
including for each a "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and, with respect to
the annual information only, a report thereon by the Issuer's
independent certified public accountants and (ii) all reports that
would be required to be filed with the Commission on Form 8-K if the
Issuer were required to file such reports. From and after the time
the Exchange Offer Registration Statement or the Shelf Registration
Statement, as the case may be, is declared effective by the
Commission, the Issuer will file such information with the Commission,
provided that the Commission will accept such filing.
(o) Except in connection with the Registered
Exchange Offer or the filing of the Shelf Registration Statement, as
the case may be, the Issuer shall not, and shall not authorize or
knowingly permit any person acting on its behalf to, (i) distribute
any offering material in connection with the offering and sale of the
Series A Notes other than the Preliminary Offering Circular and the
Offering Circular and any amendments and supplements to the Offering
Circular prepared in compliance with Section 5(c) hereof or (ii)
solicit any offer to buy or offer to sell the Notes by means of any
form of general solicitation or general advertising (including,
without limitation, as such terms are used
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<PAGE> 9
in Regulation D under the Act) or in any manner involving a public
offering within the meaning of Section 4(2) of the Act.
(p) The Issuer shall not, directly or indirectly,
without the prior consent of the Purchasers, offer, sell, grant any
option to purchase, or otherwise dispose (or announce any offer, sale,
grant of any option to purchase or other disposition) of any debt
securities of the Issuer (other than any private loan, credit or
financing agreement with a bank or similar institution) for a period
of 180 days after the date of the Offering Circular, except for the
Series A Notes and the Series B Notes as contemplated by the
Registration Rights Agreement.
(q) For so long as either of the Purchasers shall
hold any Notes, the Issuer shall promptly notify each Purchaser in
writing if the Issuer or any of its Affiliates becomes a party in
interest or a disqualified person with respect to any funded employee
benefit plan. The terms "ERISA," "Affiliates," "party in interest,"
"disqualified person" and "employee benefit plan" shall have the
meanings as set forth in Section 6(v) hereof. Upon the request of the
Issuer, each Purchaser shall promptly notify the Issuer when such
Purchaser no longer owns any Notes.
6. REPRESENTATIONS AND WARRANTIES OF THE ISSUER. The Issuer
represents and warrants to each of the Purchasers that:
(a) The Preliminary Offering Circular as of its
date did not, and the Offering Circular as of its date does not and as
of the Closing Date will not, contain any untrue statement of a
material fact or omit to state any material fact (except, in the case
of the Preliminary Offering Circular, for pricing terms and other
financial terms intentionally left blank) necessary in order to make
the statements therein, in the light of the circumstances under which
they were made, not misleading; provided, that the representation and
warranty set forth in this sentence does not apply to statements
contained in the Preliminary Offering Circular or the Offering
Circular made in reliance upon and in conformity with information
relating to the Purchasers furnished in writing by or on behalf of the
Purchasers expressly for use therein. No injunction or order has been
issued that would prevent or suspend the issuance or sale of the Notes
or the use of the Offering Circular, or any amendment or supplement
thereto, in any jurisdiction. Each of the Preliminary Offering
Circular and the Offering Circular, as of their respective dates
contained, and the Offering Circular as of the Closing Date will
contain, all of the information specified in, and meet the
requirements of, Rule 144A(d)(4) under the Act. Except as adequately
disclosed in the Offering Circular, to the knowledge of the Issuer
after due inquiry, there are no related party transactions that would
be required
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<PAGE> 10
to be disclosed in the Offering Circular if the Offering Circular were
a prospectus included in a registration statement on Form S-1 filed
under the Act.
(b) There are no securities of the Issuer
registered under the Exchange Act or listed on a national securities
exchange registered under Section 6 of the Exchange Act or quoted in a
United States automated inter-dealer quotation system.
(c) The Issuer and each Subsidiary (as defined
below) has been duly organized, is validly existing and, in the case
of the Issuer, is in good standing under the laws of its jurisdiction
of organization, and the Issuer and each Subsidiary has all requisite
power and authority to carry on the businesses to be conducted by it
upon consummation of the Acquisition as described in the Offering
Circular and to own, lease and operate the properties and assets being
acquired in the Acquisition. The Issuer and, to the Issuer's
knowledge after due inquiry, each Subsidiary is duly qualified or
licensed to do business and is in good standing as a foreign
corporation authorized to do business in each jurisdiction in which
the nature of such businesses or the ownership or leasing of such
properties requires such qualification, except where the failure to be
so qualified could not, singly or in the aggregate, have a material
adverse effect on (i) the properties, business, prospects, operations,
or condition (financial or otherwise) of the Issuer and the
Subsidiaries, taken as a whole or (ii) the ability of the Issuer to
perform its obligations under any of the Documents (a "MATERIAL
ADVERSE EFFECT").
(d) Immediately following the Closing, (i) the only
direct or indirect subsidiaries of the Issuer (collectively, the
"SUBSIDIARIES") will be the corporations identified on Schedule 6(d),
each of which is a Foreign Subsidiary (as defined in the Indenture),
and (ii) except as set forth in Schedule 6(d), the Issuer will
directly or indirectly beneficially own 100% of the outstanding shares
of capital stock of each Subsidiary, free and clear of any Lien (as
defined in the Indenture), except for Liens permitted under the
Indenture, and all of such shares of capital stock will be duly
authorized and validly issued, fully paid and nonassessable and not
issued in violation of, or subject to, any preemptive or similar
rights. There are no outstanding (x) securities convertible into or
exchangeable for any capital stock of the Issuer or any of the
Subsidiaries or (y) options, warrants or other rights to purchase or
subscribe to capital stock of the Issuer or any of the Subsidiaries or
securities convertible into or exchangeable for capital stock of the
Issuer or any of the Subsidiaries. Except as set forth on Schedule
6(d), immediately following the Closing, the Issuer will not directly
or indirectly own any capital stock or other equity interest in any
other person.
(e) All of the outstanding shares of capital stock
of the Issuer have been duly authorized and validly issued, are owned
beneficially and of record by CMH
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<PAGE> 11
Holdings Corporation free and clear of Liens, are fully paid and
nonassessable, and were not issued in violation of, and are not
subject to, any preemptive or similar rights. The table under the
caption "Pro Forma Capitalization" in the Offering Circular (including
the footnotes thereto) adequately discloses, as of its date, the
capitalization of the Issuer and its Subsidiaries on a consolidated
pro forma basis, after giving effect to the transactions described in
the Offering Circular. Except as set forth in such table, immediately
following the Closing, neither the Issuer nor any of the Subsidiaries
shall have any liabilities, absolute, accrued, contingent or otherwise
other than any such liabilities that either (x) are reflected in the
Historical Financial Statements (defined below), or (y) were incurred
subsequent to the date thereof in the ordinary course of business and
could not, singly or in the aggregate, reasonably be expected to have
a Material Adverse Effect.
(f) Except for this Agreement and the Registration
Rights Agreement neither the Issuer nor any of the Subsidiaries has
entered into any agreement (i) to register its securities under the
Act or (ii) to purchase or offer to purchase any securities of the
Issuer, any of the Subsidiaries or any of their respective affiliates.
(g) The Issuer has all requisite power and
authority to enter into, deliver and perform its obligations under the
Documents and to consummate the transactions contemplated hereby and
thereby. The Documents (other than the Notes) have been duly and
validly authorized by the Issuer, and this Agreement is, and when
executed and delivered on the Closing Date each other Document (other
than the Notes) will be, a legal, valid and binding obligation of the
Issuer, enforceable against the Issuer in accordance with its terms,
except that (i) the enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer, fraudulent conveyance or other similar laws
relating to or affecting creditors' rights generally, (ii) the
availability of equitable remedies may be limited by equitable
principles of general applicability (regardless of whether in a
proceeding in equity or at law) and (iii) in the case of the
Registration Rights Agreement, rights to indemnity may be limited by
state or Federal laws relating to securities or by policies underlying
such laws. When executed and delivered, the Indenture, the Series A
Notes, the Registration Rights Agreement and the Acquisition Agreement
will conform in all material respects to the description thereof in
the Offering Circular. On the Closing Date, the Indenture will
conform in all material respects to the requirements of the Trust
Indenture Act of 1939, as amended (the "TIA"), applicable to an
indenture that is required to be qualified under the TIA.
(h) The Series A Notes have been duly and validly
authorized by the Issuer for issuance and sale to the Purchasers
pursuant to this Agreement and, when
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<PAGE> 12
executed and authenticated in accordance with the terms of the
Indenture and delivered to and paid for by the Purchasers in
accordance with the terms hereof, will be legal, valid and binding
obligations of the Issuer, enforceable against the Issuer in
accordance with their terms, except that (i) the enforceability
thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer, fraudulent conveyance
or other similar laws relating to or affecting creditors' rights
generally and (ii) the availability of equitable remedies may be
limited by equitable principles of general applicability (regardless
of whether in a proceeding in equity or at law). The Series B Notes
have been duly and validly authorized by the Issuer and, when
executed, authenticated and delivered in accordance with the terms of
the Indenture and the Registration Rights Agreement, will be legal,
valid and binding obligations of the Issuer, enforceable against the
Issuer in accordance with their terms, except that (i) the
enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer,
fraudulent conveyance or other similar laws relating to or affecting
creditors' rights generally and (ii) the availability of equitable
remedies may be limited by equitable principles of general
applicability (regardless of whether in a proceeding in equity or at
law).
(i) Neither the Issuer nor any of the Subsidiaries
is (i) in violation of its respective charter or by-laws
(collectively, "CHARTER DOCUMENTS"), other than violations with
respect to Charter Documents of Subsidiaries that could not, singly or
in the aggregate, reasonably be expected to result in a Material
Adverse Effect, (ii) other than violations that could not, singly or
in the aggregate, reasonably be expected to result in a Material
Adverse Effect, in violation of any Federal, state, local or foreign
statute, law (including, without limitation, common law) or ordinance,
or any judgment, decree, rule, regulation or order (collectively,
"APPLICABLE LAW") of any government, governmental or regulatory agency
or body, court or arbitrator, domestic or foreign (each, a
"GOVERNMENTAL AUTHORITY") or (iii) other than breaches or defaults
that could not, singly or in the aggregate, reasonably be expected to
result in a Material Adverse Effect, in breach of or default under
(with the passage of time or otherwise) any bond, debenture, note or
other evidence of indebtedness, indenture, mortgage, deed of trust,
lease or any other agreement or instrument to which any such person is
a party or by which any of them or their respective property is bound
(collectively, "APPLICABLE AGREEMENTS").
(j) Neither the execution, delivery or performance
of the Documents by the Issuer, nor the consummation of the
Transactions shall conflict with, violate, constitute a breach of or a
default (with the passage of time or otherwise) under, or result in
the imposition of a Lien on any assets of the Issuer or any of the
Subsidiaries (except pursuant to the Indenture), or result in an
acceleration of indebtedness of the Issuer or any of the Subsidiaries
pursuant to (i) the Charter Documents of the Issuer or any of the
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<PAGE> 13
Subsidiaries, (ii) any Applicable Agreement, other than such breaches,
violations or defaults that could not, singly or in the aggregate,
result in a Material Adverse Effect or (iii) any material Applicable
Law. Immediately after giving effect to the Transactions, no Default
or Event of Default (as defined in the Indenture) will exist.
(k) No permit, authorization, approval, consent,
license or order of, or filing, registration or qualification with,
any Governmental Authority (collectively, "PERMITS") and no approval
or consent of any other person, is required in connection with, or as
a condition to, the execution, delivery or performance of any of the
Documents by the Issuer or the consummation of any of the Transactions
other than such Permits, approvals and consents (i) as have been made
or obtained on or prior to the Closing Date, (ii) as are not required
to be made or obtained on or prior to the Closing Date that will be
made or obtained when required, (iii) as may be required under the
rules of the NASD by reason of the action of the Purchasers, or (iv)
those the failure of which to make or obtain could not singly or in
the aggregate reasonably be expected to result in a Material Adverse
Effect.
(l) Except as adequately disclosed in the Offering
Circular, there is no action, claim, suit or proceeding (including,
without limitation, an investigation or partial proceeding, such as a
deposition), domestic or foreign (collectively, "PROCEEDINGS"),
pending or, to the knowledge of the Issuer after due inquiry,
threatened against the Issuer, any Subsidiary or, to the knowledge of
the Issuer after due inquiry, any other person, that either (i) seeks
to restrain, enjoin, prevent the consummation of, or otherwise
challenge any of the Documents or any of the Transactions, or (ii)
could, singly or in the aggregate, reasonably be expected to have a
Material Adverse Effect. Neither the Issuer nor any of the
Subsidiaries is subject to any judgment, order, decree, rule or
regulation of any Governmental Authority that could, singly or in the
aggregate, have a Material Adverse Effect (other than any such
judgments, orders, decrees, rules and regulations applicable to the
industry generally).
(m) Immediately following the Closing, the Issuer
and each of the Subsidiaries will have such Permits as are necessary
to own, lease and operate the properties and to conduct the businesses
described in the Offering Circular other than those the failure of
which to have could not, singly or in the aggregate, reasonably be
expected to result in a Material Adverse Effect. All such Permits are
in full force and effect. No event has occurred which allows, or
after notice or lapse of time would allow, the imposition of any
material penalty, or the revocation or termination by the issuer
thereof, or that results or will result in any material impairment of
the rights of the holder of any such Permits. To the knowledge of the
Issuer after due inquiry, no issuer is considering limiting,
suspending or revoking any such Permit.
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<PAGE> 14
(n) Immediately following the Closing, the Issuer
and the Subsidiaries (i) will have good and marketable title, free and
clear of all Liens (except for Liens permitted under the Indenture),
to all property and assets described in the Offering Circular as being
owned by them and (ii) will enjoy, in all material respects, peaceful
and undisturbed possession under all real property leases to which it
is a party as lessee. Immediately following the Closing, all
Applicable Agreements will be in full force and effect and legal,
valid and binding obligations of the Issuer, the Subsidiaries and to
the knowledge of the Issuer after due inquiry, all other parties
thereto, and no default by the Issuer, any of the Subsidiaries, or to
the knowledge of the Issuer after due inquiry, any other person, will
have occurred or be continuing thereunder, other than such defaults
that could not, singly or in the aggregate, have a Material Adverse
Effect. Immediately following the Closing, the Issuer and the
Subsidiaries will have insurance (including self-insurance consistent
with prior practice as adequately disclosed in the Offering Circular)
covering their properties, operations, personnel and businesses
against such losses and risks as they reasonably deem adequate in
accordance with customary industry practice.
(o) All tax returns required to be filed by the
Issuer and the Subsidiaries in any jurisdiction (including foreign
jurisdictions) have been filed and when filed by the Issuer or its
Subsidiaries, as the case may be, were accurate in all material
respects. All taxes, assessments, fees and other charges (including,
without limitation, withholding taxes, penalties and interest) due or
claimed to be due from such entities have been paid, other than those
being contested in good faith by appropriate proceedings, or those
that are currently payable without penalty or interest and, in each
case, for which an adequate reserve or accrual has been established on
the books and records of the Issuer in accordance with generally
accepted accounting principles of the United States, consistently
applied ("GAAP") or in respect of which the Issuer has the right to be
indemnified. There is no actual or proposed additional tax
assessments for any fiscal period against the Issuer or any of the
Subsidiaries that could, singly or in the aggregate, have a Material
Adverse Effect. The charges, accruals and reserves on the books of
each of the Issuer and the Subsidiaries in respect of any income and
tax liability for any years not finally determined are adequate to
meet any assessments or re-assessments for additional income tax for
any years not finally determined.
(p) Immediately following the Closing, the Issuer
and each of the Subsidiaries will own, or be licensed under, and have
the right to use, all patents, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems
or procedures), trademarks, service marks and trade names
(collectively, "INTELLECTUAL PROPERTY") currently used in the conduct
of the business as set forth in the Offering Circular. No
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<PAGE> 15
claims have been asserted in writing or to the knowledge of the Issuer
after due inquiry, otherwise by any person challenging the use of any
such Intellectual Property by the Issuer or any of the Subsidiaries or
questioning the validity or effectiveness of any license or agreement
related thereto, there is no valid basis for any such claim (other
than any claims that would not, singly or in the aggregate, reasonably
be expected to have a Material Adverse Effect), and the use of such
Intellectual Property by the Issuer and the Subsidiaries will not
infringe on the Intellectual Property rights of any other person.
(q) The combined financial statements and related
notes contained in the Offering Circular (the "HISTORICAL FINANCIAL
STATEMENTS") present fairly in all material respects the combined
financial position, results of operations and cash flows of the
entities named therein as of the respective dates and for the
respective periods to which they apply and have been prepared in
accordance with GAAP (except as disclosed therein) and the
requirements of Regulation S-X that would be applicable if the
Offering Circular were a prospectus included in a registration
statement on Form S-1 filed under the Act.
The unaudited pro forma financial statements and
related notes set forth under the caption "Unaudited Pro Forma
Combined Financial Information" included in the Offering Circular (the
"PRO FORMA FINANCIAL STATEMENTS" and together with the Historical
Financial Statements, the "FINANCIAL STATEMENTS") (i) have been
derived from the Historical Financial Statements and comply with the
rules and guidelines of the Commission with respect to pro forma
financial statements and (ii) in the Issuer's reasonable opinion, the
assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the
Transactions and the circumstances referred to therein. Except as
adequately disclosed in the Offering Circular, the summary and
selected pro forma financial data included in the Offering Circular
have been derived from the Pro Forma Financial Statements.
All other financial data included in the Offering
Circular are fairly and accurately presented in all material respects
and are derived from or prepared on a basis consistent with the
Historical Financial Statements and the books and records of the
Issuer, except as otherwise disclosed in the Offering Circular. Price
Waterhouse LLP are independent public accountants under Rule 101 of
AICPA's Code of Professional Conduct and its interpretations and
rulings.
(r) Subsequent to the respective dates as of which
information is given in the Offering Circular, except as adequately
disclosed in the Offering Circular, there has not been any material
adverse change in the properties, business, prospects, operations or
condition (financial or otherwise) of the Issuer and the Subsidiaries
taken
15
<PAGE> 16
as a whole (a "MATERIAL ADVERSE CHANGE"). To the knowledge of the
Issuer after due inquiry, there is no event that is reasonably likely
to occur, which if it were to occur, could, singly or in the
aggregate, reasonably be expected to have a Material Adverse Effect,
except such events that have been adequately disclosed in the Offering
Circular.
(s) Immediately following the Closing, after giving
effect to the Transactions (i) the present fair salable value of the
assets of the Issuer will exceed the amount that will be required to
be paid on or in respect of the then existing debts and other
liabilities (including contingent liabilities) of the Issuer as they
become absolute and matured and (ii) the Issuer will not have an
unreasonably small capital to carry on the businesses proposed to be
conducted by it. The Issuer does not intend to, and does not believe
that it will, incur debts beyond its ability to pay such debts as they
mature.
(t) Except as contemplated by this Agreement,
neither the Issuer nor any of its affiliates has (i) taken, directly
or indirectly, any action designed to cause or to result in, or that
has constituted or which might reasonably be expected to constitute,
the stabilization or manipulation of the price of any security of the
Issuer to facilitate the sale or resale of any of the Notes or (ii)
except as disclosed in the Offering Circular, (A) sold, bid for,
purchased, or paid anyone any compensation for soliciting purchases
of, any of the Notes or (B) paid or agreed to pay to any person any
compensation for soliciting another to purchase any other securities
of the Issuer.
(u) No registration under the Act, and no
qualification of the Indenture under the TIA is required for the sale
of the Series A Notes to the Purchasers as contemplated hereby or for
the Exempt Resales, assuming (i) that the Eligible Purchasers who buy
the Series A Notes in the Exempt Resales are QIBs or institutional
Accredited Investors, (ii) the accuracy of the Purchasers'
representations contained herein regarding the absence of general
solicitation in connection with the sale of the Series A Notes to the
Purchasers and the Exempt Resales, and (iii) the accuracy of the
representations made by each Accredited Investor who purchases the
Series A Notes pursuant to an Exempt Resale as set forth in the
letters of representation in the form of Annex A to the Offering
Circular. No form of general solicitation or general advertising was
used by the Issuer or any of its affiliates or any of their
representatives in connection with the offer and sale of any of the
Series A Notes or in connection with Exempt Resales including, but not
limited to, the methods described in Rule 502(c) of Regulation D under
the Act. No securities of the same class as any of the Notes have
been offered, issued or sold by the Issuer or any of its affiliates
within the six-month period immediately prior to the date hereof.
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<PAGE> 17
(v) Neither the Issuer nor any of its
"Affiliates" is a "party in interest" or a "disqualified person" with
respect to any funded employee benefit plans. No condition exists or
event or transaction has occurred in connection with any employee
benefit plan that could result in the Issuer or any such "Affiliate"
incurring any liability, fine or penalty that could, singly or in the
aggregate, have a Material Adverse Effect. The terms "employee benefit
plan" and "party in interest" shall have the meanings assigned to such
terms in Section 3 of the Employee Retirement Income Security Act of
1974, as amended, or the rules and regulations promulgated thereunder
("ERISA"), the term "Affiliate" shall have the meaning assigned to
such term in Section 407(d)(7) of ERISA, and the term "disqualified
person" shall have the meaning assigned to such term in section 4975
of the Internal Revenue Code of 1986, as amended, and the rules,
regulations and published interpretations promulgated thereunder the
("CODE")
(w) None of the Transactions will violate or result
in a violation of Section 7 of the Exchange Act (including, without
limitation, Regulation T (12 C.F.R. Part 220), Regulation U (12 C.F.R.
Part 221) or Regulation X (12 C.F.R. Part 224) of the Board of
Governors of the Federal Reserve System). Neither the Issuer nor any
of the Subsidiaries is, or after giving effect to the Offering and the
other Transactions contemplated by the Documents, will be (i) an
"investment company" or an entity "controlled" by an "investment
company," as such terms are defined in the Investment Company Act of
1940, as amended, and the rules and regulations and interpretations
promulgated thereunder or (ii) subject to any Federal or state statute
or regulation limiting its ability to incur or assume indebtedness for
borrowed money. The Issuer has complied with all provisions of
Florida H.B. 1771, codified as Section 517.075 of the Florida
Statutes, and all regulations promulgated thereunder relating to
issuers doing business with the Government of Cuba or with any person
or any affiliate located in Cuba.
(x) The Issuer has not dealt with any broker,
finder, commission agent or other person (other than the Purchasers)
in connection with the Transactions and neither the Issuer nor any of
the Subsidiaries is under any obligation to pay any broker's fee or
commission in connection with such transactions (other than
commissions and fees to the Purchasers as set forth in the Offering
Circular).
(y) Except as adequately disclosed in the Offering
Circular, there is (i) no unfair labor practice complaint or other
proceeding pending or, to the knowledge of the Issuer after due
inquiry, threatened against the Issuer or any of the Subsidiaries
before the National Labor Relations Board or any state, local or
foreign labor relations board or any industrial tribunal, and no
grievance or arbitration proceeding arising out of or under any
collective bargaining agreement is so pending or threatened, (ii) no
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<PAGE> 18
strike, labor dispute, slowdown or stoppage pending or, to the
knowledge of the Issuer after due inquiry, threatened against the
Issuer or any of the Subsidiaries, and (iii) no union representation
question existing with respect to the employees of the Issuer or any
of the Subsidiaries, and, to the Issuer's knowledge after due inquiry,
no union organizing activities are taking place, that, in the case of
each of such clauses (i), (ii) or (iii) could, singly or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
(z) Except as adequately disclosed in the Offering
Circular or as otherwise could not reasonably be likely to, singly or
in the aggregate, have a Material Adverse Effect:
(1) no real property or facility to be owned,
used, operated, leased or managed by the Issuer or any of the
Subsidiaries upon consummation of the Closing (the "Real
Property") is listed or proposed for listing on the National
Priorities List or the Comprehensive Environmental Response,
Compensation, and Liability Information System, both
promulgated under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA"),
or on any other state or local list established pursuant to
any Environmental Law, and neither the Issuer nor any of the
Subsidiaries has received any notification of potential or
actual liability or request for information under CERCLA or
any comparable state or local law;
(2) no underground storage tank, or related
piping, is located on any of the Real Property;
(3) there have been no releases (i.e., any
past or present releasing, spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping,
leaching, disposing or dumping, on-site or, to the knowledge
of the Issuer after due inquiry, off-site) of Hazardous
Materials (as defined below) by the Issuer, any of the
Subsidiaries or to the knowledge of the Issuer after due
inquiry, any person or entity whose liability for any such
release of Hazardous Materials, the Issuer or any of the
Subsidiaries has retained or assumed either contractually or
by operation of law at, on, under, or migrating from or into
any of the Real Property;
(4) to the knowledge of the Issuer after due
inquiry, no person or entity whose liability the Issuer or any
of the Subsidiaries has retained or assumed either
contractually or by operation of law (a "Third Party"), has
any liability, absolute or contingent, under any Environmental
Law, which has been retained or assumed by the Issuer or any
of the Subsidiaries; there is no civil, criminal or
administrative Proceeding, hearing, notice of violation or
deficiency, notice or
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<PAGE> 19
demand letter pending or threatened against the Issuer or any
of the Subsidiaries or, to the knowledge of the Issuer after
due inquiry, any Third Party under any Environmental Law; and
(5) there are no events, activities, or
actions by the Issuer or any of the Subsidiaries or conditions
of any of the Real Property, that are reasonably likely to
prevent compliance by the Issuer or any of the Subsidiaries
with any Environmental Law, or that are reasonably likely to
give rise to any liability under any Environmental Laws.
"ENVIRONMENTAL LAWS" means all Applicable
Laws relating to pollution or protection of human health or
the environment, including, without limitation, laws relating
to (1) emissions, discharges, releases or threatened releases
of pollutants, contaminants, chemicals, or industrial, toxic
or hazardous constituents, substances or wastes, including,
without limitation, asbestos or asbestos-containing materials,
polychlorinated biphenyls, petroleum or any constituents
relating to or arising out of any oil production activities,
including crude oil or any fraction thereof, or any petroleum
product or other wastes, chemicals or substances regulated by
any Environmental Law (collectively referred to as "HAZARDOUS
MATERIALS"), into the environment (including, without
limitation, ambient air, surface water, ground water, land
surface or subsurface strata), (2) the manufacture,
processing, distribution, use, generation, treatment, storage,
disposal, transport or handling of Hazardous Materials and (3)
underground storage tanks, and related piping, and emissions,
discharges, releases or threatened releases therefrom.
(aa) No representation or warranty made by the
Issuer, or to the knowledge of the Issuer after due inquiry, any other
person in any of the Documents, was or will be, when made, inaccurate,
untrue or incorrect in any material respect.
7. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS.Each
Purchaser severally and not jointly represents and warrants with respect to
itself that:
(a) It is a QIB.
(b) It (i) is not acquiring the Series A Notes with
a view to any distribution thereof that would violate the Act or the
securities laws of any state of the United States or any other
applicable jurisdiction and (ii) will be soliciting offers for the
Series A Notes only from, and will be reoffering and reselling the
Series A Notes only to (A) persons in the United States whom it
reasonably believes to be QIBs in reliance on the exemption from the
registration requirements of the Act provided by and in transactions
meeting the requirements of Rule 144A, and (B) a limited number of
institutional
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<PAGE> 20
Accredited Investors that execute and deliver to the Issuer and the
Purchasers a letter containing certain representations and agreements
in the form attached as Annex A to the Offering Circular.
(c) No form of general solicitation or general
advertising in violation of the Securities Act has been or will be
used by such Purchaser or any of its representatives in connection
with the offer and sale of any of the Series A Notes.
(d) In connection with the Exempt Resales, it will
solicit offers to buy the Series A Notes only from, and will offer and
sell the Series A Notes only to, Eligible Purchasers who, in
purchasing such Series A Notes, will be deemed to have represented and
agreed to the matters set forth under the caption "Notice to
Investors" in the Offering Circular.
(e) It has all requisite power and authority to
enter into, deliver and perform its obligations under this Agreement
and the Registration Rights Agreement and each of this Agreement and
the Registration Rights Agreement has been duly and validly authorized
by it.
8. INDEMNIFICATION.
(a) The Issuer shall, without limitation as to
time, indemnify and hold harmless each Purchaser and each person, if
any, who controls (within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act) either Purchaser (any of such
persons being hereinafter referred to as a "controlling person"), and
the respective officers, directors, partners, employees,
representatives and agents of each Purchaser and any such controlling
person, to the fullest extent lawful, from and against any and all
losses, claims, damages, liabilities, costs (including, without
limitation, costs of preparation and reasonable attorneys' fees) and
expenses (including, without limitation, reasonable costs and expenses
incurred in connection with investigating, preparing, pursuing or
defending against any of the foregoing) (collectively, "LOSSES"), as
incurred, directly or indirectly caused by, related to, based upon,
arising out of or in connection with (i) any untrue statement or
alleged untrue statement of a material fact contained in the
Preliminary Offering Circular or the Offering Circular (or any
amendment or supplement thereto), or any omission or alleged omission
to state therein a material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading except to the
extent any such untrue statement is based upon and made in conformity
with information furnished in writing by such Purchaser expressly for
use in the Offering Circular or (ii) the advice or services rendered
to the Issuer pursuant to this Agreement or in connection with the
Transactions or any indemnified person's actions or inactions in
connection with any such advice or services, provided, that (A) the
Issuer shall not be liable to any indemnified
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<PAGE> 21
party for any Losses that arise solely from the gross negligence or
willful misconduct of such indemnified party and (B) with respect to
any untrue statement or omission or alleged untrue statement or
omission made in the Preliminary Offering Circular, the indemnity
agreement contained in this Section 8(a) shall not inure to the
benefit of any indemnified party to the extent that the sale to the
person asserting any such Losses was an initial resale of Series A
Notes by a Purchaser and such Losses of such indemnified party result
from the fact that there was not sent or given to such person, at or
prior to the written confirmation of the sale of such Series A Notes
to such person, if required by law to have been sent or given, a copy
of the Offering Circular if copies of the Preliminary Offering
Circular had previously been furnished to such Purchaser and the
Offering Circular corrected such untrue statement or omission or
alleged untrue statement or omission. The Issuer shall notify the
Purchasers promptly of the institution, threat or assertion of any
Proceeding of which the Issuer or any Subsidiary is aware in
connection with the matters addressed by this Agreement which involves
the Issuer, any of the Subsidiaries or any of the indemnified parties;
provided, that the failure to so notify the Purchasers shall not be
actionable hereunder except to the extent (but only to the extent)
that it shall be finally determined by a court of competent
jurisdiction (which determination is not subject to appeal) that
either Purchaser has been prejudiced materially by such failure. In
no event shall the indemnifying parties be liable for the fees and
expenses of more than one counsel (in addition to local counsel) for
all indemnified parties in connection with any one action or separate
but similar or related actions in the same jurisdiction arising out of
the same set of allegations or circumstances. The counsel with
respect to which fees and expenses shall be so reimbursed shall be
designated in writing by Jefferies & Company, Inc. in the case of
parties indemnified pursuant to Section 8(a) and by the Issuer in the
case of parties indemnified pursuant to Section 8(c).
(b) If any Proceeding shall be brought or asserted
against any person entitled to indemnification hereunder (an
"Indemnified Party"), such Indemnified Party shall give prompt written
notice to the indemnifying party; provided, that the failure to so
notify the indemnifying party shall not relieve the indemnifying party
from any obligation or liability except to the extent (but only to the
extent) that it shall be finally determined by a court of competent
jurisdiction (which determination is not subject to appeal) that the
indemnifying party has been prejudiced materially by such failure. No
indemnifying party shall be liable for any settlement of any
Proceeding effected without its prior written consent, which consent
shall not be unreasonably withheld.
Without the consent of the Purchasers, which consent
shall not be unreasonably withheld, neither the Issuer nor any of its
Subsidiaries shall consent to entry of any judgment in or enter into
any settlement of any pending or threatened Proceeding in respect of
which indemnification or contribution may be sought hereunder (whether
or not any Indemnified Party is a party thereto) unless such judgment
or settlement includes as an unconditional term thereof the giving by
the claimant or plaintiff to each
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<PAGE> 22
Indemnified Party of a release, in form and substance satisfactory to
the Purchasers, from all Losses that may arise from such Proceeding or
the subject matter thereof.
(c) Each of the Purchasers agrees, severally and
not jointly, to indemnify and hold harmless the Issuer and each
person, if any, who controls (within the meaning of Section 15 of the
Act or Section 20(a) of the Exchange Act) the Issuer (any of such
persons being hereinafter referred to as a "controlling person"), and
the officers, directors, partners, employees, representatives and
agents of the Issuer and any such controlling person to the same
extent as the foregoing indemnity from the Issuer to each of the
Indemnified Parties, but only with respect to claims and actions based
on information relating to such Purchaser in the Offering Memorandum
that is made in reliance on and in conformity with information
furnished in writing by such Purchaser expressly for use in the
Offering Circular.
The Issuer hereby acknowledges that the statements
relating to the Purchasers contained in the third and fourth
paragraphs under the "Plan of Distribution" section of the Preliminary
Offering Circular and the Offering Circular constitute the only
information furnished in writing by any of the Purchasers to the
Issuer for all purposes hereof.
(d) If the indemnification provided for in this
Section 8 is unavailable to an Indemnified Party or is insufficient to
hold such Indemnified Party harmless for any Losses in respect of
which this Section 8 would otherwise apply by its terms (other than by
reason of exceptions provided in this Section 8), then each
indemnifying party, in lieu of indemnifying such Indemnified Party,
shall contribute to the amount paid or payable by such Indemnified
Party as a result of such Losses (i) in such proportion as is
appropriate to reflect the relative benefits received by the Issuer,
on the one hand, and the Purchasers, on the other hand, from the
offering of the Series A Notes or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the
Issuer, on the one hand, and the Purchasers, on the other hand, in
connection with the actions, statements or omissions that resulted in
such Losses, as well as any other relevant equitable considerations.
The relative benefits received by the Issuer, on the one hand, and the
Purchasers, on the other hand, shall be deemed to be in the same
proportion as the total net proceeds from the offering (before
deducting expenses) received by the Issuer, and the total discounts
and commissions received by the Purchasers, bear to the total price of
the Series A Notes in Exempt Resales in each case as set forth in the
table on the cover page of the Offering Circular. The relative fault
of the Issuer, on the one hand, and the Purchasers, on the other hand,
shall be determined by reference to, among other things, whether any
untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information
supplied by the Issuer, on the one hand, or the Purchasers, on the
other
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<PAGE> 23
hand, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission. The amount paid or payable by an Indemnified Party as a
result of any Losses shall be deemed to include any legal or other
fees or expenses incurred by such party in connection with any
Proceeding, to the extent such party would have been indemnified for
such fees or expenses if the indemnification provided for in this
Section 8 was available to such party.
Each party hereto agrees that it would not be just
and equitable if contribution pursuant to this Section 8(d) were
determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred
to in the immediately preceding paragraph. Notwithstanding the
provisions of this Section 8(d), the Purchasers shall not be required
to contribute, in the aggregate, any amount in excess of the amount by
which the total discounts and commissions received by them with
respect to the Series A Notes exceeds the amount of any damages that
the Purchaser has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
(e) The indemnity and contribution agreements
contained in this Section 8 are in addition to any liability that any
party hereto may otherwise have to the Indemnified Parties.
9. CONDITIONS.
(a) The obligation of the Purchasers to purchase
the Series A Notes under this Agreement is subject to the satisfaction
or waiver of each of the following conditions:
(i) All the representations and warranties
of the Issuer in this Agreement shall be true and correct in all
material respects (other than representations and warranties with a
materiality qualifier, which shall be true and correct as written) at
and as of the Closing Date after giving effect to the Transactions
with the same force and effect as if made on and as of such date. On
or prior to the Closing Date, the Issuer shall have performed or
complied in all material respects with all of the agreements and
satisfied in all material respects all conditions on its part to be
performed, complied with or satisfied pursuant to the Documents; and
nothing shall have come to the attention of the Issuer to lead it to
believe that any other party to the Documents (other than the
Purchasers) has not performed or complied in all material respects
with all of the agreements and satisfied in all material respects all
conditions on their respective parts to be performed, complied with or
satisfied pursuant to the Documents.
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<PAGE> 24
(ii) The Offering Circular shall have been
printed and copies made available to the Purchasers not later than
12:00 noon, New York City time, on the first business day following
the date of this Agreement or at such later date and time as the
Purchasers may approve.
(iii) No injunction, restraining order or
order of any nature by a Governmental Authority shall have been issued
as of the Closing Date that would prevent or interfere with the
issuance and sale of the Series A Notes; and no stop order suspending
the qualification or exemption from qualification of any of the Series
A Notes in any jurisdiction shall have been issued and no Proceeding
for that purpose shall have been commenced or be pending or
contemplated as of the Closing Date.
(iv) No action shall have been taken and no
Applicable Law shall have been enacted, adopted or issued that would,
as of the Closing Date, prevent the issuance or sale of the Series A
Notes. No Proceeding shall be pending or threatened other than
Proceedings that (A) if adversely determined could not, singly or in
the aggregate, adversely affect the issuance or marketability of the
Series A Notes or (B) could not reasonably be expected to have a
Material Adverse Effect.
(v) The Notes shall have (A) been
designated PORTAL securities in accordance with the rules and
regulations adopted by the NASD relating to trading in the PORTAL
market, and (B) received a rating of B+ and B1 from Standard & Poor's
Corporation and Moody's Investors Services, Inc., respectively.
(vi) The Purchasers shall have received on
the Closing Date (A) certificates dated the Closing Date, signed by
(1) the Chief Executive Officer and (2) the principal financial or
accounting officer of the Issuer, on behalf of the Issuer, (x)
confirming the matters set forth in paragraphs (i) through (iv) of
this Section 9(a) and (y) certifying as to such other matters as the
Purchasers may reasonably request, (B) a certificate, dated the
Closing Date, signed by the Secretary of the Issuer, certifying such
matters as the Purchasers may reasonably request and (C) a
certificate, dated the Closing Date, signed by the principal financial
or accounting officer of the Issuer substantially in the form
previously approved by the Purchasers.
(vii) The Purchasers shall have received on
the Closing Date an opinion and a letter (each reasonably satisfactory
in form and substance to the Purchasers and counsel to the
Purchasers), dated the Closing Date, of
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<PAGE> 25
Dechert Price & Rhoads, special counsel to the Issuer, substantially
in the form of Exhibits A-1 and A-2 hereto.
(viii) The Purchasers shall have received
on the Closing Date an opinion, dated the Closing Date, of Skadden,
Arps, Slate, Meagher & Flom LLP, in form and substance reasonably
satisfactory to the Purchasers covering such matters as are
customarily covered in such opinions.
(ix) The Purchasers and the Issuer shall
have received from Price Waterhouse (i) a customary comfort letter,
dated the date of the Offering Circular, in form and substance
reasonably satisfactory to the Purchasers, with respect to the
financial statements and certain financial information contained in
the Offering Circular, and (ii) a customary comfort letter, dated the
Closing Date, in form and substance reasonably satisfactory to the
Purchasers, to the effect that they reaffirm the statements made in
the letter furnished pursuant to clause (i), except that the specified
date referred to shall be a date not more than five days prior to the
Closing Date.
(x) The Documents shall have been executed
and delivered by all parties thereto and the Purchasers shall have
received a fully executed original of each Document.
(xi) On or prior to the Closing Date, the
Transactions shall have been duly consummated. The Purchasers shall
have received copies of all opinions, certificates, letters and other
documents delivered under or in connection with the Transactions,
including without limitation the Acquisition Agreement, and letters to
the effect that the Purchasers may rely on such opinions, as if
addressed to the Purchasers.
(xii) The Purchasers shall have received
copies of (A) all UCC-3 termination statements and mortgage releases
and other collateral releases and terminations each in form and
substance reasonably satisfactory to the Purchasers, duly executed and
delivered by United States Trust Company of New York relating to
collateral securing the 13 1/4% Senior Secured Notes due 2002 of Terex
Corporation to be acquired by the Issuer pursuant to the Acquisition
and (B) all payoff letters, UCC-3 termination statements and other
collateral releases and terminations, each in form and substance
satisfactory to the Purchasers, duly executed and delivered by
Congress Financial Corporation and/or Foothill Capital Corporation, as
necessary, relating to the Loan and Security Agreement dated as of May
9, 1995 among Terex, such parties and the other parties thereto (the
"EXISTING CREDIT FACILITY AGREEMENT") evidencing the termination and
release
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<PAGE> 26
of collateral securing any of the Existing Credit Facility Agreement
to be acquired by the Issuer pursuant to he acquisition and each
public filing related thereto.
(xiii) Counsel to the Purchasers shall have
been furnished with such documents as they may reasonably require for
the purpose of enabling them to review or pass upon the matters
referred to in this Section 9 and in order to evidence the accuracy,
completeness or satisfaction in all material respects of any of the
representations, warranties or conditions herein contained.
(b) The obligation of the Issuer to sell the Series
A Notes under this Agreement is subject to the satisfaction or waiver
of each of the following conditions:
(i) The Purchasers shall have delivered payment
to the Issuer for the Series A Notes pursuant
to Sections 2 and 4 of this Agreement.
(ii) All of the representations and warranties of
the Purchasers in this Agreement shall be
true and correct in all material respects at
and as of the Closing Date, with the same
force and effect as if made on and as of such
date. On or prior to the Closing Date, the
Purchasers shall have performed or complied
with all of the agreements and satisfied all
conditions on their part to be performed,
complied with or satisfied pursuant to this
Agreement.
(iii) No injunction, restraining order or order of
any nature by a Governmental Authority shall
have been issued as of the Closing Date that
would prevent or interfere with the issuance
and sale of the Series A Notes; and no stop
order suspending the qualification or
exemption from qualification of any of the
Series A Notes in any jurisdiction shall have
been issued and no Proceeding for that
purpose shall have been commenced or be
pending or contemplated as of the Closing
Date. No action shall have been taken and no
Applicable Law shall have been enacted,
adopted or issued that would, as of the
Closing Date, prevent the issuance or sale of
the Series A Notes.
10. TERMINATION. The Purchasers may terminate this
Agreement at any time prior to the Closing Date by written notice to the Issuer
if any of the following has occurred:
(a) since the date as of which information is given
in the Offering Circular, any material adverse effect or development
involving a prospective adverse effect on the properties, business,
prospects, operations or condition (financial or otherwise), of the
Issuer or any Subsidiary, whether or not arising in the ordinary
course
26
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of business, that could, in the Purchasers' judgment, (i) make it
impracticable or inadvisable to proceed with the offering or delivery
of the Series A Notes on the terms and in the manner contemplated in
the Offering Circular or (ii) materially impair the investment quality
of any of the Notes;
(b) the failure of the Issuer to satisfy the
conditions contained in Section 9(a) hereof on or prior to the third
business day following the date of this Agreement;
(c) any outbreak or escalation of hostilities or
other national or international calamity or crisis or material adverse
change in economic conditions in or the financial markets of the
United States, if the effect of such outbreak, escalation, calamity,
crisis or material adverse change in the economic conditions in or in
the financial markets of the United States could make it, in the
Purchasers' judgment, impracticable or inadvisable to market or
proceed with the offering or delivery of the Series A Notes on the
terms and in the manner contemplated in the Offering Circular or to
enforce contracts for the sale of any of the Series A Notes;
(d) the suspension or limitation of trading
generally in securities on the New York Stock Exchange, the American
Stock Exchange or the NASDAQ National Market or any setting of
limitations on prices for securities on any such exchange or NASDAQ
National Market;
(e) any securities of the Issuer shall have been
downgraded or placed on any "watch list" for possible downgrading by
any "nationally recognized statistical rating organization", as such
term is defined for purposes of Rule 431(g)(2) under the Act; or
(f) the declaration of a banking moratorium by any
Governmental Authority; or the taking of any Governmental Authority
after the date hereof in respect of its monetary or fiscal affairs
that in the Purchasers' opinion could have a material adverse effect
on the financial markets in the United States.
If this Agreement shall be terminated by the Purchasers
pursuant to clause (b) of this Section 10 or because of the failure or refusal
on the part of the Issuer to comply with the terms or to fulfill any of the
conditions of this Agreement, the Issuer shall promptly reimburse the
Purchasers for all reasonable out-or-pocket expenses incurred by the Purchasers
in connection with this Agreement. Without limiting the foregoing,
notwithstanding any termination of this Agreement, the Issuer shall be liable
(i) for all expenses that it has agreed to pay pursuant to Section 5(f) hereof,
and (ii) pursuant to Section 8 hereof.
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11. DEFAULT BY PURCHASER. If any of the Purchasers shall
fail or refuse to purchase the Series A Notes that it has agreed to purchase
hereunder on the Closing Date and arrangements satisfactory to the other
Purchaser and the Issuer for the purchase of such Series A Notes are not made
within 36 hours after such default, this Agreement shall terminate without
liability on the part of the non-defaulting Purchaser(s) or the Issuer, except
as otherwise provided in Section 10 hereof. Nothing herein shall relieve a
defaulting Purchaser from liability for its default.
12. MISCELLANEOUS.
(a) Notices given pursuant to any provision of this
Agreement shall be addressed as follows: (i) if to the Issuer, 172
Trade Street, Lexington, Kentucky 40508 Attention: Chief Executive
Officer, with a copy to Dechert Price & Rhoads, 477 Madison Avenue,
New York, New York 10022, Attention: Bruce B. Wood and (ii) if to the
Purchasers, to Jefferies & Company, Inc., 11100 Santa Monica
Boulevard, 10th Floor, Los Angeles, California 90025, Attention:
Jerry M. Gluck, Esq., with a copy to (a) Bear, Stearns & Co. Inc., 245
Park Avenue, New York, New York 10167, Attention: Phil Berney, and (b)
Skadden, Arps, Slate, Meagher & Flom LLP, 300 S. Grand Avenue, Suite
3400, Los Angeles, California 90071, Attention: Michael A. Woronoff
(provided that any notice pursuant to Section 8 hereof will be mailed,
delivered, telegraphed or telecopied and confirmed to the party to be
notified and its counsel), or in any case to such other address as the
person to be notified may have requested in writing.
(b) This Agreement has been and is made solely for
the benefit of and shall be binding upon the Issuer, the Purchasers
and, to the extent provided in Section 8 hereof, the controlling
persons officers, directors, partners, employees, representatives and
agents referred to in Section 8 and their respective heirs, executors,
administrators, successors and assigns, all as and to the extent
provided in this Agreement, and no other person shall acquire or have
any right under or by virtue of this Agreement. The term "successors
and assigns" shall not include a purchaser of any of the Series A
Notes from the Purchasers merely because of such purchase.
Notwithstanding the foregoing, it is expressly understood and agreed
that each purchaser who purchases Series A Notes from either Purchaser
is intended to be a beneficiary of the Issuer's covenants contained in
the Registration Rights Agreement to the same extent as if the Notes
were sold and those covenants were made directly to such purchaser by
the Issuer, and each such purchaser shall have the right to take
action against the Issuer to enforce, and obtain damages for any
breach of, those covenants.
(c) THIS AGREEMENT SHALL BE CONSTRUED, INTERPRETED
AND THE RIGHTS OF THE PARTIES DETERMINED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCI-
28
<PAGE> 29
PLES OF CONFLICTS OF LAW. THE ISSUER HEREBY IRREVOCABLY SUBMITS TO
THE JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF
MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE
BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF ANY SUIT,
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND
IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS.
THE ISSUER IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY
EFFECTIVELY DO SO UNDER APPLICABLE LAW, TRIAL BY JURY AND ANY
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE
OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND
ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH
COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. THE ISSUER
IRREVOCABLY CONSENTS, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO
UNDER APPLICABLE LAW, TO THE SERVICE OF PROCESS OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING
OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO
THE ISSUER AT THE ADDRESS SET FORTH HEREIN, SUCH SERVICE TO BECOME
EFFECTIVE 30 DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE
RIGHT OF ANY OF THE PURCHASERS TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED
AGAINST THE ISSUER IN ANY OTHER JURISDICTION.
(d) This Agreement may be signed in various
counterparts which together shall constitute one and the same
instrument.
(e) The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect
the meaning hereof.
(f) If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated, and the parties hereto shall use their best efforts to
find and employ an alternative means to achieve the same or
substantially the same result as that contemplated by such term,
provision, covenant or restriction. It is hereby stipulated and
declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions
without including any of such that may be hereafter declared invalid,
illegal, void or unenforceable.
29
<PAGE> 30
(g) This Agreement may be amended, modified or
supplemented, and waivers or consents to departures from the
provisions hereof may be given, provided that the same are in writing
and signed by each of the signatories hereto.
(h) The indemnities, contribution and expense
reimbursement provisions set forth in or made pursuant to this
Agreement shall remain operative and in full force and effect, and
will survive delivery and payment for the Series A Notes, regardless
of (i) any investigation, or statement as to the results thereof, made
by or on behalf of any party hereto, (ii) acceptance of the Series A
Notes, and payment for them hereunder, and (iii) any termination of
this Agreement.
30
<PAGE> 31
Please confirm that the foregoing correctly sets forth the
agreement between the Issuer and the Purchasers.
Very truly yours,
CMHC ACQUISITION CORPORATION
By: /s/
---------------------------------
Name:
Title:
Accepted and Agreed to:
JEFFERIES & COMPANY, INC.
By: /s/
------------------------------------
Name:
Title:
BEAR, STEARNS & CO. INC.
By: /s/
------------------------------------
Name:
Title:
<PAGE> 32
EXHIBIT A
Form of Dechert Price & Rhoads Opinion (Exhibit Omitted)
A-1
<PAGE> 33
Schedule A
<TABLE>
<CAPTION>
Principal Amount
Purchaser of Series A Notes
- --------- -----------------
<S> <C>
Jefferies & Company, Inc. 78,000,000
52,000,000
Bear, Stearns & Co. Inc.
------------------
TOTAL $130,000,000
</TABLE>
<PAGE> 34
Schedule B
<TABLE>
<S> <C>
First Step
- ----------
- Clark Material Handling Company ("CMHC") adopts a plan of
liquidation providing, among other things, for the distribution
of all assets and liabilities (the "Clark Business") to be sold
to or assumed by CMHC Acquisition Corporation ("Buyer") to
Terex Corporation ("Terex")
Second Step
- -----------
- CMH Acquisition Corp. merges into Terex
- CMH Acquisition International Corp. merges into Terex
Third Step
- ----------
- Clark Material Handling International, Inc. merges into Terex
Closing Date
- ------------
- Terex transfers the Clark Business to Buyer by way of letter of
direction in lieu of having the Clark Business distributed
directly to Terex as per the CMHC plan of liquidation
- Terex (as successor by merger) transfers the German Shares, the
Canadian Shares and the Korean Shares to Buyer
</TABLE>
<PAGE> 35
Schedule 6(d)
Subsidiaries
I. Subsidiaries of the Issuer
<TABLE>
<CAPTION>
Percentage Jurisdiction of
Ownership Organization
--------- --------------
<S> <C> <C>
Clark Material Handling GmbH 100% Germany
Clark Material Handling of Canada, Ltd. 100% Canada
Clark Forklift Korea, Inc. 100% Korea
Clark Empilhaderas do Brasil Ltda. 100% Brazil
Clark Material Handling France 99.997% France
Clark Maquinaria S.A. 100% Spain
</TABLE>
II. Other Equity Interests
<TABLE>
<CAPTION>
Percentage Jurisdiction of
Ownership Organization
--------- ---------------
<S> <C> <C>
Flandres Manutention S.A.* 40% France
Clarklift of Washington/Alaska, Inc.** 37.2% Washington
</TABLE>
- ------------------
* In process of being sold.
** May be acquired in connection with the Acquisition.
<PAGE> 1
EXHIBIT 10.2
LOAN AND SECURITY AGREEMENT
BY AND BETWEEN
CONGRESS FINANCIAL CORPORATION
AS LENDER
AND
CLARK MATERIAL HANDLING COMPANY
AS BORROWER
DATED AS OF: NOVEMBER 27, 1996
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2. CREDIT FACILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.1 Revolving Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.2 Letter of Credit Accommodations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.3 Availability Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 3. INTEREST AND FEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.1 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.2 Closing Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.3 Servicing Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.4 Unused Line Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.5 Changes in Laws and Increased Costs of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 4. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.1 Conditions Precedent to Initial Revolving Loans and Letter of Credit Accommodations . . . . . . . . . . . . . 27
4.2 Conditions Precedent to All Revolving Loans and Letter of Credit Accommodations . . . . . . . . . . . . . . . 30
SECTION 5. GRANT OF SECURITY INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 6. COLLECTION AND ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.1 Borrower's Loan Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.2 Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.3 Collection of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
6.4 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.5 Authorization to Make Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.6 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 7. COLLATERAL REPORTING AND COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.1 Collateral Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.2 Accounts Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.3 Inventory Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.4 Power of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
7.5 Right to Cure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
7.6 Access to Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
7.7 Irrevocable License to Use Equipment and Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . 41
7.8 Terex Distribution Center Mortgagee Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 8. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.1 Corporate Existence, Power and Authority; Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.2 Financial Statements; No Material Adverse Change. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
8.3 Chief Executive Office; Collateral Locations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
</TABLE>
(i)
<PAGE> 3
<TABLE>
<S> <C>
8.4 Priority of Liens; Title to Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
8.5 Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
8.6 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
8.7 Compliance with Other Agreements and Applicable Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
8.8 Accuracy and Completeness of Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
8.9 Acquisition of Purchased Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
8.10 Issuance of Senior Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
8.11 Employee Benefits. Ex . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
8.12 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
8.13 Survival of Warranties; Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
9.1 Maintenance of Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
9.2 New Collateral Locations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
9.3 Compliance with Laws, Regulations, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
9.4 Payment of Taxes and Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
9.5 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
9.6 Financial Statements and Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
9.8 Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
9.9 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
9.10 Loans, Investments, Guarantees, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
9.11 Dividends and Redemptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
9.12 Additional Restrictions for Certain Indebtedness, Investments and Dividends . . . . . . . . . . . . . . . . . 62
9.13 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
9.14 Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
9.15 Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
9.16 No Conflicts with Amount of Maximum Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
9.17 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 10. EVENTS OF DEFAULT AND REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
10.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
10.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS
AND CONSENTS; GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
11.1 Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver . . . . . . . . . . . . . . . . . . . . 70
11.2 Waiver of Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
11.3 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
11.4 Waiver of Counterclaims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
11.5 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 12. TERM OF AGREEMENT; MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
12.1 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
12.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
12.3 Partial Invalidity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
12.4 Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
12.5 Participant's Security Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
</TABLE>
(ii)
<PAGE> 4
<TABLE>
<S> <C>
12.6 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
12.7 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
</TABLE>
(iii)
<PAGE> 5
INDEX TO
EXHIBITS AND SCHEDULES
Exhibit A Information Certificate of Borrower
<PAGE> 6
LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement dated as of November 27, 1996 is
entered into by and between Congress Financial Corporation, a California
corporation ("Lender") and CLARK Material Handling Company, a Delaware
corporation, formerly known as CMHC Acquisition Corporation ("Borrower").
W I T N E S S E T H:
WHEREAS, Borrower has requested that Lender enter into certain
financing arrangements with Borrower pursuant to which Lender may make
loans and provide other financial accommodations to Borrower; and
WHEREAS, Lender is willing to make such loans and provide such
financial accommodations on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties
hereto agree as follows:
SECTION 1. DEFINITIONS
All terms used herein which are defined in Article 1 or Article 9 of
the Uniform Commercial Code shall have the meanings given therein unless
otherwise defined in this Agreement. All references to the plural herein
shall also mean the singular and to the singular shall also mean the
plural. All references to Borrower and Lender pursuant to the definitions
set forth above, or to any other person herein, shall include their
respective successors and assigns. The words "hereof", "herein",
"hereunder", "this Agreement" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not any particular
provision of this Agreement and as this Agreement now exists or may
hereafter be amended, modified, supplemented, extended, renewed, restated
or replaced. An Event of Default shall exist or continue or be continuing
until such Event of Default is waived in accordance with Section 11.3. Any
accounting term used herein unless otherwise defined in this Agreement
shall have the meanings customarily given to such term in accordance with
GAAP. For purposes of this Agreement, the following terms shall have the
respective meanings given to them below:
1.1 "Accounts" shall mean, individually and collectively, (a)
accounts purchased by Borrower from Sellers pursuant to the Purchase
Agreements and (b) all of Borrower's now owned and
<PAGE> 7
hereafter acquired rights to payment for the prior, concurrent or future
sale, lease or other disposition of Inventory or rendition of services,
whether or not evidenced by an instrument or chattel paper and whether or
not earned by performance.
1.2 "Adjusted Eurodollar Rate" shall mean, with respect to each
Interest Period for any Eurodollar Rate Loan, the rate per annum (rounded
upwards, if necessary, to the next one-sixteenth (1/16) of one (1%)
percent) determined by dividing (1) the Eurodollar Rate for such Interest
Period by (2) a percentage equal to: (i) one (1) minus (ii) the Reserve
Percentage. For purposes hereof, "Reserve Percentage" shall mean the
reserve percentage, expressed as a decimal, prescribed by any United States
or foreign banking authority for determining the reserve requirement which
is or would be applicable to deposits of United States dollars in a
non-United States or an international banking office of Reference Bank used
to fund a Eurodollar Rate Loan or any Eurodollar Rate Loan made with the
proceeds of such deposit, whether or not the Reference Bank actually holds
or has made any such deposits or loans. The Adjusted Eurodollar Rate shall
be adjusted on and as of the effective day of any change in the Reserve
Percentage.
1.3 "Affiliate" shall mean, as to any specified Person, any other
Person directly or indirectly controlling or controlled by or under direct
or indirect common control with such specified Person. For purposes of
this definition, "control" (including with correlative meanings, the terms
or policies of such Person, whether through the ownership of voting
securities, by agreement or otherwise. "controlling", "controlled by" and
"under common control with"), as used with respect to any Person, will mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management in effect.
1.4 "Availability Reserves" shall mean, as of any date of
determination, such amounts as Lender may from time to time establish and
revise in good faith reducing the amount of Revolving Loans and Letter of
Credit Accommodations which would otherwise be available to Borrower under
the lending formula(s) provided for herein: (a) to reflect events,
conditions, contingencies or risks which, as determined by Lender in good
faith, do or may (i) adversely affect either (A) any Collateral, the rights
of the Lender in any Collateral or any other property which is security for
the Obligations or its value or (B) the security interests and other rights
of Lender in the Collateral (including the enforceability, perfection and
priority thereof) or (ii) adversely affect in any material respect the
assets (other than any Collateral) or business of Borrower or any Obligor,
(b) to reflect the good faith belief of Lender that any collateral report
or financial information furnished by or on behalf of any Borrower or any
Obligor to Lender is or may have been incomplete, inaccurate or misleading
in any material respect
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or (c) to reflect outstanding Letter of Credit Accommodations as provided
in Section 2.2 hereof, or (d) in respect of any state of facts which Lender
determines in good faith constitutes an Event of Default or may, with
notice or passage of time or both, constitute an Event of Default.
1.5 "Blocked Accounts" shall have the meaning set forth in Section
6.3 hereof.
1.6 "Board of Directors" shall mean the board of directors or any
duly constituted committee of any corporation or of a corporate general
partner of a partnership and any similar body empowered to direct the
affairs of any other entity.
1.7 "Business Day" or "business day" shall mean (a) for the Prime
Rate Loans, any day other than a Saturday, Sunday, or other day on which
commercial banks are authorized or required to close under the laws of the
State of New York or the Commonwealth of Pennsylvania, and a day on which
the Reference Bank and Lender are both open for the transaction of
business, (b) for all Eurodollar Rate Loans, any such day as described in
clause (a) above in this definition of Business Day, excluding any day on
which banks are closed for dealings in dollar deposits in the London
interbank market or other applicable Eurodollar Rate market, and (c) for
all other purposes hereof, any such day as described in clause (a) above.
1.8 "Change of Control" shall mean (i) the transfer (in one
transaction or a series of transactions) of all or substantially all of
Borrower's assets to any Person or group (as such term is used in Section
13(d)(3) of the Exchange Act), (ii) the liquidation or dissolution of
Borrower or the adoption of a plan by the stockholders of Borrower relating
to the dissolution or liquidation of Borrower, (iii) the acquisition by any
Person or group (as such term is used in Section 13(d)(3) of the Exchange
Act), except for one or more Existing Holders, of beneficial ownership,
directly or indirectly, of more than fifty (50%) percent of the voting
power of the total outstanding Voting Stock of Holdings, (iv) after
consummation of an initial public offering of any class of common stock of
Borrower or Holdings, during any period of two consecutive years,
individuals who at the beginning of such period constituted the Board of
Directors of Borrower or Holdings (together with any new directors who have
been appointed by CVC, Citicorp N.A., or any Affiliate of CVC or whose
nomination for election by the stockholders of Borrower was approved by a
vote of at least sixty-six and two-thirds (66 2/3%) percent of the
directors then still in office who were either directors at the beginning
of such period or whose election or nomination for election was previously
so approved) cease for any reason to constitute a majority of the Board of
Directors of Borrower or Holdings, as the case may be, then still in office
or (v) the failure by Holdings to own more than fifty (50%) percent
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of the voting power of the total outstanding Voting Stock of Borrower.
1.9 "Clark Brazil" shall mean Clark Empilhadeiros Do Brasil Ltda, an
entity organized under the laws of Brazil.
1.10 "Clark Canada" shall mean Clark Material Handling of Canada,
Ltd., a Canadian corporation.
1.11 "Clark Germany" shall mean Clark Material Handling GmbH, an
entity organized under the laws of Germany.
1.12 "Clark Korea" shall mean Clark Forklift Korea, Inc., an entity
organized under the laws of Korea.
1.13 "Code" shall mean the Internal Revenue Code of 1986, as the same
now exists or may from time to time hereafter be amended, modified,
recodified or supplemented, together with all rules, regulations and
interpretations thereunder or related thereto.
1.14 "Collateral" shall have the meaning set forth in Section 5
hereof.
1.15 "Confidential Information" shall mean non-public information
supplied by Borrower to Lender the disclosure of which is restricted by the
provisions of Section 12.7 hereof.
1.16 "CVC" shall mean Citicorp Venture Capital, Ltd., a New York
corporation.
1.17 "Eligible Accounts" shall mean, Accounts purchased by Borrower
from Old Clark pursuant to the Purchase Agreements or created by Borrower
which are and continue to be acceptable to Lender based on the criteria set
forth below. In general, Accounts shall be Eligible Accounts if:
(a) such Accounts arise from the actual and bona fide sale and
delivery of Inventory by Borrower or inventory by Old Clark or rendition of
services by Borrower or Old Clark in the ordinary course of its business
and which transactions are completed in accordance with the terms and
provisions contained in any documents related thereto;
(b) such Accounts are not unpaid more than sixty (60) days from
the original due date thereof or more than one hundred and twenty (120)
days after the date of the original invoice for them, except for such
longer periods of reasonable duration as to any Account with respect to
which payment is covered by the terms of an outstanding and unexpired
letter of credit that in all other respects complies with the requirements
of subsection (f)(ii)(A) of this definition of Eligible Accounts;
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<PAGE> 10
(c) such Accounts are not owed by any account debtor as to which
more than fifty (50%) percent of the aggregate amount thereof are unpaid
more than sixty (60) days past the original due date thereof or are unpaid
more than one hundred and twenty (120) days after the date of the original
invoice for them;
(d) such Accounts comply with the terms and conditions contained
in Section 7.2(c) of this Agreement;
(e) such Accounts do not arise from sales on consignment,
guaranteed sale, sale and return, sale on approval, or other terms under
which payment by the account debtor may be conditional or contingent;
provided, however, that, no Account where the account debtor is a
franchised dealer of Inventory shall be deemed ineligible solely because
Borrower has a buy-back arrangement with such account debtor effective upon
the termination by Borrower of such account debtor as a franchised dealer,
but upon such termination (or any other termination of or by such account
debtor as a franchised dealer) the Accounts owed by such dealer shall
become ineligible;
(f) such Accounts are payable in the United States of America in
United States dollars and (i) the chief executive office of the account
debtor with respect to such Accounts is located in the United States of
America, Canada or Puerto Rico, or (ii) at the option of Lender (subject to
such lending formula with respect thereto as Lender may determine) if
either: (A) the account debtor has delivered to Borrower an irrevocable
letter of credit issued or confirmed by a bank reasonably satisfactory to
Lender, sufficient to cover such Account, in form and substance
satisfactory to Lender, and, if required by Lender, the original of such
letter of credit has been delivered to Lender or a bailee for Lender and
the issuer thereof notified of the assignment of the proceeds of such
letter of credit to Lender, or (B) such Account is subject to credit
insurance payable to Lender issued by an insurer reasonably acceptable and
on terms and in an amount acceptable to Lender, or (C) such Account is
payable under a sight draft against delivery of documents of title and
accepted by a bank reasonably satisfactory to Lender, and on terms and
conditions acceptable to Lender, or (D) such Account is otherwise
acceptable in all respects to Lender with respect to the creditworthiness
of the account debtor and the ability of Lender to collect such Accounts;
(g) such Accounts do not consist of progress billings, bill and
hold invoices or retainage invoices, except as to bill and hold invoices,
if Lender shall have received an agreement in writing from the account
debtor, in form and substance satisfactory to Lender, confirming the
unconditional obligation of the account debtor to take the goods related
thereto and pay such invoice;
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<PAGE> 11
(h) the account debtor with respect to such Accounts (x) has not
asserted a counterclaim, defense or dispute, and (y) does not engage in
transactions which give rise to, any right of setoff against such Accounts,
unless in the case of clause (y) such account debtor has entered into a
written agreement in favor of Lender, for the benefit of Lender, and in
form and substance reasonably satisfactory to Lender, pursuant to which
such account debtor agrees not to assert any setoff against Accounts owed
to any Borrower;
(i) there are no facts, events or occurrences which Lender
believes in good faith would impair the validity, enforceability or
collectability of such Accounts or reduce the amount payable or delay
payment thereunder;
(j) such Accounts are subject to the first priority, valid and
perfected security interest of Lender, and any goods giving rise thereto
are not, and were not at the time of the sale thereof, subject to any liens
or security interests except those permitted in this Agreement;
(k) neither the account debtor nor any officer or director of
the account debtor with respect to such Accounts is affiliated with
Borrower directly or indirectly by virtue of family membership, ownership,
control or management;
(l) the account debtors with respect to such Accounts are not
any foreign government, the United States of America, any State, political
subdivision, department, agency or instrumentality thereof, unless, upon
request of Lender, the Federal Assignment of Claims Act of 1940, as amended
or any similar State, local or foreign law, if applicable, has been
complied with in a manner reasonably satisfactory to Lender;
(m) there are no proceedings or actions which are threatened or
pending against the account debtors with respect to such Accounts which
might result in any material adverse change in any such account debtor's
financial condition;
(n) such Accounts of a single account debtor or its affiliates
do not constitute more than ten (10%) percent of all otherwise Eligible
Accounts (but the portion of such Accounts not in excess of such percentage
may be deemed Eligible Accounts);
(o) such Accounts are owed by account debtors whose total
indebtedness to Borrower does not exceed the applicable credit limit(s)
with respect to such account debtors as established by Lender from time to
time (but the portion of such Accounts not in excess of such credit limit
may still be deemed Eligible Accounts);
(p) such Accounts are not Floor Plan Accounts; and
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<PAGE> 12
(q) such Accounts are owed by account debtors deemed
creditworthy at all times by Lender, as determined by Lender in good faith.
General criteria for Eligible Accounts may be established and revised from
time to time by Lender in good faith. Any Accounts which are not Eligible
Accounts shall nevertheless be part of the Collateral.
1.18 "Eligible Inventory" shall mean Inventory consisting of finished
goods held for resale in the ordinary course of the business of Borrower,
parts held for resale or to be incorporated into finished goods, and raw
materials for such finished goods which are deemed acceptable to Lender in
its good faith judgment based on the criteria set forth below. In general,
Eligible Inventory shall not include (a) work-in-process; (b) spare parts
for Equipment; (c) packaging and shipping materials; (d) supplies used or
consumed in Borrower's business; (e) Inventory at premises other than those
located in the United States of America; (f) Inventory at premises other
than those owned and controlled by Borrower, except if Lender shall have
received an agreement in writing from the person in possession of such
Inventory and/or the owner or operator of such premises in form and
substance satisfactory to Lender acknowledging the first priority security
interest of Lender, in the Inventory, waiving or subordinating in favor of
Lender security interests and claims by such person against the Inventory
and permitting Lender access to, and, subject to such limitations and costs
reasonably acceptable to Lender, the right to remain on, the premises so as
to exercise the rights and remedies of Lender and otherwise deal with the
Collateral; provided, however, that fifty (50%) percent of the Value of
Inventory of Borrower in the possession of any of its dealers or other
third parties (but expressly excluding Terex in any event) that otherwise
satisfies and continues to satisfy Lender's criteria for Eligible
Inventory, but for only the fact that Borrower has not delivered to Lender
the written agreement by such dealer or other third party required pursuant
to this subsection (f), shall nevertheless be treated as Eligible Inventory
for the period from the date hereof through the earlier of March 31, 1997
or the occurrence of an Event of Default; and provided, further, that the
aggregate amount of Revolving Loans determined by Lender to be available
with respect to Inventory in the possession of Borrower's dealers or other
third parties that is partly deemed Eligible Inventory on a temporary basis
by virtue of the preceding proviso, shall not exceed the amount of
$1,000,000 at any one time outstanding; (g) Inventory in the possession of
or under the control of Terex, unless, in addition to the written agreement
referred to in subsection (f) of this Section, Borrower has delivered the
written agreement in favor of Lender as required in Section 4.1(g)(ii) and
unless such agreement and the Service Agreement remain in effect and have
not been breached in any material respect by Terex or Borrower, and
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Lender is and continues to be satisfied in all respects with the manner of
segregation and storage of Inventory, and billing and recordkeeping
practices and procedures relating to Inventory and Accounts of Borrower
utilized by Terex under the Service Agreement; (h) Inventory subject to a
security interest or lien in favor of any person other than Lender; (i)
bill and hold goods; (j) unserviceable or obsolete Inventory; (k) slow
moving Inventory of parts or raw materials or any product or category of
finished goods which has not been the subject of a sale in the ordinary
course of business of Borrower within a reasonable period of time as
determined in good faith by Lender; (l) Inventory which is not subject to
the first priority, valid and perfected security interest of Lender; (m)
returned inventory (unless such inventory is first quality, unused and
suitable for resale in the ordinary course of Borrower's business), damaged
and/or defective Inventory; (n) Inventory purchased or sold on consignment;
and (o) Inventory which Lender determines, in good faith, for any other
reason, is not acceptable for lending purposes. General criteria for
Eligible Inventory may be established and revised from time to time by
Lender in good faith. Any Inventory which is not Eligible Inventory shall
nevertheless be part of the Collateral.
1.19 "Equipment" shall mean all of Borrower's now owned and hereafter
acquired equipment and fixtures used in the conduct of Borrower's business,
including, without limitation, all manufacturing, assembly, distribution,
data processing and office equipment and all machinery, furniture,
furnishings, appliances and trade fixtures.
1.20 "ERISA" shall mean the United States Employee Retirement Income
Security Act of 1974, as the same now exists or may hereafter from time to
time be amended, modified, recodified or supplemented, together with all
rules, regulations and interpretations thereunder or related thereto.
1.21 "ERISA Affiliate" shall mean any person required to be aggregated
with a Borrower or any of its Subsidiaries under Sections 414(b), 414(c),
414(m) or 414(o) of the Code.
1.22 "Eurodollar Rate Loans" shall mean any Revolving Loans or portion
thereof on which interest is payable based on the Adjusted Eurodollar Rate
in accordance with the terms hereof.
1.23 "Eurodollar Rate" shall mean with respect to the Interest Period
for a Eurodollar Rate Loan, the interest rate per annum equal to the
arithmetic average of the rates of interest per annum (rounded upwards, if
necessary, to the next one-sixteenth (1/16) of one (1%) percent) at which
Reference Bank is offered deposits of United States dollars in the London
interbank market (or other Eurodollar Rate market selected by Borrower and
approved by Lender) on or about 11:00 a.m. (New York City time)
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<PAGE> 14
two (2) Business Days prior to the commencement of such Interest Period in
amounts substantially equal to the principal amount of the Eurodollar Rate
Loans requested by Borrower and available to Borrower in accordance with
this Agreement, with a maturity of comparable duration to the Interest
Period selected by Borrower.
1.24 "Event of Default" shall have the meaning set forth in Section
10.1 hereof.
1.25 "Excess Availability" shall mean the amount, as determined by
Lender, calculated at any time, equal to:
(a) the lesser of (i) the amount of the Revolving Loans
available to Borrower as of such time based on the
applicable lending formulas multiplied by the Net Amount of
Eligible Accounts and the Value of Eligible Inventory as
determined by Lender, and subject to the Inventory Loan
Limit, any other sublimits and Availability Reserves from
time to time established by Lender hereunder and (ii) the
Maximum Credit, plus
(b) the value at such time of all of Borrower's cash and cash
equivalents of the kind described in Section 9.10(b) hereof,
less outstanding checks and other outstanding payment
instruments or payment orders thereagainst, and less the
amount of any cash and cash equivalents that are subject to
any restriction on use or any lien or security interest,
minus
(c) the sum of: (i) the amount of all then outstanding and
unpaid Obligations, plus (ii) the aggregate amount of all
then outstanding and unpaid trade payables of Borrower,
which are past due at such time for a period in excess of
ninety (90) days past the original due date for such trade
payables, unless such past due trade payables are subject to
a written agreement extending the original due date for a
longer period, provided the Borrower is not then in default
under such agreement;
Provided, however, that the amount of Excess Availability otherwise
determined as provided in this Section shall be reduced by the aggregate
amount of Net Asset Sale Proceeds from time to time realized, less an
amount equal to the aggregate amount of funds used by Borrower or its
Subsidiaries at any time after a transaction giving rise to Net Asset Sale
Proceeds either (A) to make investments as described in clauses (a) of
Section 4.10 of the Note Indenture (as in effect on the date hereof), to
the extent such use of funds relieves Borrower from the obligation to
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make an Excess Proceeds Offer (as defined in the Note Indenture as in
effect on the date hereof) in respect of such Net Asset Sale Proceeds, or
(B) to purchase Senior Notes pursuant to a Net Proceeds Purchase.
1.26 "Exchange Act" shall mean the Securities Exchange Act of 1934,
as the same now exists or may, from time to time hereafter be amended,
modified, remodified or supplemented, together with all rules, regulations
and interpretations thereunder or related thereto.
1.27 "Existing Holders" shall mean (i) CVC, (ii) Citicorp N.A. or any
other Affiliate of CVC, (iii) any officer, employee or director of CVC,
(iv) the Management Investors (as such term is defined in the Note
Indenture as presently in effect) and (v) in the case of any natural Person
specified in the foregoing clauses, any spouse or lineal descendant
(including by adoption) of such Person; provided, that in no event shall
the Persons specified in clauses (iii) through (v) be deemed "Existing
Holders" with respect to more than thirty (30%) percent of the voting power
of the total outstanding Voting Stock of the Borrower or Holdings.
1.28 "Existing Working Capital Lenders" shall mean Congress Financial
Corporation ("Congress") and Foothill Capital Corporation ("Foothill"), as
lenders, and Foothill as agent for itself and Congress, pursuant to the
Loan and Security Agreement dated May 9, 1995 among such lenders and agent
and Terex and certain of its Subsidiaries, including Old Clark, as
borrowers.
1.29 "Financing Agreements" shall mean, collectively, this Agreement
and all notes, guarantees, security agreements and other agreements,
documents and instruments now or at any time hereafter executed and/or
delivered by Borrower or any Obligor in connection with this Agreement, as
the same now exist or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced.
1.30 "Floor Plan Accounts" shall mean all Accounts which are either
(i) owed to Borrower by a franchised dealer or other purchaser or lessor
who has incurred or is otherwise liable for any Indebtedness covered by a
Floor Plan Guaranty, or (ii) are payable directly to Borrower by a floor
plan lender or other person who finances the purchase of the inventory
giving rise to such Account.
1.31 "Floor Plan Guaranty" shall mean the guarantee by Borrower of, or
other arrangement under which Borrower may be liable, in whole or in part,
for Indebtedness incurred by a franchised dealer, or other purchaser or
lessor, for the purchase or lease of inventory manufactured or sold by
Borrower, the proceeds of which Indebtedness is used solely to pay the
purchase
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price of inventory sold by Borrower to such franchised dealer and any
related fees and expenses (including finance fees); provided, that (i) to
the extent commercially practicable, the Indebtedness so guaranteed is
secured by a perfected first priority lien on such inventory and the
proceeds thereof in favor of the holder of such Indebtedness and (ii) if
Borrower is required to make payment with respect to such guarantee,
Borrower will have the right to receive either (a) title to such inventory,
(b) a valid assignment of a first priority perfected lien in such inventory
and the proceeds thereof or (c) the net proceeds of any resale of such
inventory.
1.32 "Foreign Subsidiaries" shall mean, individually and
collectively, Clark Canada, Clark Germany, Clark Brazil and Clark Korea,
and their Subsidiaries.
1.33 "GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect on the date hereof as set forth in
the opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and the statements and
pronouncements of the Financial Accounting Standards Boards which are
applicable to the circumstances under determination consistently applied.
1.34 "Hedging Obligations" shall mean, with respect to any person, the
obligations of such person under any of the following agreements or
arrangements to the extent that the primary purpose thereof is reduction of
risk to Borrower of interest rate fluctuations relating to its customary
business and not interest rate speculation: (i) interest rate swap
agreements, interest rate cap agreements and interest rate collar
agreements and (ii) other agreements or arrangements designed to protect
such person against fluctuations in interest rates.
1.35 "Holdings" shall mean CMH Holdings Corporation, a Delaware
corporation.
1.36 "Indebtedness" of any person shall mean (without duplication) (i)
all indebtedness of such person for borrowed money, (ii) all obligations of
such Person evidenced by bonds, debentures, notes or other similar
instruments, (iii) all obligations of such person to pay the deferred
purchase price of property or services (other than trade payables on
customary terms incurred in the ordinary course of business), (iv) all
indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such person (even
though the rights and remedies of the seller or lender under such agreement
in the event of default are limited to repossession or sale of such
property), (v) all obligations of such Person as lessee under capitalized
leases, (vi) all obligations, contingent or otherwise, of such Person
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under bankers' acceptance and letter of credit facilities, (vii) all
obligations of such Person in respect of Hedging Obligations or under the
Tax Sharing Agreement, (viii) all Indebtedness of others guaranteed by such
person, including Floor Plan Guaranties, and (ix) all Indebtedness of the
type referred to in clauses (i) through (viii) above secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any lien on property (including, without
limitation, accounts and contract rights) owned by such Person, even though
such person has not assumed or become liable for the payment of such
Indebtedness, provided however, that the amount of such Indebtedness shall
(to the extent such person has not assumed or become liable for the payment
of such Indebtedness) be the lesser of (x) the fair market value of such
property at the time of determination and (y) the amount of such
Indebtedness. The amount of Indebtedness of any Person at any date shall
be the outstanding balance at such date of all unconditional obligations as
described above and the maximum liability, upon the occurrence of the
contingency giving rise to the obligation, of any contingent obligations at
such date; provided, further, that in the case of each of clauses (i), (ii)
and (iii) above, the amount of such Indebtedness will be the amount that
would appear as a liability on the balance sheet of such Person prepared in
accordance with GAAP.
1.37 "Information Certificate" shall mean, the Information Certificate
of Borrower containing material information with respect to Borrower, its
business and assets, as such Information Certificate has been provided by
or on behalf of Borrower to Lender in connection with the preparation of
this Agreement and the other Financing Agreements and the financing
arrangements provided for herein.
1.38 "Intellectual Property" shall mean all of Borrower's now owned
and hereafter acquired (a) common law and statutory trademarks, service
marks, trade names, trademark and service mark registrations, applications
for trademark or service mark registrations, corporate names, company
names, business names, fictitious business names, trade styles, logos,
other source or business identifiers, copyrights, designs and all
registrations and recordings thereof, including, without limitation,
registrations, recordings and applications in the United States Patent and
Trademark Office, United States Register of Copyrights, or in any similar
office or agency of the United States, any state thereof, or any county or
any political subdivision thereof, together with all goodwill associated
therewith, (b) United States and foreign patents and patent applications,
(c) utility models, industrial models, designs, know-how, blue prints,
drawings and all other forms of industrial intellectual property, (d) all
grants issued by or applications pending in the United States Patent and
Trademark Office or in any other country or political subdivision thereof,
(e) all
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extensions, reissues, continuations, continuations-in-part, and divisions
thereof, and (f) all proceeds of the foregoing (including, without
limitation, license royalties and proceeds of infringement suits).
1.39 "Interest Period" shall mean for any Eurodollar Rate Loan, a
period of approximately one (1), two (2), or three (3) months duration as
Borrower may elect, the exact duration to be determined in accordance with
the customary practice in the applicable Eurodollar Rate market; provided,
that, Borrower may not elect an Interest Period which will end after the
last day of the then current term of this Agreement.
1.40 "Interest Rate" shall mean, as to Prime Rate Loans, a rate of
one-half of one (.5%) percent per annum in excess of the Prime Rate and, as
to Eurodollar Rate Loans, a rate of two and one-half (2.5%) percent per
annum in excess of the Adjusted Eurodollar Rate (based on the Eurodollar
Rate applicable for the Interest Period selected by Borrower as in effect
three (3) Business Days after the date of receipt by Lender of the request
of Borrower for such Eurodollar Rate Loans in accordance with the terms
hereof, whether such rate is higher or lower than any rate previously
quoted to Borrower); provided, that, the Interest Rate shall mean the rate
of two and one-half (2.5%) percent per annum in excess of the Prime Rate as
to Prime Rate Loans and the rate of four and one-half (4.5%) percent per
annum in excess of the Adjusted Eurodollar Rate as to Eurodollar Rate
Loans, at the option of Lender, without notice (a) for the period on and
after the date of termination or non-renewal hereof, or the date of the
occurrence of any Event of Default, and for so long as such Event of
Default is continuing and until such time as all Obligations are paid in
full (notwithstanding entry of any judgment against Borrower) and (b) on
the Revolving Loans at any time outstanding in excess of the amounts
available to Borrower under Section 2 (whether or not such excess(es),
arise or are made with or without knowledge or consent of Lender and
whether made before or after an Event of Default).
1.41 "Inventory" shall mean all of Borrower's now owned and hereafter
acquired goods (including, without limitation, goods in the possession of
Borrower or Terex or any other bailee or other person for sale, storage,
transit, processing, use or otherwise supplies, finished goods, parts, raw
materials, work-in-process and components) which are: (a) held for sale or
lease, (b) furnished or to be furnished under contracts for services, or
(c) raw materials, work-in-process or materials used or consumed in its
business.
1.42 "Inventory Loan Limit" shall mean, the amount of $27,500,000.
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1.43 "Investments" shall mean, with respect to any person, all
investments by such person in other persons (including affiliates) in the
forms of loans, guarantees, advances or capital contributions, purchases or
other acquisitions for consideration of Indebtedness, equity interests,
common stock appreciation rights, or other securities, the acquisition of
all or a substantial part of the assets or business of a person, and any
other items that are or would be classified as investments on a balance
sheet prepared in accordance with GAAP (excluding (i) relocation loans,
commission, travel and similar advances to officers and employees of such
person made in the ordinary course of business and (ii) bona fide accounts
receivable arising from the sale of goods or services in the ordinary
course of business on customary terms consistent with past practice,
including the past practice of Old Clark).
1.44 "Letter of Credit Accommodations" shall mean the letters of
credit, merchandise purchase or other guaranties which are from time to
time either (a) issued or opened by Lender for the account of Borrower or
any Obligor or (b) with respect to which Lender has agreed to indemnify the
issuer or other person obligated to the issuer or guaranteed to the issuer
the performance by Borrower of its obligations to such issuer.
1.45 "Loans" shall mean the Revolving Loans.
1.46 "Maximum Credit" shall mean the amount of $30,000,000.
1.47 "Net Amount of Eligible Accounts" shall mean the gross amount of
Eligible Accounts less (a) sales, excise or similar taxes included in the
amount thereof and (b) returns, discounts, claims, credits and allowances
of any nature at any time issued, owing, granted, outstanding, available or
claimed with respect thereto.
1.48 "Net Asset Sale Proceeds" shall have the meaning ascribed to the
term "Net Proceeds" in the Note Indenture, as in effect on the date hereof.
1.49 "Net Proceeds Purchase" shall mean a purchase by Borrower of the
Senior Notes pursuant to a mandatory offer by Borrower in respect of excess
Net Asset Sale Proceeds, as and to the extent required pursuant to Section
4.10 of the Note Indenture as in effect on the date hereof.
1.50 "Note Indenture" shall mean the Indenture, dated of even date
herewith, by and between Borrower, as issuer, and the Note Trustee, in
connection with and governing the rights of the holders of the Senior
Notes, as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
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1.51 "Note Trustee" shall mean United States Trust Company of New
York, a New York corporation, acting in its capacity as trustee on behalf
of the holders of the Senior Notes pursuant to the Note Indenture and the
agreements delivered in connection therewith, and its successors and
assigns (and including, without limitation, any successor, replacement,
assignee or additional person at any time acting as trustee for the benefit
of the holders of the Senior Notes).
1.52 "Obligations" shall mean any and all Revolving Loans, Letter of
Credit Accommodations and all other obligations, liabilities and
indebtedness of every kind, nature and description owing by Borrower to
Lender arising under or in connection with this Agreement, including
principal, interest, charges, fees, costs and expenses, however evidenced,
whether as principal, surety, endorser, guarantor or otherwise, arising
under or in connection with this Agreement, whether now existing or
hereafter arising, whether arising before, during or after the initial or
any renewal term of this Agreement or after the commencement of any case
with respect to Borrower under the United States Bankruptcy Code or any
similar statute (including, without limitation, the payment of interest and
other amounts which would accrue and become due but for the commencement of
such case), whether direct or indirect, absolute or contingent, joint or
several, due or not due, primary or secondary, liquidated or unliquidated,
secured or unsecured.
1.53 "Obligor" shall mean any guarantor, endorser, acceptor, surety or
other person liable on or with respect to the Obligations or who is the
owner of any property which is security for the Obligations, other than
Borrower.
1.54 "Old Clark" shall mean Terex Material Handling Corporation, a
Kentucky corporation, formerly known as Clark Material Handling Company.
1.55 "Participant" shall mean any person which at any time
participates with Lender in respect of the Revolving Loans, the Letter of
Credit Accommodations or other Obligations or any portion thereof.
1.56 "Payment Account" shall have the meaning set forth in Section 6.3
hereof.
1.57 "Person" or "person" shall mean any individual, sole
proprietorship, partnership, limited liability company, a limited liability
partnership, corporation (including, without limitation, any corporation
which elects subchapter S status under the Code), business trust,
unincorporated association, joint stock corporation, trust, joint venture
or other entity or any government or any agency or instrumentality or
political subdivision thereof.
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1.58 "Prime Rate" shall mean the rate from time to time publicly
announced by CoreStates Bank, N.A., or its successors, at its office in
Philadelphia, Pennsylvania, as its prime rate, whether or not such
announced rate is the best rate available at such bank.
1.59 "Prime Rate Loans" shall mean any Revolving Loans or portion
thereof on which interest is payable based on the Prime Rate in accordance
with the terms thereof.
1.60 "Purchase Agreements" shall mean, individually and collectively,
the Stock and Asset Purchase and Sale Agreement, dated November 9, 1996,
between Sellers and Borrower, as amended through the date hereof, the
Service Agreement, and all other agreements as are referred to therein and
all side letters with respect thereto and all agreements, documents and
instruments executed and/or delivered in connection therewith as all of the
foregoing now exist or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced.
1.61 "Purchased Assets" shall mean all of the assets, warranties and
rights acquired by Borrower from Sellers pursuant to the Purchase
Agreements, including, without limitation, the Purchased Stock.
1.62 "Purchased Stock" shall mean, collectively, all of the issued and
outstanding shares of Clark Germany, Clark Korea, Clark Brazil, Clark
Canada and Clarklift of Washington/Alaska, Inc., sold by Sellers and
purchased by Borrower pursuant to the Purchase Agreements.
1.63 "Receivables" shall mean all of Borrower's now owned and
hereafter acquired (a) Accounts, (b) general intangibles for money due or
to become due (including, without limitation, intercompany obligations)
which arise from or relate to the sale, lease or other disposition of
Inventory or rendition of services, (c) chattel paper and instruments
evidencing indebtedness which arise from or relate to the sale, lease or
other disposition of Inventory or rendition of services, (d) Indebtedness
of Sellers to Borrower pursuant to the Purchase Agreements which arises
from or relates to accounts, inventory and other Collateral included in the
Purchased Assets, (e) interest, late charges, collection fees and other
sums owed in connection with the foregoing, and (f) interests in Inventory
(including, without limitation, returned, repossessed and reclaimed goods)
which gave rise to any of the foregoing.
1.64 "Records" shall mean all of Borrower's present and future books
of account, purchase and sale agreements, invoices, ledger cards, bills of
lading and other shipping evidence, statements, correspondence, memoranda,
credit files and other data relating to the Collateral or any account
debtor, together
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with the tapes, disks, diskettes and other data and software storage media
and devices, file cabinets or containers in or on which the foregoing are
stored (including any rights of Borrower with respect to the foregoing
maintained with or by Terex or any other person).
1.65 "Reference Bank" shall mean CoreStates Bank, N.A., or such other
bank as Lender may from time to time designate.
1.66 "Revolving Loans" shall mean the loans now or hereafter made by
Lender to or for the benefit of Borrower on a revolving basis (involving
advances, repayments and readvances) as set forth in Section 2.1 hereof.
1.67 "Sellers" shall mean, individually and collectively, Terex, Old
Clark, CMH Acquisition Corp., a Delaware corporation, CMH Acquisition
International Corp., a Delaware corporation, and Clark Material Handling
International, Inc., a Michigan corporation.
1.68 "Senior Notes" shall mean, individually and collectively, the
unsecured 10 3/4% Senior Notes due 2006 in the original principal amount of
$130,000,000 issued by Borrower pursuant to the Note Indenture, as the same
now exist or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.
1.69 "Service Agreement" shall mean the Service Agreement between
Terex and Borrower, dated as of the date hereof, as the same now exists or
may hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced.
1.70 "Subsidiary" or "subsidiary" shall mean, with respect to any
Person, (i) any corporation, association or other business entity of which
more than fifty (50%) percent of the total voting power of shares of Voting
Stock thereof is at the time owned or controlled, directly or indirectly,
by such Person or one or more of the other Subsidiaries of that Person or a
combination thereof and (ii) any partnership in which such Person or any of
its Subsidiaries is a general partner.
1.71 "Tax Sharing Agreement" shall mean that certain Tax Sharing
Agreement, dated as of the date hereof, between Holdings and Borrower, as
the same now exists or may hereafter be amended, supplemented, extended,
renewed, restated or replaced.
1.72 "Terex" shall mean Terex Corporation, a Delaware corporation, and
its successors and assigns.
1.73 "Uniform Commercial Code" or "UCC" shall mean the Uniform
Commercial Code of the State of New York.
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1.74 "Value" shall mean, as determined by Lender in good faith, with
respect to Inventory, the lower of (a) cost computed on a
first-in-first-out basis in accordance with GAAP or (b) market value.
1.75 "Voting Stock" shall mean with respect to any Person, (i) one or
more classes of capital stock of such Person having general voting powers
to elect at least a majority of the board of directors, managers or
trustees of such Person (irrespective of whether or not at the time capital
stock of any other class or classes have or might have voting power by
reason of the happening of any contingency) and (ii) any capital stock of
such Person convertible or exchangeable without restriction at the option
of the holder thereof into capital stock of such Person described in clause
(i) above.
SECTION 2. CREDIT FACILITIES
2.1 Revolving Loans.
(a) Subject to, and upon the terms and conditions contained
herein, Lender agrees to make Revolving Loans to Borrower from time to time
in amounts requested by Borrower, up to the amount equal to the sum of:
(i) seventy (70%) percent of the Net Amount of Eligible
Accounts, plus
(ii) the lesser of (A) forty (40%) percent of the Value of
Eligible Inventory, or (B) the Inventory Loan Limit, less
(iii) any Availability Reserves established in accordance
with this Agreement.
(b) Lender may, in its discretion, from time to time, upon not
less than five (5) days' prior notice to Borrower, (i) reduce the lending
formula with respect to Eligible Accounts to the extent that Lender
determines in good faith that: (A) the dilution with respect to the
Accounts of Borrower for any period (based on the ratio of (1) the
aggregate amount of reductions in Accounts of Borrower other than as a
result of payments in cash to (2) the aggregate amount of total sales of
Borrower) has increased in any material respect or may be reasonably
anticipated to increase in any material respect above historical levels, or
(B) the general creditworthiness of account debtors of Borrower has
declined or (ii) reduce the lending formula with respect to Eligible
Inventory to the extent that Lender determines in good faith that: (A) the
number of days of the turnover of the Inventory of Borrower for any period
has changed in any material adverse respect or (B) the liquidation value of
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the Eligible Inventory of Borrower, or any category thereof, has decreased,
or (C) the nature and quality of the Inventory of such Borrower has
deteriorated in any material respect or the mix of such Inventory has
changed materially and adversely. In determining whether to reduce the
lending formula(s), Lender may consider events, conditions, contingencies
or risks which are also considered in determining Eligible Accounts,
Eligible Inventory or in establishing Availability Reserves.
(c) Except in the discretion of Lender, the aggregate amount of
the Revolving Loans and the Letter of Credit Accommodations outstanding at
any time shall not exceed the Maximum Credit and the aggregate Revolving
Loans outstanding at any time based on the aggregate Value of Eligible
Inventory shall not exceed the Inventory Loan Limit at such time. Subject
to the terms and conditions of this Agreement, Borrower may borrow, shall
repay, and may reborrow such amounts (if any) as are determined in good
faith by Lender to be available to Borrower as Revolving Loans and Letter
of Credit Accommodations. In the event that the outstanding amount of any
component of the Revolving Loans, or the aggregate amount of the
outstanding Revolving Loans and Letter of Credit Accommodations, exceed the
amounts available under the lending formulas, the Inventory Loan Limit, the
sublimits for Letter of Credit Accommodations set forth in Section 2.2(d)
or the Maximum Credit, as applicable, such event shall not limit, waive or
otherwise affect any rights of Lender in that circumstance or on any future
occasions and Borrower shall, upon demand by Lender, which may be made at
any time or from time to time, immediately repay to Lender the entire
amount of any such excess(es) for which payment is demanded.
(d) For purposes of applying the sublimit set forth in Section
2.1(a)(ii)(B) hereof, Lender may treat the amount of its reliance on
Eligible Inventory to be purchased under outstanding Letter of Credit
Accommodations as a Revolving Loan based on Eligible Inventory pursuant to
Section 2(a)(ii). In determining the amount of such reliance, the
outstanding Revolving Loans and Availability Reserves shall first be
attributed to any components of the lending formulas in Section 2.1(a) that
are not subject to such sublimit, before being attributed to components of
the lending formulas subject to such sublimit.
2.2 Letter of Credit Accommodations.
(a) Subject to, and upon the terms and conditions contained
herein, at the request of Borrower, Lender agrees to provide or arrange for
Letter of Credit Accommodations for the account of Borrower containing
terms and conditions acceptable to Lender and the issuer thereof. Any
payments made by Lender to any issuer thereof and/or related parties in
connection with the Letter of Credit Accommodations shall constitute
additional Revolving Loans to Borrower pursuant to this Section 2.
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(b) In addition to any charges, fees or expenses charged by any
bank or issuer in connection with the Letter of Credit Accommodations,
shall pay to Lender a letter of credit fee at a rate equal to one and
one-half (1.5%) percent per annum on the daily outstanding balance of the
Letter of Credit Accommodations for each month (or part thereof), payable
in arrears as of the first day of each month for the immediately preceding
month, except that Borrower shall pay to Lender such letter of credit fee,
without notice, at Lender's option, at a rate equal to three and one-half
(3.5%) percent per annum on such daily outstanding balance for (i) the
period from and after the date of termination or non-renewal hereof until
Lender has received full and final payment of all Obligations
(notwithstanding entry of a judgment against Borrower) and (ii) the period
from and after the date of the occurrence of an Event of Default for so
long as such Event of Default is continuing as determined by Lender. Such
letter of credit fee shall be calculated on the basis of a three hundred
sixty (360) day year and actual days elapsed and the Obligation of Borrower
to pay such fee shall survive the termination or non-renewal of this
Agreement.
(c) No Letter of Credit Accommodations shall be available unless
on the date of the proposed issuance of any Letter of Credit
Accommodations, the Revolving Loans available to Borrower (subject, without
limitation, to the Maximum Credit, the Inventory Loan Limit and any
Availability Reserves) are equal to or greater than: (i) if the proposed
Letter of Credit Accommodation is for the purpose of purchasing Eligible
Inventory, the sum of (A) sixty (60%) percent of the Value of such Eligible
Inventory, plus (B) freight, taxes, duty and other amounts which Lender
estimates must be paid in connection with such Inventory upon arrival and
for delivery to one of Borrower's locations for Eligible Inventory within
the United States and (ii) if the proposed Letter of Credit Accommodation
is for any other purpose, an amount equal to one hundred (100%) percent of
the face amount thereof and all other commitments and obligations made or
incurred by Lender with respect thereto. Effective on the issuance of each
Letter of Credit Accommodation, the amount of Revolving Loans which might
otherwise be available to Borrower shall be reduced by the applicable
amount set forth in Section 2.2(c)(i) or Section 2.2(c)(ii).
(d) Except in the discretion of Lender, the aggregate amount of
all outstanding Letter of Credit Accommodations and all other commitments
and obligations made or incurred by Lender in connection therewith, shall
not at any time exceed $7,500,000. At any time an Event of Default exists
or has occurred and is continuing, upon request by Lender, Borrower will
either furnish cash collateral to secure the reimbursement obligations to
the issuer in connection with any Letter of Credit Accommodations or
furnish cash collateral to Lender for the Letter of Credit
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Accommodations, and in either case, the Revolving Loans otherwise available
to Borrower shall not be reduced as provided in Section 2.2(c) to the
extent of such cash collateral.
(e) Borrower shall indemnify and hold Lender harmless from and
against any and all losses, claims, damages, liabilities, costs and
expenses which Lender may suffer or incur in connection with any Letter of
Credit Accommodations and any documents, drafts or acceptances relating
thereto, including, but not limited to, any losses, claims, damages,
liabilities, costs and expenses due to any action taken by any issuer or
correspondent with respect to any Letter of Credit Accommodation; provided,
however, that Borrower shall have no obligation to indemnify Lender for any
such losses, claims, damages, liabilities, costs and expenses to the extent
directly caused by the willful misconduct or gross negligence of Lender
otherwise entitled to be indemnified and held harmless, as determined by a
final, non-appealable judgment of a court of competent jurisdiction.
Borrower assumes all risks with respect to the acts or omissions of the
drawer under or beneficiary of any Letter of Credit Accommodation and for
such purposes the drawer or beneficiary shall be deemed the agent for the
Borrower. Borrower assumes all risks for, and agree to pay, all foreign,
Federal, State and local taxes, duties and levies relating to any goods
subject to any Letter of Credit Accommodations or any documents, drafts or
acceptances thereunder. Borrower hereby releases and holds Lender harmless
from and against any acts, waivers, errors, delays or omissions, whether
caused by Lender, by any issuer or correspondent or otherwise with respect
to or relating to any Letter of Credit Accommodation, except any of the
foregoing directly caused by the willful misconduct or gross negligence of
Lender otherwise to be released and held harmless, as determined by a
final, non-appealable judgment of a court of competent jurisdiction. The
provisions of this Section 2.2(e) shall survive the payment of Obligations
and the termination or non-renewal of this Agreement.
(f) Nothing contained herein shall be deemed or construed to
grant Borrower any right or authority to pledge the credit of Lender in any
manner. Lender shall have no liability of any kind with respect to any
Letter of Credit Accommodation provided by an issuer other than Lender
unless Lender has, in accordance herewith, duly executed and delivered to
such issuer the application or a guarantee or indemnification in writing
with respect to such Letter of Credit Accommodation. Borrower shall be
bound by any interpretation made in good faith by Lender or by the issuer
or correspondent under or in connection with any Letter of Credit
Accommodation or any documents, drafts or acceptances thereunder,
notwithstanding that such interpretation may be inconsistent with any
instructions of Borrower. At any time an Event of Default exists or has
occurred and is continuing, Lender shall have the sole and exclusive right
and
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authority in good faith, to, and Borrower shall not (i) approve or resolve
any questions of non-compliance of documents, (ii) give any instructions as
to acceptance or rejection of any documents or goods, (iii) execute any and
all applications for steamship or airway guaranties, indemnities or
delivery orders. At any time an Event of Default exists or has occurred
and is continuing, Lender shall have the sole and exclusive right and
authority in good faith, to, and Borrower shall not at any time (x) grant
any extensions of the maturity of, time of payment for, or time of
presentation of, any drafts, acceptances, or documents, or (y) agree to any
amendments, renewals, extensions, modifications, changes or cancellations
of any of the terms or conditions of any of the applications, Letter of
Credit Accommodations, or documents, drafts or acceptances thereunder or
any letters of credit included in the Collateral. Lender may take such
actions either in its own name or in Borrower's name.
(g) Nothing herein contained in Section 2.2(f) or elsewhere in
this Agreement shall in any event operate to restrict the rights of any
issuer of a Letter of Credit Accommodation or correspondent thereof at any
time or to render Lender liable for any exercise of rights by an issuer or
correspondent thereof.
(h) Any rights, remedies, duties or obligations granted or
undertaken by Borrower to any issuer or correspondent in any application
for any Letter of Credit Accommodation, or any other agreement in favor of
any issuer or correspondent relating to any Letter of Credit Accommodation,
shall be deemed to have been granted or undertaken by Borrower to Lender.
Any duties or obligations undertaken by Lender to any issuer or
correspondent in any application for any Letter of Credit Accommodation, or
any other agreement by Lender in favor of any issuer or correspondent
relating to any Letter of Credit Accommodation, shall be deemed to have
correspondingly been undertaken in favor of Lender by Borrower.
2.3 Availability Reserves.
(a) All Revolving Loans otherwise available to Borrower pursuant
to the lending formulas and subject to the Maximum Credit, the Inventory
Loan Limit and other applicable limits hereunder shall be subject to the
continuing right of Lender to establish and revise Availability Reserves in
accordance with this Agreement.
(b) Without limiting Lender's other rights hereunder to
establish Availability Reserves, if at any time Borrower's Excess
Availability shall fall below $5,000,000, Lender shall have the right to
establish and to maintain at all times thereafter, Availability Reserves in
an amount deemed necessary by Lender in good faith to cover future fees,
costs and expenses
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payable by Borrower to Terex under the Service Agreement and/or such sums
that would be payable by Lender to Terex following an Event of Default or
any commencement of a liquidation of Borrower's Loan account, for
performance of services relating to the Collateral in Terex's possession or
under its control. All sums paid by Lender to Terex in respect of such
services and other costs and expenses payable by Lender in connection with
access to and realization upon Collateral in Terex's possession or under
its control shall be deemed advanced for Borrower's account and shall be
part of the Obligations. For purposes of this Section 2.3(b), Excess
Availability shall be determined without adding any amount (if any) that
would otherwise be added under clause (b) of the definition of Excess
Availability, and without taking into account the reduction (if any)
otherwise to be made pursuant to the proviso contained in such definition.
SECTION 3. INTEREST AND FEES
3.1 Interest.
(a) Borrower shall pay to Lender, interest on the outstanding
principal amount of the non-contingent Obligations at the Interest Rate.
All interest accruing hereunder on and after the date of, and during the
continuance of, any Event of Default, or after termination or non-renewal
hereof, shall be payable on demand.
(b) Borrower may from time to time request that Eurodollar Rate
Loans be made or that Prime Rate Loans be converted to Eurodollar Rate
Loans or that any existing Eurodollar Rate Loans continue for an additional
Interest Period. Such request from Borrower shall specify the amount of
the Eurodollar Rate Loans requested or the amount of Prime Rate Loans to be
converted to Eurodollar Rate Loans (subject to the limits set forth below)
and the Interest Period to be applicable to such Eurodollar Rate Loans.
Subject to the terms and conditions contained herein, including, without
limitation, Lender's determination of Revolving Loan availability under
Section 2 hereof, three (3) Business Days after receipt by Lender of such a
request from Borrower, such Eurodollar Rate Loans (if available) shall be
made, such Prime Rate Loans shall be converted to Eurodollar Rate Loans or
such Eurodollar Rate Loans shall continue, as the case may be, provided,
that, (i) no Event of Default, or event which with notice or passage of
time or both would constitute an Event of Default, exists or has occurred
and is continuing, (ii) no party hereto shall have sent, pursuant to the
terms hereof, any notice of termination or non-renewal of this Agreement,
(iii) Borrower shall have complied with such customary procedures as are
established by Lender and specified by Lender to Borrower from time to time
for requests by Borrower for Eurodollar Rate Loans, (iv) no more than five
(5) Interest
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Periods may be in effect at any one time, (v) the aggregate amount of the
Eurodollar Rate Loans must be in an amount not less than $3,000,000 and
must be an integral multiple of $500,000, (vi) the maximum amount of the
Eurodollar Rate Loans at any time requested by Borrower shall not exceed
the amount equal to eighty-five (85%) percent of the lowest principal
amount of the Revolving Loans which it is anticipated will be outstanding
during the applicable Interest Period, as determined in good faith by
Lender (but with no obligation of Lender to make such Revolving Loans) and
(vii) Lender shall have determined that the Interest Period or Adjusted
Eurodollar Rate is available to Lender through the Reference Bank and can
be readily determined as of the date of the request for such Eurodollar
Rate Loan by Borrower. Any request by Borrower for a Eurodollar Rate Loan
to be made or to convert Prime Rate Loans to Eurodollar Rate Loans or to
continue any existing Eurodollar Rate Loans shall be irrevocable.
Notwithstanding anything to the contrary contained herein, Lender and
Reference Bank shall not be required to purchase United States dollar
deposits in the London interbank market or other applicable Eurodollar Rate
market to fund any Eurodollar Rate Loans, but the provisions hereof shall
be deemed to apply as if Lender Reference Bank had purchased such deposits
to fund the Eurodollar Rate Loans.
(c) Any Eurodollar Rate Loans shall automatically convert to
Prime Rate Loans upon the last day of the applicable Interest Period,
unless Lender has received and approved a request to continue such
Eurodollar Rate Loans at least three (3) Business Days prior to such last
day in accordance with the terms hereof. Any Eurodollar Rate Loans shall,
at the option of Lender, upon notice by Lender to Borrower, convert to
Prime Rate Loans in the event that (i) an Event of Default or event which
with the notice or passage of time or both would constitute an Event of
Default, shall exist or shall have occurred and be continuing, or (ii) this
Agreement shall terminate or not be renewed.
(d) If the sum of the initial principal amounts of Revolving
Loans initially made as Eurodollar Rate Loans or of Prime Rate Loans which
have previously been converted to Eurodollar Rate Loans or existing
Eurodollar Rate Loans continued, as the case may be, shall at any time
exceed either (x) the aggregate principal amount of the Revolving Loans
then outstanding, or (y) the amount of the Revolving Loans then available
to Borrower under Section 2 hereof, then, at Lender's option, there shall
be converted to Prime Rate Loans such amount of Eurodollar Rate Loans
outstanding under then-effective Interest Periods, as shall be sufficient
to reduce the principal balance of the remaining Eurodollar Rate Loans to
not more than eighty-five (85%) percent of the amount of Revolving Loans
which it is anticipated (1) will be outstanding at all times during the
remaining Interest Periods and (2) will be outstanding at all
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times during such remaining Interest Periods within the amounts available
to Borrower under Section 2 hereof, in each case as determined by Lender in
good faith. The actual amount of Eurodollar Rate Loans converted to Prime
Rate Loans under this Section 3.1(d) shall be the smallest amount equal to
or exceeding the required reduction resulting from the conversion of the
full initial amounts of Eurodollar Rate Loans for one or more Interest
Periods in effect at the time of conversion.
(e) Borrower shall pay to Lender, upon demand by Lender (or
Lender may, at its option, charge to any loan account of Borrower), any
amounts required to compensate Lender, the Reference Bank or any
Participant for any out-of-pocket loss, cost or expense incurred by such
person, as a result of the conversion of Eurodollar Rate Loans to Prime
Rate Loans pursuant to any of the foregoing.
(f) Interest shall be payable by Borrower to Lender, monthly in
arrears, not later than the first day of each calendar month and shall be
calculated on the basis of a three hundred sixty (360) day year and actual
days elapsed. The Interest Rate on non-contingent Obligations (other than
Eurodollar Rate Loans) shall increase or decrease by an amount equal to
each increase or decrease in the Prime Rate, effective on the first day of
the month after any change in such Prime Rate is announced, based on the
Prime Rate in effect on the last day of the month in which any such change
occurs. In no event shall charges constituting interest payable by
Borrower to Lender exceed the maximum amount or the rate permitted under
any applicable law or regulation, and if any such part or provision of this
Agreement is in contravention of any such law or regulation, such part or
provision shall be deemed amended to conform thereto.
3.2 Closing Fee. Borrower shall pay to Lender, as a closing fee the
amount of $225,000, which shall be fully earned and payable as of the date
hereof.
3.3 Servicing Fee. Borrower shall pay to Lender, monthly a servicing
fee in an amount equal to $5,000 in respect of Lender's services for each
month (or part thereof) while this Agreement remains in effect and for so
long thereafter as any of the Obligations are outstanding, which fee shall
be fully earned as of and payable in advance on the date hereof and on the
first day of each month hereafter.
3.4 Unused Line Fee. Borrower shall pay to Lender monthly an unused
line fee at a rate equal to one-quarter of one (.25%) percent per annum
calculated upon the amount by which the Maximum Credit exceeds the average
daily principal balance of the outstanding Revolving Loans and Letter of
Credit Accommodations during the immediately preceding month (or part
thereof) while this Agreement is in effect and for so long thereafter as
any of
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the Obligations are outstanding, which fee under this Section 3.4 shall be
payable on the first day of each month in arrears.
3.5 Changes in Laws and Increased Costs of Loans.
(a) Notwithstanding anything to the contrary contained herein,
all Eurodollar Rate Loans shall, upon notice by Lender to Borrower, convert
to Prime Rate Loans in the event that (i) any change in applicable law or
regulation (or the interpretation or administration thereof) shall either
(A) make it unlawful for any of Lender, Reference Bank or any Participant
to make or maintain Eurodollar Rate Loans or to comply with the terms
hereof in connection with the Eurodollar Rate Loans, by an amount deemed in
good faith by Lender to be material, or (B) shall result in the increase in
the costs to any of Lender, Reference Bank or any Participant of making or
maintaining any Eurodollar Rate Loans or (C) reduce the amounts received or
receivable by Lender or any Participant in respect thereof, by an amount
deemed by Lender to be material or (ii) the cost to any of Lender,
Reference Bank or any Participant, which is determined by Lender to be
attributable in good faith to making or maintaining any Eurodollar Rate
Loans, shall otherwise increase by an amount deemed by Lender to be
material. In the circumstances described in clauses (i)(B), (i)(C) or
(ii), in lieu of conversion to Prime Rate Loans, Borrower shall have the
option, for the balance of the Interest Period(s) for then outstanding
Eurodollar Rate Loans, of paying any and all increased costs and expenses
incurred in good faith by any of Lender, the Reference Bank or any
Participant, together with the aggregate amount received or receivable by
Lender and which has been reduced in respect of such Eurodollar Rate Loans.
In the event of any conversion of Eurodollar Rate Loans to Prime Rate
Loans, Borrower shall pay to Lender, upon demand by Lender (or Lender may,
at its option, charge any loan account of Borrower) any amounts determined
in good faith by Lender to be required to compensate any of Lender, the
Reference Bank or any Participant for any out-of-pocket loss, cost or
expense incurred in good faith by such person as a result of the foregoing,
including, without limitation, any such loss, cost or expense incurred in
good faith by reason of the liquidation or reemployment of deposits or
other funds acquired by such person to make or maintain the Eurodollar Rate
Loans or any portion thereof. A certificate of Lender setting forth the
basis for the determination of such amount necessary to compensate such
person as aforesaid shall be delivered to Borrower and shall be conclusive,
absent manifest error.
(b) If any payments or prepayments of principal in respect of
the Eurodollar Rate Loans are received by Lender other than on the last day
of the applicable Interest Period (whether pursuant to acceleration, upon
maturity or otherwise), including any payments pursuant to the application
of collections under Section 6.3 or any other payments made with the
proceeds of
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Collateral, Borrower shall pay to Lender for the benefit of Lender, upon
demand by Lender (or Lender may, at its option, charge to any loan account
of Borrower), any amounts determined in good faith by Lender to be required
to compensate Lender, the Reference Bank or any Participant for any
out-of-pocket loss, cost or expense incurred in good faith by such person
as a result of such prepayment or payment, including, without limitation,
any loss, cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such person to make or
maintain such Eurodollar Rate Loans or any portion thereof.
SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions Precedent to Initial Revolving Loans and Letter of
Credit Accommodations. Each of the following is a condition precedent to
Lender making the initial Revolving Loans and providing the initial Letter
of Credit Accommodations hereunder:
(a) Lender shall have received, in form and substance
satisfactory to Lender, all releases, terminations and such other documents
as Lender may request to evidence and effectuate the termination and
release by the Existing Working Capital Lenders and the trustee(s) and
collateral agent(s) for the holders of Terex's 13 1/4% Senior Secured Notes
due 2002 and other holders of security interests granted by Sellers (except
with respect to capital leases of Equipment assumed by Borrower) with
respect to the Purchased Assets, duly executed and delivered by each of the
Existing Working Capital Lenders, such trustee(s) and collateral agent(s)
and such other Persons, including, but not limited to UCC termination
statements or other lien discharges for all UCC financing statements and
other instruments evidencing or creating any lien or security interest
previously filed by it or any of them or their predecessors, as secured
party or lien holder, and Sellers or any Subsidiaries of Sellers that will
be, upon consummation of the Purchase Agreements, Subsidiaries of Borrower,
as debtor or grantor, relating to any of the Purchased Assets or the assets
of any of such Subsidiaries of Borrower;
(b) Lender shall have received, in form and substance
satisfactory to Lender, evidence that (i) Borrower has completed the
issuance of all of the Senior Notes pursuant to the terms of the Note
Indenture and the preliminary offering circular dated November 11, 1996
with respect thereto previously delivered to Lender (except for the
non-fulfillment of any terms thereof or waiver of any conditions precedent
contained therein that are disclosed to and consented to in writing by
Lender), and (ii) Borrower has received gross cash proceeds in an amount of
not less than $130,000,000 from the issuance of the Senior Notes;
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(c) Lender shall have received, in form and substance
satisfactory to Lender, evidence that Holdings has made an equity
contribution to Borrower of not less than $25,000,000 in cash in exchange
for all of the capital stock of Borrower and Borrower shall have received
such capital contribution;
(d) Lender shall have received, in form and substance
satisfactory to Lender, evidence that the Purchase Agreements have been
duly executed and delivered by and to the appropriate parties thereto and
the transactions contemplated under the terms of the Purchase Agreements
have been consummated pursuant to the terms of the Purchase Agreements
prior to the execution of this Agreement (except for the non-fulfillment of
any terms thereof or waiver of any conditions precedent contained therein
that are disclosed to and consented to in writing by Lender), including,
without limitation, (i) the payment of the entire Purchase Price (as such
term is defined in the Purchase Agreements) to Sellers from the application
in part of such proceeds from the issuance of the Senior Notes and such
cash equity contribution to Borrower received by Borrower, (ii) compliance
with all conditions precedent to the obligations of Sellers and Borrower to
consummate the sale and purchase of the Purchased Assets and (iii) delivery
of all documents required to be delivered by Sellers and Borrower at the
Closing (as such term is defined in the Purchase Agreements);
(e) Lender shall have received, in form and substance
satisfactory to Lender, a pro-forma consolidated balance sheet of Borrower
in the form included at pages P-2 and P-3 of Borrower's preliminary
offering circular dated November 11, 1996 with respect to the Senior Notes
reflecting consummation of the initial transactions contemplated hereunder
and under the Purchase Agreements, including, but not limited to, (i) the
consummation of the acquisition of the Purchased Assets by Borrower from
Sellers and the other transactions contemplated by the Purchase Agreements,
(ii) the consummation of the issuance by Borrower of the Senior Notes,
(iii) the $25,000,000 cash equity contribution by Holdings to Borrower and
(iv) the assumption of certain liabilities of Sellers by Borrower pursuant
to and as provided in the Purchase Agreements, accompanied by a
certificate, dated of even date herewith, of the chief financial officer of
Borrower, stating that such pro-forma balance sheet represents the
reasonable, good faith opinion of such officer as to the subject matter
thereof as of the date of such certificate;
(f) Lender shall have received, in form and substance
satisfactory to Lender, evidence that Lender has valid perfected and first
priority security interests in and liens upon the Collateral and any other
property which is intended to be security for the Obligations or the
liability of any Obligor in respect thereof, subject only to the security
interests and liens permitted herein or in the other Financing Agreements;
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(g) Lender shall have received, in form and substance
satisfactory to Lender (i) the agreement of Sellers consenting to the
collateral assignment by Borrower to Lender of all of Borrower's rights and
remedies and claims for damages or other relief under the Purchase
Agreements arising from or relating to the accounts, inventory and other
Collateral included in the Purchased Assets, including, without limitation,
all such rights and remedies under the Service Agreement and bulk transfer
indemnities, and (ii) the written agreement by Terex to provide directly to
Lender for such periods and on such terms as shall be acceptable to Lender
such of the services covered by the Service Agreement as Lender shall
request, notwithstanding any breach or default by Borrower under or
termination of the Service Agreement, and granting Lender such other rights
as Lender may require, in each case duly authorized, executed and delivered
by Sellers or Terex, as applicable;
(h) no material adverse change shall have occurred in the
assets, business or prospects of Old Clark (up to the time immediately
preceding the consummation of the sale of the Purchased Assets to Borrower)
or Borrower since the date of Lender's latest field examination and no
change or event shall have occurred which would impair the ability of
Borrower or any Obligor to perform its obligations hereunder or under any
of the other Financing Agreements to which it is a party or of Lender to
enforce the Obligations or realize upon the Collateral;
(i) Lender shall have completed a field review of the Records
and such other information with respect to the Collateral (including,
without limitation, the books and records with respect to the Purchased
Assets maintained by or for the benefit of Old Clark) as Lender may require
to determine the amount of Revolving Loans available to Borrower, the
results of which shall be satisfactory to Lender not more than three (3)
Business Days prior to the date hereof;
(j) Lender shall have received, in form and substance
satisfactory to Lender, all consents, waivers, acknowledgments and other
agreements from third persons which Lender may deem necessary or desirable
in order to permit, protect and perfect its security interests in and liens
upon the Collateral or to effectuate the provisions or purposes of this
Agreement and the other Financing Agreements, including, without
limitation, acknowledgments by lessors, mortgagees and warehousemen (and in
any event by Terex and the lessor and mortgagee of Terex's distribution
center located in Southhaven, Mississippi) of the security interests of
Lender in the Collateral, waivers or subordinations in favor of Lender by
such persons of any security interests, liens or other claims by such
persons to the Collateral and agreements permitting Lender access to, and,
subject to limitations and costs reasonably acceptable to Lender,
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the right to remain on, the premises to exercise its rights and remedies
and otherwise deal with the Collateral;
(k) Borrower shall have, in the aggregate, Excess Availability,
as determined by Lender as of the date hereof and the date of the initial
Loans or Letter of Credit Accommodations extended hereunder, in an amount
not less than $18,000,000, after giving effect to the application of the
initial Revolving Loans and Letter of Credit Accommodations hereunder and
after provision for payment of all fees and expenses of the transactions
contemplated by this Agreement, the Purchase Agreements and the Offering
Circular relating to the Senior Notes;
(l) Lender shall have received, in form and substance
satisfactory to Lender, blocked account or lockbox agreements with such
banks as are acceptable to Lender;
(m) Lender shall have received evidence of insurance and loss
payee endorsements required hereunder and under the other Financing
Agreements, in form and substance satisfactory to Lender, and certificates
of insurance policies and/or endorsements naming Lender as loss payee;
(n) Lender shall have received, in form and substance
satisfactory to Lender, (i) such opinion letters of counsel to Borrower and
Obligors with respect to the Financing Agreements, the Purchase Agreements,
the issuance of the Senior Notes pursuant to the Note Indenture, the cash
capital contribution by Holdings to Borrower, the liens and security
interests of Lender with respect to the Collateral, the change of name of
Borrower to CLARK Material Handling Company and such other matters as
Lender may request and (ii) the opinion letter(s) of counsel to Sellers
delivered to Borrower pursuant to the Purchase Agreements which, among
other things, shall provide that such opinion letter(s) may be delivered to
and relied upon by Lender and Participants;
(o) Lender shall have received, in form and substance
satisfactory to Lender, an irrevocable license from Holdings with respect
to any intellectual property of Holdings licensed to or used by Borrower,
such license in favor of Lender to be for the purposes described in Section
7.7(b); and
(p) the other Financing Agreements and all instruments and
documents hereunder and thereunder shall have been duly executed and
delivered to Lender, in form and substance satisfactory to Lender.
4.2 Conditions Precedent to All Revolving Loans and Letter of Credit
Accommodations. Each of the following is an additional condition precedent
to Lender making Revolving Loans and/or providing Letter of Credit
Accommodations to Borrower, including the initial Revolving Loans and
Letter of Credit Accommodations
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and any future Revolving Loans and Letter of Credit Accommodations:
(a) all representations and warranties contained herein and in
the other Financing Agreements shall be true and correct in all material
respects with the same effect as though such representations and warranties
had been made on and as of the date of the making of each such Revolving
Loan or providing each such Letter of Credit Accommodation and after giving
effect thereto; and
(b) no Event of Default and no event or condition which, with
notice or passage of time or both, would constitute an Event of Default,
shall exist or have occurred and be continuing on and as of the date of the
making of such Revolving Loan or providing each such Letter of Credit
Accommodation and after giving effect thereto.
SECTION 5. GRANT OF SECURITY INTEREST
To secure payment and performance of all Obligations, Borrower hereby
grants to Lender a continuing security interest in, a lien upon, and a
right of set off against, and hereby assigns as security to Lender the
following property and interests in property, whether now owned or
hereafter acquired or existing, and wherever located (collectively, the
"Collateral"):
5.1 all of Borrower's Receivables (including, but not limited to,
Accounts);
5.2 all present and future monies, securities, credit balances,
collateral, deposits, deposit accounts and other property of such Borrower,
to the extent constituting proceeds of Receivables or Inventory or Loans,
now or hereafter held or received by or in transit to Lender or any
depository bank or institution;
5.3 all present and future liens, security interests, rights,
remedies, interests and documents of Borrower in, to and in respect of
Receivables and Inventory, including, without limitation, (a) rights and
remedies under or relating to guaranties, warranties, contracts of
suretyship, letters of credit and credit and other insurance related
thereto, (b) rights of stoppage in transit, replevin, repossession,
reclamation and other rights and remedies of Borrower with respect to the
Receivables as an unpaid vendor, lienor or secured party and (c) deposits
by and property of account debtors or other persons securing the
obligations of account debtors with respect to the Receivables;
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5.4 all of Borrower's present and future agreements or arrangements
with sales agents, sales representatives, distributors, warehousemen and
subcontractors or the like (including, without limitation, Terex) with
respect to the sale, lease, disposition, servicing, storage, processing or
manufacture of Inventory or with respect to Receivables;
5.5 Inventory;
5.6 all of Borrower's present and future rights arising under or
related to the Purchase Agreements arising from or relating to the
accounts, inventory and other Collateral included in the Purchased Assets;
5.7 Records; and
5.8 all products and proceeds of the foregoing, in any form,
including, without limitation, all cash collections and other cash proceeds
of any Receivables, all items or remittances in any form issued in payment
of any Receivables (including, without limitation, checks, drafts and other
instruments), insurance proceeds and all claims against third parties for
loss or damage to or destruction of any or all of the foregoing.
SECTION 6. COLLECTION AND ADMINISTRATION
6.1 Borrower's Loan Accounts. Lender shall maintain one or more loan
account(s) on its books in which shall be recorded (a) all Loans, Letter of
Credit Accommodations and other Obligations and the Collateral, (b) all
payments made by or on behalf of Borrower and (c) all other appropriate
debits and credits as provided in this Agreement, including, without
limitation, fees, charges, costs, expenses and interest. All entries in
the loan account(s) shall be made in accordance with Lender's customary
practices as in effect from time to time.
6.2 Statements. Lender shall render to Borrower each month a
statement setting forth the balance in the Borrower's loan account(s)
maintained by Lender for Borrower pursuant to the provisions of this
Agreement, including principal, interest, fees, costs and expenses. Each
such statement shall be subject to subsequent adjustment by Lender but
shall, absent manifest errors or omissions, be considered correct and
deemed accepted by Borrower and conclusively binding upon Borrower as an
account stated except to the extent that Lender receives a written notice
from Borrower of any specific exceptions of Borrower thereto within thirty
(30) days after the date such statement has been mailed by Lender. Until
such time as Lender shall have rendered to Borrower a written statement as
provided above, the balance in Borrower's loan account(s) shall be
presumptive evidence of the amounts due and owing by Borrower to Lender.
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6.3 Collection of Accounts.
(a) Borrower shall establish and maintain, at its expense,
blocked accounts or lockboxes and related blocked accounts (in either case,
"Blocked Accounts"), as Lender may specify, with such banks as are
reasonably acceptable to Lender into which Borrower shall promptly deposit
and direct its account debtors to directly remit all payments on Accounts
and all payments constituting proceeds of Inventory or other Collateral in
the identical form in which such payments are made, whether by cash, check
or other manner. The banks at which the Blocked Accounts are established
shall enter into an agreement, in form and substance satisfactory to
Lender, providing that all items received or deposited in the Blocked
Accounts are the property of Lender, that the depository bank has no lien
upon, or right to setoff against, the Blocked Accounts, the items received
for deposit therein, or the funds from time to time on deposit therein and
that the depository bank will wire, or otherwise transfer, in immediately
available funds, on a daily basis, all funds received or deposited into the
Blocked Accounts to such bank account of Lender as Lender may from time to
time designate for such purpose ("Payment Account"). Borrower agrees that
all payments made to such Blocked Accounts or other funds received and
collected by Lender, whether on the Accounts or as proceeds of Inventory or
other Collateral shall be the property of Lender.
(b) For purposes of calculating interest on the Obligations,
such payments or other funds received will be applied (conditional upon
final collection) to the Obligations one (1) Business Day following the
date of receipt of immediately available funds by Lender in the Payment
Account. For purposes of calculating the amount of the Revolving Loans
available to Borrower, such payments will be applied (conditional upon
final collection) to the Obligations on the Business Day of receipt by
Lender in the Payment Account, if such payments are received within
sufficient time (in accordance with Lender's usual and customary practices
as in effect from time to time) to credit Borrower's loan accounts on such
day, and if not, then on the next Business Day.
(c) Borrower and all of its affiliates, subsidiaries,
shareholders, directors, employees or agents shall, acting as trustee for
Lender, receive, as the property of Lender, any monies, checks, notes,
drafts or any other payment relating to and/or proceeds of Receivables or
other Collateral which come into their possession or under their control
and immediately upon receipt thereof, shall deposit or cause the same to be
deposited in the Blocked Accounts, or remit the same or cause the same to
be remitted, in kind, to Lender. In no event shall the same be commingled
with Borrower's own funds. Borrower agrees to reimburse Lender on demand
for any amounts owed or paid to any bank at which a Blocked Account is
established or any other bank
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or person involved in the transfer of funds to or from the Blocked Accounts
arising out of any payments by Lender to or indemnification of such bank or
person. The obligation of Borrower to reimburse Lender for such amounts
pursuant to this Section 6.3 shall survive the termination or non-renewal
of this Agreement.
6.4 Payments. All Obligations shall be payable to the Payment
Account as provided in Section 6.3 or such other place as Lender may
designate from time to time. Lender may apply payments received or
collected from Borrower or for the account of Borrower (including, without
limitation, the monetary proceeds of collections of or realization upon any
Collateral) to such of the Obligations, whether or not then due, in such
order and manner as Lender determines. At the option of Lender, all
principal, interest, fees, costs, expenses and other charges provided for
in this Agreement or the other Financing Agreements may be charged directly
to the loan account(s) of Borrower. Borrower shall make all payments on
the Obligations to Lender, free and clear of, and without deduction or
withholding for or on account of, any setoff, counterclaim, defense,
duties, taxes, levies, imposts, fees, deductions, withholding, restrictions
or conditions of any kind. If after receipt of any payment of, or proceeds
of Collateral applied to the payment of, any of the Obligations, Lender is
required to surrender or return such payment or proceeds to any Person for
any reason, then the Obligations intended to be satisfied by such payment
or proceeds shall be reinstated and continue and this Agreement shall
continue in full force and effect as if such payment or proceeds had not
been received by Lender. Borrower shall be liable to pay to Lender, and
does hereby indemnify and hold Lender harmless for, the amount of any
payments or proceeds so surrendered or returned. This Section 6.4 shall
remain effective notwithstanding any contrary action which may be taken by
Lender in reliance upon such payment or proceeds. This Section 6.4 shall
survive the payment of the Obligations and the termination or non-renewal
of this Agreement.
6.5 Authorization to Make Loans. Lender is authorized to make the
Loans and provide the Letter of Credit Accommodations based upon telephonic
or other instructions received from anyone purporting to be an officer of
Borrower or other authorized person or, at the discretion of Lender, if
such Loans are necessary to satisfy any Obligations. All requests for
Loans or Letter of Credit Accommodations hereunder shall specify the date
on which the requested advance is to be made or Letter of Credit
Accommodations established (which day shall be a Business Day) and the
amount of the requested Loan. Requests received after 12:00 Noon New York
City time on any day shall be deemed to have been made as of the opening of
business on the immediately following Business Day. All Loans and Letter
of Credit Accommodations under this Agreement shall be conclusively
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presumed to have been made to, and at the request of and for the benefit
of, Borrower when deposited to the credit of Borrower or otherwise
disbursed or established in accordance with the instructions of Borrower or
in accordance with the terms and conditions of this Agreement.
6.6 Use of Proceeds. Borrower shall use the proceeds of the initial
Loans provided by Lender to Borrower hereunder only for: (a) payments to
each of the persons listed in the disbursement direction letter (if any)
furnished by Borrower to Lender on the date thereof, (b) costs, expenses
and fees incurred in connection with the preparation, negotiation,
execution and delivery of this Agreement and the other Financing
Agreements, and (c) general operating and working capital. All other Loans
made or Letter of Credit Accommodations provided by Lender to Borrower
pursuant to the provisions hereof shall be used by Borrower only for
general operating, working capital and other proper corporate purposes of
Borrower not otherwise prohibited by the terms hereof. None of the
proceeds will be used, directly or indirectly, for the purpose of
purchasing or carrying any margin security or for the purposes of reducing
or retiring any indebtedness which was originally incurred to purchase or
carry any margin security or for any other purpose which might cause any of
the Loans or Letter of Credit Accommodations to be considered a "purpose
credit" within the meaning of Regulation G of the Board of Governors of the
Federal Reserve System, as amended.
SECTION 7. COLLATERAL REPORTING AND COVENANTS
7.1 Collateral Reporting. Borrower shall provide Lender with the
following documents, in a form satisfactory to Lender: (a) on a regular
basis as required by Lender, a schedule of Accounts; (b) on the following
periodic basis or, after the occurrence and during the continuance of an
Event of Default, more frequently as Lender may request, (i) monthly
perpetual Inventory reports, (ii) monthly reports of all Inventory by
category, (iii) weekly reports of finished goods Inventory, and (iv)
monthly agings of accounts payable, (c) upon reasonable request by Lender,
and at all times upon request by Lender after the occurrence and during the
continuance of an Event of Default, (i) copies of customer statements and
credit memos, remittance advices and reports, and copies of deposit slips
and bank statements, (ii) copies of shipping and delivery documents, and
(iii) copies of purchase orders, invoices and delivery documents for
Inventory acquired by Borrower; (d) agings of accounts receivable on a
weekly basis or more frequently as Lender may request; and (e) such other
reports as to the Collateral as Lender shall reasonably request from time
to time. In the case of those of the foregoing reports that are to be
delivered on a monthly basis, such reports shall be delivered as soon as
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practicable following the end of each fiscal month, but in any event within
ten (10) Business Days after the end of such month. If Borrower's records
or reports of the Collateral are prepared or maintained by an accounting
service, contractor, shipper or other agent, Borrower hereby irrevocably
authorizes such service, contractor, shipper or agent to deliver such
records, reports, and related documents to Lender and to follow
instructions from Lender with respect to further services at any time that
an Event of Default exists or has occurred and is continuing.
7.2 Accounts Covenants.
(a) Without limiting the other reporting obligations of Borrower
hereunder, Borrower shall promptly notify Lender on a separate basis of:
(i) any material delay in Borrower's performance of any of its obligations
(including, without limitation, obligations of Old Clark assumed by
Borrower) to any account debtor, or (ii) the assertion of any claims,
offsets, defenses or counterclaims by any account debtor, or any disputes
with account debtors, or any settlement, adjustment or compromise thereof,
not yet reported to Lender and involving an amount in excess of (A)
$200,000 individually or $500,000 in the aggregate for all such matters, so
long as Borrower has Excess Availability in excess of $3,000,000 and no
Event of Default has occurred that is continuing, or (B) $100,000
individually or $300,000 in the aggregate for all such matters, at all
other times, (iii) all material adverse information known to Borrower,
relating to the financial condition of any account debtor of Borrower and
(iv) any event or circumstance not otherwise described in clauses (i), (ii)
or (iii) of this Section 7.2(a), which, to Borrower's knowledge, would
cause Lender to consider any then existing Accounts as no longer
constituting Eligible Accounts. No credit, discount, allowance or
extension or agreement for any of the foregoing shall be granted to any
account debtor without the consent of Lender, except in the ordinary course
of Borrower's business in accordance with practices and policies previously
disclosed in writing to Lender. So long as no Event of Default exists or
has occurred and is continuing, Borrower may settle, adjust or compromise
any claim, offset, counterclaim or dispute with its account debtors. At
any time that an Event of Default exists or has occurred and is continuing,
Lender shall, at its option, have the exclusive right to settle, adjust or
compromise any claim, offset, counterclaim or dispute with account debtors
or grant any credits, discounts or allowances.
(b) Without limiting the other reporting obligations of Borrower
hereunder, Borrower shall promptly report on a separate basis to Lender any
return by an account debtor of Borrower of Inventory having a sales price
in excess of (i) $200,000 for any one account debtor or $500,000 in the
aggregate for all account debtors, so long as Borrower has Excess
Availability in excess of $3,000,000 and no Event of Default has
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occurred that is continuing, or (ii) $100,000 for any one account debtor or
$300,000 in the aggregate for all account debtors, at all other times. At
any time that Inventory is returned, reclaimed or repossessed, the related
Account shall not be deemed an Eligible Account. In the event any account
debtor of Borrower returns Inventory when an Event of Default exists or has
occurred and is continuing, Borrower shall, upon request by Lender, (i)
hold the returned Inventory in trust for Lender, (ii) segregate all
returned Inventory from all of its other property, (iii) dispose of the
returned Inventory solely according to instructions of Lender, and (iv) not
issue any credits, discounts or allowances with respect thereto without
prior written consent of Lender.
(c) With respect to each Account: (i) the amounts shown on any
invoice delivered to Lender or schedule thereof delivered to Lender shall
be true and complete, (ii) no payments shall be made thereon except
payments immediately delivered to Lender pursuant to the terms of this
Agreement, (iii) no credit, discount, allowance or extension or agreement
for any of the foregoing shall be granted to any account debtor except as
reported to Lender in accordance with this Agreement and provided such
credits, discounts, allowances or extensions are made or given in the
ordinary course of Borrower's business in accordance with past practices or
pursuant to policies previously disclosed to Lender, (iv) there shall be no
setoffs, deductions, contras, defenses, counterclaims or disputes existing
or asserted with respect thereto except as reported to Lender in accordance
with the terms of this Agreement, (v) none of the transactions giving rise
thereto will violate any applicable State or Federal laws or regulations,
all documentation relating thereto will be legally sufficient under such
laws and regulations and all such documentation will be legally enforceable
in accordance with its terms, subject to the effect on enforceability of
(A) any bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting enforcement of creditors' rights generally and (B) the
application of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(d) Lender shall have the right at any time or times, in the
name of Lender or in the name of a nominee of Lender, to verify the
validity, amount or any other matter relating to any Account or other
Collateral, by mail, telephone, facsimile transmission or otherwise.
(e) Borrower shall deliver or cause to be delivered to Lender,
with appropriate endorsement and assignment, with full recourse to
Borrower, all chattel paper and instruments which are part of the
Collateral which Borrower now owns or may at any time acquire immediately
upon Borrower's receipt thereof, except as Lender may otherwise agree in
writing.
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(f) Lender may, at any time or times that an Event of Default
exists or has occurred and is continuing, (i) notify any or all account
debtors that the Receivables have been assigned to Lender and that Lender
has a security interest therein, and Lender may direct any or all account
debtors to make payment of Receivables directly to Lender, (ii) extend the
time of payment of, compromise, settle or adjust for cash, credit, return
of merchandise or otherwise, and upon any commercially reasonable terms or
conditions, any and all Receivables or other obligations included in the
Collateral and thereby discharge or release the account debtor or any other
party or parties in any way liable for payment thereof without affecting
any of the Obligations, (iii) demand, collect or enforce payment of any
Receivables or such other obligations, but without any duty to do so, and
Lender shall not be liable for any failure to collect or enforce the
payment thereof nor for the negligence of its or their agents or attorneys
with respect thereto, provided that such agents or attorneys are selected
by Lender with due care, and (iv) take whatever other action Lender may
deem necessary or desirable for the protection of its and Lender's
interests. At any time that an Event of Default exists or has occurred and
is continuing, at the request of Lender, all invoices and statements sent
to any account debtor shall state that the Accounts and such other
obligations have been assigned to Lender and are payable directly and only
to Lender and Borrower shall deliver to Lender such originals of documents
evidencing the sale and delivery of goods or the performance of services
giving rise to any Accounts as Lender may require.
7.3 Inventory Covenants. With respect to the Inventory: (a) Borrower
shall at all times maintain inventory records reasonably satisfactory to
Lender, keeping correct and accurate records itemizing and describing the
kind, type, quality and quantity of Inventory, Borrower's cost therefor and
daily withdrawals therefrom and additions thereto; (b) with respect to
Inventory counting (i) Borrower shall conduct a physical count of its
Inventory at least once each year, unless Borrower's cycle counts of
Inventory during such year are reasonably acceptable to Lender as to scope,
methodology and frequency and are at least ninety-five (95%) percent
accurate when compared with Borrower's Inventory accounting records, (ii)
Borrower shall conduct a physical inventory at any time or times as Lender
may request after and during the continuance of an Event of Default, and
(iii) promptly following such physical inventory or each cycle count, upon
request by Lender, Borrower shall supply Lender with a report in the form
and with such specificity as may be reasonably satisfactory to Lender
concerning such physical count or cycle count; (c) Borrower shall not
remove any Inventory from the locations set forth or permitted herein,
without the prior written consent of Lender, except for sales of Inventory
in the ordinary course of Borrower's business and except to move Inventory
directly from one location set forth or permitted
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herein to another such location; (d) upon request by Lender, Borrower
shall, at its expense, no more than once in any twelve (12) month period,
but at any time or times as Lender may request after and during the
continuance of an Event of Default, deliver or cause to be delivered to
Lender written reports of appraisals as to the Inventory in form, scope and
methodology acceptable to Lender and by an appraiser acceptable to Lender,
addressed to Lender and upon which Lender is expressly permitted to rely;
(e) Borrower shall produce, use, store and maintain its Inventory, with all
reasonable care and caution and in accordance with applicable standards of
any insurance and in conformity with applicable laws (including, but not
limited to, the requirements of the Federal Fair Labor Standards Act of
1938, as amended, and all rules, regulations and orders related thereto);
(f) Borrower assumes all responsibility and liability arising from or
relating to the production, use, sale or other disposition of its
Inventory; (g) Borrower shall not sell Inventory to any customer on
approval, or any other basis which entitles the customer to return or may
obligate Borrower to repurchase such Inventory, except in the ordinary
course of business in accordance with past practices or policies previously
disclosed in writing to Lender; (h) Borrower shall keep its Inventory in
good and saleable condition; and (i) Borrower shall not, without prior
written notice to Lender, acquire or accept any Inventory on consignment or
approval, except if the acquisition or acceptance of any such Inventory so
acquired is separately reported in writing to Lender upon receipt thereof
by Borrower, and provided such Inventory is readily identifiable or is
segregated from other Inventory (but Lender may, in its discretion,
establish Availability Reserves to cover possible claims by the consignor
as to such consigned Inventory or the products or the proceeds thereof).
7.4 Power of Attorney. Borrower hereby irrevocably designates and
appoints Lender (and all persons designated by Lender) as Borrower's true
and lawful attorney-in-fact, and authorizes Lender, in Borrower's name or
in the name of Lender, to: (a) at any time an Event of Default or event
which with notice or passage of time or both would constitute an Event of
Default exists or has occurred and is continuing (i) demand payment on
Accounts or other proceeds of Inventory or other Collateral, (ii) enforce
payment of Accounts or other Receivables by legal proceedings or otherwise,
(iii) exercise all of Borrower's rights and remedies to collect any Account
or other Collateral, (iv) sell or assign any Account or other Collateral
upon such terms, for such amount and at such time or times as Lender deems
advisable and commercially reasonable, (v) settle, adjust, compromise,
extend or renew an Account or other Receivable, (vi) discharge and release
any Account or other Receivable on commercially reasonable terms, (vii)
prepare, file and sign Borrower's name on any proof of claim in bankruptcy
or other similar document against an account debtor, (viii) notify the post
office authorities to change the address for delivery of
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Borrower's mail to an address designated by Lender, and open and dispose of
all mail addressed to Borrower, and (ix) do all acts and things which are
necessary, in the determination of Lender, to fulfill Borrower's
Obligations under this Agreement and the other Financing Agreements and (b)
at any time to (i) take control of any item of payment or proceeds thereof
deposited or received for credit to the Blocked Accounts or constituting
part of the Collateral, (ii) have access to any lockbox to which Borrower's
customer remittances are sent and the contents thereof, (iii) endorse
Borrower's name upon any items of payment or proceeds thereof deposited or
received for credit to the Blocked Accounts or constituting part of the
Collateral, and transfer the same to or deposit the same in the account of
Lender for application to the Obligations, (iv) endorse Borrower's name
upon any chattel paper, document, instrument, invoice, or similar document
or agreement relating to any Account or any goods pertaining thereto or any
other Collateral, (v) sign Borrower's name on any verification of Accounts
and notices thereof to account debtors and (vi) execute in Borrower's name
and file any UCC financing statements or amendments thereto, provided the
Collateral covered by any new financing statement so executed and filed
does not include, and the Collateral description of any existing financing
statement, so amended, is not expanded to include, any property other than
the Collateral. Borrower hereby releases Lender and its officers,
employees and, to the extent selected with due care, their agents, from any
liabilities arising from any act or acts under this power of attorney and
in furtherance thereof, whether of omission or commission, except as a
result of their own gross negligence, willful misconduct, actual fraud or
bad faith, as determined pursuant to a final non-appealable judgment of a
court of competent jurisdiction.
7.5 Right to Cure. Lender may, at its option, (a) cure any default
by Borrower under any agreement with a third party or pay or bond on appeal
any judgment entered against Borrower if any Event of Default shall have
occurred and be continuing (including, but not limited to, any Event of
Default by reason of such default or judgment), (b) discharge taxes, liens,
security interests or other encumbrances at any time levied on or existing
with respect to the Collateral, which are not permitted to exist hereunder,
and (c) pay any amount, incur any expense or perform any act which, in the
good faith judgment of Lender, is necessary or appropriate to preserve,
protect, insure or maintain the Collateral and the rights of Lender with
respect thereto. Lender may add any amounts so expended to the Obligations
and charge Borrower's account therefor, such amounts to be repayable by
Borrower on demand. Lender shall be under no obligation to effect such
cure, payment or bonding and shall not, by doing so, be deemed to have
assumed any obligation or liability of Borrower. Any payment made or other
action taken by Lender under this Section shall be without prejudice to any
right to assert an Event of Default hereunder and to proceed accordingly.
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<PAGE> 46
7.6 Access to Premises. From time to time as requested by Lender, at
the cost and expense of Borrower, (a) Lender, and their designees shall
have complete access to all of Borrower's premises during normal business
hours and after reasonable notice to Borrower, or at any time and without
notice to Borrower if an Event of Default has occurred that is continuing,
for the purposes of inspecting, verifying and auditing the Collateral and
all of Borrower's books and records, including, without limitation, the
Records, and (b) Borrower shall promptly furnish to Lender such copies of
such books and records or extracts therefrom as a Lender may reasonably
request, and (c) use during normal business hours such of Borrower's
personnel, equipment, supplies and premises as may be reasonably necessary
for the foregoing and if an Event of Default exists or has occurred that is
continuing for the collection of Accounts and realization of other
Collateral; provided, that in exercising the rights under clauses (b) and
(c) of this Section, Lender, and its designees will, unless an Event of
Default has occurred that is continuing, use reasonable efforts not to
unnecessarily interfere with the conduct of Borrower's business.
7.7 Irrevocable License to Use Equipment and Intellectual Property.
Borrower hereby grants Lender an irrevocable non-exclusive license, without
charge (a) to use after the occurrence and during the continuance of an
Event of Default, any of the Equipment consisting of computers or other
data processing equipment relating to the storage or processing of records,
documents or files pertaining to the Collateral and use any other Equipment
to handle, deal with or dispose of any Collateral pursuant to the rights
and remedies of Lender as set forth in this Agreement and the other
Financing Agreements, the Uniform Commercial Code of any applicable
jurisdiction and other applicable law, provided that such use of Equipment
by Lender shall not damage such Equipment; and (b) to use after the
occurrence and during the continuance of an Event of Default, any of the
Intellectual Property marked or stamped on any Collateral or otherwise
required to collect or realize on any Collateral. Such license shall be
irrevocable and shall continue until the Obligations have been indefeasibly
paid and satisfied and this Agreement and all other Financing Agreements
have been terminated.
7.8 Terex Distribution Center Mortgagee Waiver.
With respect to the Mortgagee Waiver (the "TDC Mortgagee Waiver")
being delivered as of the date hereof by Jim B. Tohill, as Trustee (the
"Terex Mortgagee"), and United States Trust Company of New York, as
Collateral Agent, for certain senior secured notes of Terex (the "Terex
Collateral Agent") in favor of Lender with respect to the distribution
center facility leased by Terex in Southhaven, Mississippi upon which
Inventory, Records and other personal property of Borrower may be located
and upon
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Terex's interest in which facility the Terex Mortgagee has a lien under a
deed of trust ("TDC Mortgage") for the benefit of the Terex Collateral
Agent, Borrower shall promptly, and in any event within ninety (90) days,
following notification by Lender that it has received notice from the Terex
Collateral Agent under the TDC Mortgagee Waiver to the effect that an event
of default and acceleration has occurred with respect to the indebtedness
secured by the TDC Mortgage, upon written notice to Lender, either (i) move
all of the Inventory, Records and other personal property of Borrower
located at such facility to a new permitted location with respect to which
such landlord's and mortgagee's waivers shall be delivered to Lender as
Lender shall require, and/or (ii) make other arrangements with respect to
such Inventory, Records and personal property as shall be satisfactory to
Lender. Following the expiration of such ninety (90) day period, should
Borrower not be successful in completing such relocation or implementing
such other arrangements satisfactory to Lender as aforesaid, none of the
otherwise Eligible Inventory located at such facility shall any longer be
deemed Eligible Inventory and none of the otherwise Eligible Accounts with
respect to which the Records are located at such facility shall any longer
be deemed Eligible Accounts.
SECTION 8. REPRESENTATIONS AND WARRANTIES
Borrower hereby represents and warrants to Lender the following (which
shall survive the execution and delivery of this Agreement), the truth and
accuracy of which are a continuing condition of the making of Loans and
providing Letter of Credit Accommodations by Lender to Borrower:
8.1 Corporate Existence, Power and Authority; Subsidiaries. Borrower
is a corporation duly organized and in good standing under the laws of its
state of incorporation and is duly qualified as a foreign corporation and
in good standing in all states or other jurisdictions where the nature and
extent of the business transacted by it or the ownership of assets makes
such qualification necessary, except for those jurisdictions in which the
failure to so qualify would not have a material adverse effect on
Borrower's financial condition, results of operation or business or the
rights of Lender in or to any of the Collateral. The name of Borrower has
been legally and validly changed from CMHC Acquisition Corporation to CLARK
Material Handling Company. The name of Clark Material Handling Company, a
Kentucky corporation, has been legally and validly changed to Terex
Material Handling Corp. The execution, delivery and performance of this
Agreement, the other Financing Agreements and the transactions contemplated
hereunder and thereunder are all within Borrower's corporate powers, have
been duly authorized by all necessary corporate and shareholder action and
are not in
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contravention of law or the terms of Borrower's certificate of
incorporation, by-laws, or other organizational documentation, or any
indenture, material agreement or material undertaking to which Borrower is
a party or by which any Borrower or its property are bound. This Agreement
and the other Financing Agreements constitute legal, valid and binding
obligations of Borrower enforceable in accordance with their respective
terms. Borrower does not have any Subsidiaries, except for the Foreign
Subsidiaries in existence on the date hereof and newly formed or acquired
Subsidiaries of Borrower as permitted under Section 9.7(c) hereof.
8.2 Financial Statements; No Material Adverse Change. All financial
statements relating to Borrower or Old Clark which have been or may
hereafter be delivered by Borrower to Lender have been prepared consistent
with GAAP and fairly present the financial condition and the results of
operation of, as applicable, Borrower or Old Clark as at the dates and for
the periods set forth therein, except for footnotes and any departures from
GAAP indicated therein. Except as disclosed in any interim financial
statements of Old Clark furnished by Borrower to Lender prior to the date
of this Agreement, there has been no material adverse change in the assets,
liabilities, properties and condition, financial or otherwise, of Borrower,
since the date of the most recent audited financial statements of Old Clark
furnished by Borrower to Lender prior to the date of this Agreement.
8.3 Chief Executive Office; Collateral Locations. The chief
executive office of Borrower and Borrower's Records concerning Accounts are
located only at its address set forth below and its only other places of
business and the only other locations of Collateral, if any, are (i) the
addresses set forth in the Information Certificate, subject to the right of
Borrower to establish new locations in accordance with Section 9.2 below,
(ii) Inventory which is in transit to one of such addresses or such new
locations so established, and (iii) Inventory located at dealers not
reported to Lender under Section 9.2 and not included in any Collateral
report delivered at any time to Lender, in amounts not to exceed $25,000 at
any one dealer location or $300,000 for all such unreported dealer
locations. The Information Certificate correctly identifies any of such
existing locations which are not owned by Borrower and sets forth the
owners and/or operators thereof. Borrower's registered office within the
State of Kentucky is in Franklin County, Kentucky and will not be changed,
except upon twenty (20) days' prior written notice to Lender.
8.4 Priority of Liens; Title to Properties. The security interests
and liens granted to Lender this Agreement and the other Financing
Agreements constitute valid and perfected first priority liens and security
interests in and upon the Collateral
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subject only to the liens indicated on the Information Certificate and the
other liens permitted under Section 9.8 hereof. Borrower has good and
marketable title to all of its properties and assets, including, without
limitation, the Purchased Assets, subject to no liens, mortgages, pledges,
security interests, encumbrances or charges of any kind, except those
granted to Lender and such others as are specifically permitted under
Section 9.8 hereof.
8.5 Tax Returns. Borrower has filed, or caused to be filed, in a
timely manner all tax returns, reports and declarations which are required
to be filed by it (without requests for extension except as previously
disclosed in writing to Lender). All information in such tax returns,
reports and declarations is complete and accurate in all material respects.
Borrower has paid or caused to be paid all taxes due and payable or claimed
due and payable in any assessment received by it, except taxes the validity
of which are being contested in good faith by appropriate proceedings
diligently pursued and available to Borrower and with respect to which
reserves have been set aside on its books in accordance with GAAP.
Adequate provision has been made for the payment of all accrued and unpaid
Federal, State, county, local, foreign and other taxes whether or not yet
due and payable and whether or not disputed.
8.6 Litigation. Except as set forth on the Information Certificate,
there is no present investigation by any governmental agency pending, or to
the best of Borrower's knowledge threatened, against or affecting Borrower,
its assets or business and there is no action, suit, proceeding or claim by
any Person pending, or to the best of Borrower's knowledge threatened,
against Borrower or its assets or goodwill, or against or affecting any
transactions contemplated by this Agreement, which has a reasonable
likelihood of success and which, if adversely determined against Borrower,
would result in any material adverse change in the assets or business of
Borrower or would impair the ability of Borrower to perform its obligations
hereunder or under any of the other Financing Agreements to which it is a
party or of Lender to enforce any Obligations or realize upon any
Collateral.
8.7 Compliance with Other Agreements and Applicable Laws. Borrower
is not in default in any material respect under, or in violation in any
material respect of any of the terms of, any agreement, contract,
instrument, lease or other commitment to which it is a party or by which it
or any of its assets are bound, and Borrower is in compliance in all
material respects with all applicable provisions of laws, rules,
regulations, licenses, permits, approvals and orders of any foreign,
Federal, State or local governmental authority, except where such default,
violation or failure to so comply would not have a material adverse effect
on the business or assets of Borrower or impair
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the value of any Collateral or the rights of Lender therein or thereto.
8.8 Accuracy and Completeness of Information. All information
furnished by or on behalf of Borrower in writing to Lender in connection
with this Agreement or any of the other Financing Agreements or any
transaction contemplated hereby or thereby, including, without limitation,
all information on the Information Certificate is true and correct in all
material respects on the date as of which such information is dated or
certified and does not omit any material fact necessary in order to make
such information not misleading. No event or circumstance has occurred
which has had or could reasonably be expected to have a material adverse
effect on the business, assets or prospects of Borrower, which has not been
fully and accurately disclosed to Lender in writing.
8.9 Acquisition of Purchased Assets.
(a) The Purchase Agreements and the transactions contemplated
thereunder have been duly executed, delivered and performed in accordance
with their terms by the respective parties thereto in all material
respects, including the fulfillment (not merely the waiver, except as may
be disclosed to Lender and consented to in writing by Lender) of all
conditions precedent set forth therein, and giving effect to the terms of
the Purchase Agreements and the assignments to be executed and delivered by
Sellers thereunder, Borrower acquired and has good and marketable title to
the Purchased Assets, free and clear of all claims, liens, pledges and
encumbrances of any kind, except as permitted hereunder.
(b) All actions and proceedings required by the Purchase
Agreements, applicable law or regulation (including, but not limited to,
compliance with the Hart-Scott-Rodino Anti-Trust Improvements Act of 1976,
as amended) and the transactions required thereunder have been duly and
validly taken and consummated.
(c) No court of competent jurisdiction has issued any
injunction, restraining order or other order which prohibits consummation
of the transactions described in the Purchase Agreements and no
governmental or other action or proceeding has been threatened or
commenced, seeking any injunction, restraining order or other order which
seeks to void or otherwise modify the transactions described in the
Purchase Agreements.
(d) Borrower has delivered, or caused to be delivered, to Lender
true, correct and complete copies of the Purchase Agreements.
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8.10 Issuance of Senior Notes.
(a) The Note Indenture and the transactions contemplated
thereunder and under the Offering Circular with respect thereto have been
duly executed, delivered and performed in accordance with their terms by
the respective parties thereto in all material respects, including the
fulfillment (not merely the waiver, except as may be disclosed to Lender
and consented to in writing by Lender) of all conditions precedent set
forth therein, and giving effect to the terms of the Note Indenture and the
Offering Circular with respect thereto, Borrower has issued all of the
Senior Notes and has applied the cash proceeds received therefrom as
provided in Section 4.1(d) hereof.
(b) All actions and proceedings required by the Note Indenture
and in connection with the Issuance by Borrower of the Senior Notes,
applicable law or regulation have been taken and the transactions required
thereunder have been duly and validly taken and consummated.
(c) No court of competent jurisdiction has issued any
injunction, restraining order or other order which prohibits consummation
of the transactions described in the Note Indenture and the Offering
Circular with respect thereto and no governmental or other action or
proceeding has been threatened or commenced, seeking any injunction,
restraining order or other order which seeks to void or otherwise modify
the transactions described in the Note Indenture and the Offering Circular
with respect thereto.
(d) Borrower has delivered, or caused to be delivered, to Lender
true, correct and complete copies of the Offering Circular, Note Indenture
and specimen Senior Notes.
8.11 Employee Benefits. Except as otherwise disclosed on the
Information Certificate:
(a) Borrower has not engaged in any transaction (including,
without limitation, the assumption of any liabilities pursuant to the
Purchase Agreements) in connection with or as a result of which such
Borrower or any of its ERISA Affiliates could be subject to either a civil
penalty assessed pursuant to Section 502(i) of ERISA or a tax imposed by
Section 4975 of the Code, including any accumulated funding deficiency
described in Section 8.11(c) hereof and any deficiency with respect to
vested accrued benefits described in Section 8.11(d) hereof.
(b) No liability to the Pension Benefit Guaranty Corporation has
been or is expected by Borrower to be incurred with respect to any employee
benefit plan of Borrower or any of its ERISA Affiliates. There has been no
reportable event (within the meaning of Section 4043(c) of ERISA) for which
reporting was
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not waived by regulations of the Pension Benefit Guaranty Corporation or
any other event or condition with respect to any employee benefit plan of
Borrower or any of its ERISA Affiliates which presents a risk of
termination of any such plan by the Pension Benefit Guaranty Corporation.
(c) Full payment has been made of all amounts which Borrower or
any of its ERISA Affiliates is required under Section 302 of ERISA and
Section 412 of the Code to have paid under the terms of each employee
benefit plan as contributions to such plan as of the last day of the most
recent fiscal year of such plan ended prior to the date hereof, and no
accumulated funding deficiency (as defined in Section 302 of ERISA and
Section 412 of the Code), whether or not waived, exists with respect to any
employee benefit plan, including any penalty or tax described in Section
8.11(a) hereof and any deficiency with respect to vested accrued benefits
described in Section 8.11(d) hereof.
(d) The current value of all vested accrued benefits under all
employee benefit plans maintained by Borrower that are subject to Title IV
of ERISA does not exceed the current value of the assets of such plans
allocable to such vested accrued benefits. The terms "current value" and
"accrued benefit" have the meanings specified in ERISA.
(e) Neither Borrower nor any of its ERISA Affiliates is
obligated to contribute to any "multiemployer plan" (as such term is
defined in Section 4001(a)(3) of ERISA) that is subject to Title IV of
ERISA nor has it incurred or received any notice with respect to withdrawal
liability.
8.12 Capitalization.
(a) All of the issued and outstanding shares of capital stock of
Borrower are directly and beneficially owned and held by Holdings and all
of such shares have been duly authorized and are fully paid and
non-assessable, free and clear of all claims, liens, pledges and
encumbrances of any kind, except as disclosed in writing to Lender.
(b) Borrower is not insolvent and will continue to be solvent
after the creation of the Obligations, the security interests of Lender and
the other transactions contemplated hereunder, and without limiting the
foregoing, is able to pay its debts as they mature and has (and has reason
to believe it will continue to have) sufficient capital (and not
unreasonably small capital) to carry on its business and all businesses in
which it is about to engage. The assets and properties of Borrower at a
fair valuation and at their present fair salable value are, and will be,
greater than the Indebtedness of Borrower, and including subordinated and
contingent liabilities computed at the amount which, to the best of
Borrower's knowledge, represents an amount
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which can reasonably be expected to become an actual or matured liability.
(c) Holdings has, on or before the date hereof, made a cash
equity contribution to Borrower in an amount of not less than $25,000,000
as consideration for the issuance to Holding of all of the capital stock of
Borrower and the proceeds of such cash equity contribution have been
applied, contemporaneously herewith, to the cash portion of the purchase
price for the Purchased Assets as provided in Section 4.1(c) hereof.
8.13 Survival of Warranties; Cumulative. All representations and
warranties contained in this Agreement or any of the other Financing
Agreements shall survive the execution and delivery of this Agreement and
shall be deemed to have been made again to Lender on the date of each
additional borrowing or other credit accommodation hereunder (except with
respect to any representation or warranty expressly stated to have been
made as of a specified date, which shall nevertheless be deemed to have
been repeated to be true as of that specified date) and shall be
conclusively presumed to have been relied on by Lender regardless of any
investigation made or information possessed by Lender. The representations
and warranties set forth herein shall be cumulative and in addition to any
other representations or warranties which Borrower shall now or hereafter
give, or cause to be given, to Lender.
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS
9.1 Maintenance of Existence. Borrower shall at all times preserve,
renew and keep in full, force and effect its corporate existence and rights
and franchises with respect thereto and maintain in full force and effect
all permits, licenses, trademarks, tradenames, approvals, authorizations,
leases and contracts necessary to carry on the business as presently or
proposed to be conducted. Borrower shall give Lender thirty (30) days
prior written notice of any proposed change in its corporate name, which
notice shall set forth the new name and Borrower shall deliver to Lender a
copy of the amendment to the Certificate of Incorporation of Borrower
providing for the name change certified by the Secretary of State of the
jurisdiction of incorporation of Borrower as soon as it is available.
9.2 New Collateral Locations.
(a) Borrower may, in the ordinary course of business, open,
maintain or move Inventory to any new location within the continental
United States, Canada or Puerto Rico, provided Borrower (i) gives Lender
thirty (30) days prior written notice of the intended opening of any such
new location and (ii) executes and delivers, or causes to be executed and
delivered, to
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Lender such agreements, documents, and instruments as Lender may deem
reasonably necessary or desirable to protect its interests in the
Collateral at such location, including, without limitation, UCC financing
statements; and
(b) Borrower may, in the ordinary course of business, open,
maintain or move Inventory to a location outside of the continental United
States, Canada and Puerto Rico, provided that (i) in addition to periodic
reporting required elsewhere herein, separate written notice thereof shall
be given by Borrower to Lender as soon as practicable after the aggregate
cost of Inventory so moved to a location outside the continental United
States, Canada and Puerto Rico exceeds $300,000 since the last periodic
Inventory report, (ii) the amount of Eligible Inventory of Borrower is
reduced by the amount of the net reduction of Eligible Inventory (if any)
resulting from such transaction, and (iii) after giving effect to such
reduction (if any), the Loans and Letter of Credit Accommodations would not
exceed the amounts available under the lending formulas and subject to the
sublimits set forth in this Agreement.
9.3 Compliance with Laws, Regulations, Etc. Borrower shall, at all
times, comply in all material respects with all laws, rules, regulations,
licenses, permits, approvals and orders of any Federal, State or local
governmental authority applicable to it, the non-compliance with which
would either (i) have a material adverse effect upon the business or assets
of Borrower, unless being diligently contested in good faith by appropriate
proceedings available to Borrower and with respect to which adequate
reserves have been set aside on its books, or (ii) have an adverse effect
on the value of any Collateral or the rights of the Lender therein or
thereto.
9.4 Payment of Taxes and Claims. Borrower shall duly pay and
discharge all taxes, assessments, contributions and governmental charges
upon or against it or its properties or assets, except for taxes the
validity of which are being contested in good faith by appropriate
proceedings diligently pursued and available to Borrower and with respect
to which reserves have been set aside on its books in accordance with GAAP.
Borrower shall be liable for any tax or penalties imposed on Lender as a
result of the financing arrangements provided for herein and Borrower
agrees to indemnify and hold Lender harmless with respect to the foregoing,
and to pay to Lender the amount thereof, within two (2) Business Days after
demand, accompanied by a reasonable description of the claim, and until
paid to Lender such amount shall be added to and deemed part of the Loans,
provided, that, nothing contained herein shall be construed to require
Borrower to pay any income or franchise taxes attributable to the income of
Lender from any amounts charged or paid hereunder to Lender. The foregoing
indemnity
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shall survive the payment of the Obligations and the termination or
non-renewal of this Agreement.
9.5 Insurance. Borrower shall, at all times, maintain with
financially sound and reputable insurers insurance with respect to the
Collateral against loss or damage and all other insurance of the kinds and
in the amounts customarily insured against or carried by corporations of
established reputation engaged in the same or similar businesses and
similarly situated; provided, that Borrower may self-insure as to liability
or other insurable risks, other than damage, loss or other casualty risks
affecting any Collateral. Said policies of insurance shall be satisfactory
to Lender as to form, amount and insurer. Borrower shall furnish
certificates, policies or endorsements to Lender as Lender shall require as
proof of such insurance, and, if Borrower fails to do so, Lender is
authorized, but not required, to obtain such insurance at the expense of
Borrower. All policies shall provide for at least thirty (30) days prior
written notice to Lender of any cancellation or reduction of coverage and
that Lender may act as attorney for Borrower in obtaining, and at any time
an Event of Default exists or has occurred and is continuing, adjusting,
settling, amending and canceling such insurance. Borrower shall cause
Lender to be named as a loss payee for the benefit of each Lender as an
additional insured (but without any liability for any premiums) under such
insurance policies and Borrower shall obtain non-contributory lender's loss
payable endorsements to all insurance policies in form and substance
satisfactory to Lender and Lender. Such lender's loss payable endorsements
shall specify that the proceeds of such insurance relating to casualties to
the Collateral shall be payable to Lender as its interests may appear and
further specify that Lender shall be paid regardless of any act or omission
by Borrower or any of its affiliates. At its option, Lender may apply any
insurance proceeds received by Lender at any time to the cost of
replacement of Collateral and/or to payment of the Obligations, whether or
not then due, in any order and in such manner as Lender may determine or
hold such proceeds as cash collateral for the Obligations.
9.6 Financial Statements and Other Information.
(a) Borrower shall keep proper books and records in which true
and complete entries shall be made of all dealings or transactions of or in
relation to its Collateral and the business of Borrower and its
subsidiaries (if any) consistent with GAAP and Borrower shall furnish or
cause to be furnished to Lender: (i) within thirty (30) days after the end
of each calendar month (other than the third, sixth, ninth and twelfth
calendar months), and within forty-five (45) days after the end of each of
the third, sixth, ninth and twelfth calendar months, monthly unaudited
consolidated and consolidating financial statements of Borrower and its
subsidiaries (including in each case balance
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sheets, statements of income and loss, statements of cash flow and
statements of shareholders' equity), all in reasonable detail, fairly
presenting the financial position and the results of the operations of
Borrower and its subsidiaries as of the end of and through such fiscal
month and (ii) within ninety (90) days after the end of each fiscal year,
audited consolidated financial statements of Borrower and its subsidiaries
(including in each case balance sheets, statements of income and loss,
statements of cash flow and statements of shareholders' equity), and the
accompanying notes thereto, all in reasonable detail, fairly presenting the
financial position and the results of the operations of Borrower and its
subsidiaries as of the end of and for such fiscal year, together with the
opinion, in accordance with generally accepted auditing standards, of
independent certified public accountants, which accountants shall be an
independent accounting firm selected by Borrower and reasonably acceptable
to Lender, stating that such financial statements have been prepared in
accordance with GAAP, and present fairly in all material respects the
results of operations and financial condition of Borrower and its
subsidiaries as of the end of and for the fiscal year then ended (or
containing such other expression of the auditor's opinion from time to time
prescribed by generally accepted auditing standards having essentially the
same meaning).
(b) Borrower shall promptly notify Lender in writing of the
details of (i) any loss, damage, investigation, action, suit, proceeding or
claim of which it or Borrower has knowledge, relating to the Collateral or
any other property which is security for the Obligations and involving an
amount in excess of $250,000, or which would result in any material adverse
change in Borrower's business, properties, assets, goodwill or condition,
financial or otherwise and (ii) the occurrence of any Event of Default or
event which, with the passage of time or giving of notice or both, would
constitute an Event of Default.
(c) Borrower shall promptly after the sending or filing thereof
furnish or cause to be furnished to Lender copies of all reports which
Borrower sends to its stockholders generally or to the Note Trustee, and
copies of all publicly available reports and registration statements which
Borrower files with the Securities and Exchange Commission, any national
securities exchange or the National Association of Securities Dealers, Inc.
(d) Borrower shall furnish or cause to be furnished to Lender
such budgets, forecasts, projections and other information respecting the
Collateral of Borrower and the business of Borrower, as Lender may, from
time to time, reasonably request subject to the provisions of Section 12.7
(as applicable). Lender is hereby authorized to deliver a copy of any
financial statement or any other information relating to the business of
Borrower to any court or other government agency or to any
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Participant or assignee or prospective Participant or assignee. Borrower
hereby irrevocably authorizes and directs all accountants or auditors to
deliver to Lender, at Borrower's expense, copies of the financial
statements of Borrower and any reports or management letters prepared by
such accountants or auditors on behalf of Borrower and to disclose to
Lender such information as they may have regarding the business of
Borrower. Any documents, schedules, invoices or other papers delivered to
Lender may be destroyed or otherwise disposed of by Lender one (1) year
after the same are delivered to Lender, except as otherwise designated by
Borrower to Lender in writing.
(e) Borrower shall deliver, or cause to be delivered, to Lender,
within one hundred twenty (120) days from the date hereof, opening balance
sheets prepared by independent certified public accountants, which
accountants shall be a nationally recognized independent accounting firm
selected by Borrower and reasonably acceptable to lender, and certified by
such accountants to the effect that such opening balance sheets have been
prepared in accordance with GAAP and present fairly the financial condition
of Borrower as of such date.
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc.
Borrower shall not, directly or indirectly:
(a) merge into or with or consolidate with any other Person or
permit any other Person to merge into or with or consolidate with it,
(b) sell, assign, lease, transfer, abandon or otherwise dispose
of any stock or Indebtedness to any other Person or any of its assets to
any other Person, except for (i) sales of Inventory in the ordinary course
of business, (ii) the disposition or abandonment of worn-out or obsolete
Equipment or Equipment no longer used or useful in the business of
Borrower, (iii) sales of assets, other than any Collateral, consistent with
past practices, (iv) sales of assets, other than any Collateral, which
would not have a material adverse effect on Borrower's ability to perform
its Obligations hereunder or upon the value of any Collateral or the rights
of Lender therein or thereto, (v) the issuance and sale by Borrower of its
own equity securities (subject to Section 10.1(j) hereof), and (vi) the
issuance and sale by Borrower of its own debt securities, to the extent
such Indebtedness is permitted in Section 9.9 hereof, or
(c) form or acquire any Subsidiaries, except Subsidiaries
engaged in the same business as Borrower's present business or a business
closely related thereto (subject, nevertheless, to the other terms and
provisions hereof, including Sections 9.9, 9.10, 9.12 and 9.13), or
(d) wind up, liquidate or dissolve, or
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(e) amend, modify, alter or change any of the material terms of
the Purchase Agreements as in effect on the date hereof, or
(f) agree to do any of the foregoing.
9.8 Encumbrances. Borrower shall not create, incur, assume or suffer
to exist any security interest, mortgage, pledge, lien, charge or other
encumbrance of any nature whatsoever on any of its assets or properties,
including, without limitation, any Collateral, except:
(a) liens and security interests of Lender;
(b) liens securing the payment of taxes, either not yet overdue
or the validity of which are being contested in good faith by appropriate
proceedings diligently pursued and available to Borrower and with respect
to which reserves have been set aside on its books in accordance with GAAP;
(c) non-consensual statutory liens (other than liens pursuant to
ERISA or environmental laws or securing the payment of taxes) arising in
the ordinary course of Borrower's business to the extent:
(i) such liens secure indebtedness which is not overdue for
a period of more than thirty (30) days, or
(ii) such liens secure indebtedness relating to claims or
liabilities which are fully insured and being defended at the
sole cost and expense and at the sole risk of the insurer or
being contested in good faith by appropriate proceedings
diligently pursued and available to Borrower,
in each case under clauses (i) and (ii), prior to the commencement of
foreclosure or other similar proceedings and with respect to which reserves
have been set aside on its books in accordance with GAAP;
(d) liens on property, other than any Collateral, incurred in
the ordinary course of business in respect of Hedging Obligations;
(e) liens on property, other than any Collateral, securing
surety or appeal bonds, performance bonds, insurance obligations, or other
obligations of a like nature incurred in the ordinary course of business;
(f) liens on property, other than any Collateral, arising by
reason of any judgment, decree or order of any court with respect to which
Borrower is then in good faith prosecuting
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an appeal or other proceedings for review, the existence of which judgment,
order or decree is not an Event of Default under this Agreement;
(g) encumbrances on or with respect to real property consisting
of zoning restrictions, survey exceptions, utility easements, access
licenses, rights of way, easements of ingress or egress over real property
of Borrower or restrictions of record on the use of real property, minor
defects in title to real property, mechanics' liens and vendors' liens on
real property, in each case to the extent the same do not interfere in any
material respect with the ordinary conduct of the business of Borrower and
do not impair the value of any Collateral or the rights of Lender therein
or thereto;
(h) liens upon, or deposits of, property other than any
Collateral, made in connection with or to secure the performance of
tenders, bids, and government contracts and leases and subleases;
(i) pledges or deposits of property, other than any Collateral,
under worker's compensation, unemployment or other social security
legislation;
(j) purchase money security interests in Equipment of Borrower
(including capital leases) and purchase money mortgages on real estate, so
long as such security interests and mortgages do not apply to any property
of Borrower other than the Equipment of Borrower or real estate so
acquired, and the indebtedness secured thereby does not exceed the cost of
the Equipment or real estate so acquired, as the case may be; and
(k) the security interests and liens set forth on the
Information Certificate.
9.9 Indebtedness. Borrower shall not incur, create, assume, become
or be liable in any manner with respect to, or permit to exist, any
Indebtedness, except:
(a) the Obligations;
(b) performance bonds, surety bonds and insurance premium
obligations, to the extent incurred in the ordinary course of business;
(c) Hedging Obligations;
(d) Indebtedness under the Tax Sharing Agreement, as in effect
on the date hereof;
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(e) Indebtedness arising out of sale and leaseback transactions
not involving any property which is part of the Collateral and not
otherwise prohibited by this Agreement;
(f) Floor Plan Guaranties;
(g) purchase money Indebtedness (including capital leases) to
the extent not incurred or secured by liens (including capital leases) in
violation of any other provision of this Agreement;
(h) unsecured Indebtedness of Borrower not to exceed the
principal amount of $130,000,000 evidenced by the Senior Notes, as in
effect on the date hereof, and, to the extent provided for in the Senior
Notes and the Note Indenture as such instruments are in effect on the date
hereof, interest thereon at the rate provided for in the Senior Notes;
provided, that:
(w) Borrower shall only make regularly scheduled payments
of principal and interest, or other mandatory payments in respect
of such Indebtedness in accordance with the terms of the Senior
Notes and Note Indenture, each as in effect on the date hereof;
(x) Borrower shall not, directly or indirectly:
(A) amend, modify, alter or change any of the
material terms of the Senior Notes, the Note Indenture,
or any agreements, documents or instruments executed
and/or delivered in connection therewith, each as in
effect on the date hereof, including, but not limited
to, any terms thereof relating to payments, redemptions
or amortization, financial covenants, defaults, or any
collateral therefor, except to the extent any such
amendments, modification, alterations or changes shall
make any such terms no less favorable to Borrower in
the reasonable determination of Lender, or
(B) redeem, retire, defease, purchase or
otherwise acquire any such Indebtedness, or set aside
or otherwise deposit or invest any sums for such
purpose, or
(y) Borrower shall furnish to Lender copies of all
certificates, required notices, demands, claims, notices of
default or acceleration, requests for amendments, waivers or
consents or other material notices, either received from the Note
Trustee or any of the holders of the Senior Notes, or on their
behalf,
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promptly after receipt thereof, or sent by Borrower or any
guarantor thereof, or on its behalf, to any of the holders of the
Senior Notes, or any representative of the holders, (including,
but not limited to, the Note Trustee or other collateral agent or
trustee) promptly after the sending thereof, as the case may be;
(i) unsecured Indebtedness incurred by Borrower for money
borrowed after the date hereof from a non-Affiliate in an aggregate amount
not to exceed (x) $10,000,000 minus (y) the aggregate amount of
Indebtedness incurred after the date hereof as permitted under this Section
9.9(i) or Section 9.9(j) minus (z) the outstanding principal balance of
Indebtedness incurred as permitted under Section 9.9(k), determined as of
the date the Indebtedness under this Section 9.9(i) is incurred, provided,
that, (i) such Indebtedness is permitted under the terms of the Indenture
as in effect on the date hereof, and incurred on commercially reasonable
rates and terms in an arm's length transaction, (ii) Lender shall have
received not less than five (5) Business Days prior written notice of the
intention to incur such Indebtedness, which notice shall set forth in
reasonable detail satisfactory to Lender, the amount of such Indebtedness,
the person to whom such Indebtedness will be owed, the interest rate, the
schedule of repayments and maturity date with respect thereto and such
other information as Lender may reasonably request with respect thereto,
(iii) Lender shall have received true, correct and complete copies of all
agreements, documents and instruments evidencing or otherwise related to
such Indebtedness, (iv) on and before the date of incurring such
Indebtedness and after giving effect thereto, no Event of Default, or event
which with the passage of time or both would constitute an Event of
Default, shall exist or have occurred and be continuing, (v) Borrower may
only make regularly scheduled payments of principal and interest in respect
of such Indebtedness in accordance with the terms of the agreement or
instrument evidencing or giving rise to such indebtedness as in effect on
the date of the execution thereof, (vi) Borrower shall not, directly or
indirectly, (A) make any prepayments or other non-mandatory payments in
respect of such Indebtedness, or (B) amend, modify, alter or change the
terms of such Indebtedness in any material respect or any agreement,
document or instrument related thereto, or (C) redeem, retire, defease,
purchase or otherwise acquire such Indebtedness, or set aside or otherwise
deposit or invest any sums for such purpose; provided, however, that
Borrower may engage in any transaction otherwise prohibited by clauses
(vi)(A) or (vi)(C) of this Section 9.9(i), so long as (1) no Event of
Default, or event which, with notice or passage of time, or both, would
constitute an Event of Default shall exist or have occurred and be
continuing, and (2) Borrower shall have Excess Availability of not less
than $8,000,000 for the period of thirty (30) consecutive days immediately
preceding and after giving effect to each such transaction, and (vii)
Borrower
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shall furnish to Lender copies of all certificates, required notices,
demands, claims, notices of default or acceleration, requests for
amendments, waivers or consents or other material notices in connection
with such Indebtedness either received by Borrower or on its behalf,
promptly after the receipt thereof, or sent by Borrower or on its behalf,
concurrently with the sending thereof, as the case may be;
(j) unsecured Indebtedness incurred by Borrower for money
borrowed after the date hereof from an Affiliate in an aggregate amount not
to exceed (x) $10,000,000 minus (y) the aggregate amount of Indebtedness
incurred after the date hereof as permitted under Section 9.9(i) or this
Section 9.9(j) minus (z) the outstanding principal balance of Indebtedness
incurred as permitted under Section 9.9(k), determined as of the date the
Indebtedness under this Section 9.9(j) is incurred, provided, that, (i)
such Indebtedness is permitted under the terms of the Indenture as in
effect on the date hereof, and incurred on commercially reasonable rates
and terms no less favorable to Borrower than would be obtained in an arm's
length transaction with a non-Affiliate, (ii) Lender shall have received
not less than five (5) Business Days prior written notice of the intention
to incur such Indebtedness, which notice shall set forth in reasonable
detail satisfactory to Lender, the amount of such Indebtedness, the person
to whom such Indebtedness will be owed, the interest rate, the schedule of
repayments and maturity date with respect thereto and such other
information as Lender may reasonably request with respect thereto, (iii)
Lender shall have received true, correct and complete copies of all
agreements, documents and instruments evidencing or otherwise related to
such Indebtedness, which shall, as to payments, be expressly be made
subject to the terms of this Section, (iv) on and before the date of
incurring such Indebtedness and after giving effect thereto, no Event of
Default, or event which with the passage of time or both would constitute
an Event of Default, shall exist or have occurred and be continuing, (v)
Borrower shall not make any payments or mandatory or non-mandatory
prepayments in respect of such Indebtedness, except that Borrower may make
regularly scheduled payments of principal and interest in respect of such
Indebtedness in accordance with the terms of the agreement or instrument
evidencing or giving rise to such indebtedness as in effect on the date of
the execution thereof, but such regularly scheduled payments may only be
made so long as (1) no Event of Default, or event which, with notice or
passage of time, or both, would constitute an Event of Default shall exist
or have occurred and be continuing, and (2) Borrower shall have Excess
Availability of not less than $8,000,000 for the period of thirty (30)
consecutive days immediately preceding and after giving effect to each such
payment, (vi) Borrower shall not, directly or indirectly, or (A) amend,
modify, alter or change the terms of such Indebtedness in any material
respect or any agreement, document or instrument related thereto, or (B)
redeem, retire,
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defease, purchase or otherwise acquire such Indebtedness, or set aside or
otherwise deposit or invest any sums for such purpose, and (vii) Borrower
shall furnish to Lender copies of all certificates, required notices,
demands, claims, notices of default or acceleration, requests for
amendments, waivers or consents or other material notices in connection
with such Indebtedness either received by Borrower or on its behalf,
promptly after the receipt thereof, or sent by Borrower or on its behalf,
concurrently with the sending thereof, as the case may be;
(k) unsecured Indebtedness incurred by Borrower for loans to
Borrower made by its Subsidiaries in an aggregate amount not to exceed, at
any one time outstanding, the amount of (x) $10,000,000 minus (y) the
aggregate amount of Indebtedness incurred after the date hereof as
permitted under Sections 9.9(i) and (j) hereof; provided, that, (i) such
Indebtedness is permitted under the terms of the Indenture as in effect on
the date hereof, on commercially reasonable rates and terms, (ii) Borrower
shall not, directly or indirectly, make any payments in respect of such
Indebtedness, including, but not limited to, any prepayments, and the terms
of such Indebtedness shall expressly provide that no such payments or
prepayments of such Indebtedness shall be required or accepted, or any
funds set aside therefor or any Receivables owed to Borrower set-off
against such Indebtedness, except that, until an Event of Default, or event
which with notice or passage of time or both would constitute an Event of
Default, shall exist or have occurred and be continuing, and provided
Borrower shall have Excess Availability of not less than $8,000,000 for the
period of thirty (30) consecutive days immediately preceding and after
giving effect to each such payment, Borrower may make payments of principal
and interest in accordance with the terms of such Indebtedness as in effect
on the date of incurrence, (iii) Borrower shall not, directly or
indirectly, amend, modify, alter or change any terms of such Indebtedness
or any agreement, document or instrument related thereto, and (iv) Borrower
shall furnish to Lender copies of all certificates, required notices,
demands, claims, notices of default or acceleration, requests for
amendments, waivers or consents or other material notices concerning such
Indebtedness either received by Borrower or on its behalf, promptly after
receipt thereof, or sent by Borrower or on its behalf, concurrently with
the sending thereof, as the case may be; and
(l) Indebtedness issued in exchange for, or the proceeds of
which are contemporaneously used to extend, refinance, renew, replace or
refund, but not to increase, any Indebtedness permitted pursuant to the
terms of this Agreement, on terms not materially less favorable to the
Borrower or to Lender than the terms of the Indebtedness so extended,
refinanced, renewed, replaced or refunded.
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9.10 Loans, Investments, Guarantees, Etc. Borrower shall not,
directly or indirectly, make any loans or advance money or property to any
person, or invest in (by capital contribution, dividend or otherwise), or
purchase or repurchase the stock, obligations or Indebtedness or all or a
substantial part of the assets or property of any person, or guarantee,
assume, endorse, or otherwise become responsible for (directly or
indirectly) the Indebtedness, performance, obligations or dividends of any
Person or make any other Investment, or agree to do any of the foregoing,
except:
(a) the endorsement of instruments for collection or deposit in
the ordinary course of business;
(b) Investments reported as of the end of each month to Lender
in:
(i) direct obligations of the United States of America
or any agency thereof, or obligations guaranteed by the United
States of America or any agency thereof, in each case having a
maturity not beyond one year,
(ii) time deposit accounts, certificates of deposit and
money market deposits, in each case having a maturity not beyond
one year, issued by a bank or trust company which is organized
under the laws of the United States of America or any state
thereof whose debt is rated "A" (or such similar rating) or
higher by at least one nationally recognized statistical rating
organization (as defined in Rule 436 under the Securities Act of
1933, as amended) or which is otherwise satisfactory to Lender,
(iii) repurchase obligations with a term of not more
than thirty (30) days for underlying securities of the types
described in clause (i) above entered into with a bank meeting
the qualifications described in clause (ii) above,
(iv) commercial paper with a rating of "P-1" (or
higher) according to Moody's Investors Service, Inc. or "A-1" (or
higher) according to Standard and Poor's Corporation, and
(v) money-market funds sponsored by any registered
broker dealer or mutual fund distributor, which invest solely in
one or more of the securities referred to in clauses (i), (ii),
(iii) or (iv) or that are otherwise satisfactory to Lender;
(c) Floor Plan Guaranties;
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(d) Investments consisting of stock in the Foreign Subsidiaries
as in effect on the date hereof;
(e) Investments by Borrower made after the date hereof in the
form of loans to Holdings or in the form of equity interests in, or loans
to, or guaranties of Indebtedness of, the Foreign Subsidiaries or in the
form of equity interests in, or loans to, or guaranties of Indebtedness of,
newly formed or acquired Subsidiaries of Borrower engaged in the same
business as Borrower's present business or a business closely related
thereto, or to dealers or suppliers of Borrower, not to exceed, in the
aggregate for all such Investments after the date hereof, an amount equal
to (x) $10,000,000 minus (y) the aggregate amount of dividends declared or
paid after the date hereof as permitted under Section 9.11(a) hereof;
provided, that, (i) each such Investment is permitted under the terms of
the Indenture as in effect on the date hereof, (ii) Lender shall have
received not less than five (5) Business Days notice of the intention to
make each such Investment (except for short-term loans in the ordinary
course of business by Borrower to Clark Germany of up to $1,000,000 which
shall be reported to Lender monthly), (iii) on and before the making of
each such Investment and after giving effect thereto, no Event of Default,
or event which, with notice or passage of time or both would constitute an
Event of Default, shall exist or have occurred and be continuing, (iv)
Borrower shall have Excess Availability of not less than $8,000,000 for the
period of thirty (30) consecutive days immediately preceding and after
giving effect to each such Investment, and (v) Borrower shall provide
Lender with copies of all agreements, documents and instruments evidencing
or relating to the making of each such Investment; and further provided
that (1) no such Investments shall, directly or indirectly, be used to pay,
or to setoff against, any Receivables owed to Borrower by the person
receiving such Investment or its Affiliates, and (2) such Investments in
the form of loans to Holdings shall not exceed either (I) $500,000 in any
fiscal year of Borrower, less the aggregate amount of dividends declared or
paid by Borrower in such fiscal year as permitted under Section 9.11(a)
hereof, or (II) $1,500,000 in the aggregate on or after the date hereof
less the aggregate amount of dividends declared or paid by Borrower after
the date hereof, as permitted under Section 9.11(a) hereof, and (3) such
Investments in the form of loans to Holdings shall be used only for the
purposes of funding redemptions of stock in Holdings owned by management
employees of Borrower who have died or whose employment has terminated,
which such redemptions shall be made only out of legally available funds
therefor;
(f) advances and loans to officers and employees of Borrower in
the ordinary course of business for relocation expenses, commission, travel
and similar advances, not to exceed the amount of $250,000 in the aggregate
for all such advances and loans at any one time outstanding; and
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(g) the guarantees by Borrower set forth in the Information
Certificate.
9.11 Dividends and Redemptions. Borrower shall not, directly or
indirectly:
(a) declare or pay any dividends on account of any shares of
class of capital stock of Borrower now or hereafter outstanding (or set
aside or otherwise deposit or invest any sums for such purpose), except
cash dividends declared and paid by Borrower to Holdings after the date
hereof out of legally available funds therefor, such dividends not to
exceed (x) in the aggregate for all such dividends declared or paid after
the date hereof, an amount equal to $1,500,000 less the amount of loans
made by Borrower to Holdings as permitted under the second proviso
contained in Section 9.10(e), or (y) in any one fiscal year of Borrower, an
amount equal to $500,000 less the amount of loans made by Borrower to
Holdings in such fiscal year as permitted under the second proviso
contained in Section 9.10(e); provided, that, (i) each such dividend is
permitted to be declared and paid under the terms of the Indenture as in
effect on the date hereof, (ii) Lender shall have received not less than
five (5) Business Days notice of the intention to declare and of the
intention to pay each such dividend, (iii) on and before each of the
declaration and payment of each such dividend and after giving effect
thereto, no Event of Default, or event which, with notice or passage of
time or both would constitute an Event of Default, shall exist or have
occurred and be continuing, (iv) Borrower shall have Excess Availability of
not less than $8,000,000 for the period of thirty (30) consecutive days
immediately preceding and after giving effect to each such declaration and
payment, and (v) Borrower shall provide Lender with copies of all
agreements, documents and instruments evidencing or relating to the
declaration and payment of each such dividend; and further provided that
such dividends shall be used only for the purposes of funding redemptions
of stock in Holdings owned by management employees of Borrower who have
died or whose employment has terminated, which redemptions shall be
declared and paid only out of legally available funds therefor; and further
provided that the aggregate amount of dividends so declared or paid after
the date hereof, when added to the aggregate amount of Investments made by
Borrower after the date hereof as permitted by Section 9.10(e) hereof shall
not exceed $10,000,000.
(b) redeem, retire, defease, purchase or otherwise acquire any
shares of any class of capital stock (or set aside or otherwise deposit or
invest any sums for such purpose) for any consideration other than common
stock or apply or set apart any sum, or make any other distribution (by
reduction of capital or otherwise) in respect of any such shares or agree
to do any of the foregoing.
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9.12 Additional Restrictions for Certain Indebtedness, Investments and
Dividends.
The incurrence of Indebtedness permitted under Section 9.9(i) and
9.9(j) hereof, the making of Investments permitted under Section 9.10(e)
hereof and the declaration and payment of dividends permitted under Section
9.11(a) hereof shall be further subject to the following additional
restrictions:
(a) In the case of any payment to be made in respect of
Indebtedness incurred under Section 9.9(i) hereof, unless Borrower shall
have Excess Availability for the period of (30) consecutive days
immediately preceding each such payment and after giving effect thereto of
not less than $8,000,000, determined without regard to the net positive
amount (if any) that would otherwise be added under clause (b) of the
definition of Excess Availability, after taking into account the negative
adjustment (if any) under the proviso contained in the definition of Excess
Availability (such net positive amount, if any, the "Net Cash Position"),
such payment shall not be funded, directly or indirectly, with proceeds of
Revolving Loans until Borrower has first applied to such payment all
permitted Investments in the form of cash and cash equivalents included in
such clause(b) of such definition, except that if such payment is in
respect of a transaction permitted by the proviso to clause (vi) of Section
9.9(i), such payment shall not be funded, directly or indirectly, with the
proceeds of Revolving Loans and shall only be funded in an amount not in
excess of the amount of the Net Cash Position (if any) at the time of
payment.
(b) In the case of any payment to be made in respect of
Indebtedness incurred under Section 9.9(j) hereof, unless Borrower shall
have Excess Availability for the period of (30) consecutive days
immediately preceding each such payment and after giving effect thereto of
not less than $8,000,000, determined without regard to the Net Cash
Position at the time of such payment, such payment shall not be funded,
directly or indirectly, with proceeds of Revolving Loans and shall only be
funded with permitted Investments in the form of cash and cash equivalents
(or the proceeds thereof) of Borrower included under such clause (b) of
such definition and only in an amount not in excess of the amount of the
Net Cash Position (if any) at the time of payment.
(c) In the case of any Investment to be made or a dividend to be
declared or paid pursuant to and as permitted under Sections 9.10(e) or
9.11(a) hereof, unless the Excess Availability requirement set forth in the
clause (iv) of Section 9.10(e) or clause (iv) of Section 9.11(a), as
applicable, would be satisfied if Excess Availability were determined by
Lender for the thirty (30) consecutive day immediately preceding such
Investment or declaration or payment of such dividend and after
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giving effect thereto, without regard to the Net Cash Position (if any) at
the time of such Investment, declaration or payment, such Investment or
dividend shall only be permitted to the extent that it is not funded,
directly or indirectly, with proceeds of Revolving Loans and is only funded
with permitted Investments in the form of cash or cash equivalents (or the
proceeds thereof) included under such clause (b) of such definition and
only in an amount not in excess of the Net Cash Position (if any) at the
time of payment.
9.13 Transactions with Affiliates.
(a) Borrower shall not, directly or indirectly, enter into any
transaction for the purchase, sale or exchange of property or the
rendering of any service to or by any Affiliate or Subsidiary, except in
the ordinary course of and pursuant to the reasonable requirements of
Borrower's business in accordance with past practices and upon fair and
reasonable terms no less favorable to Borrower than such Borrower would
obtain in a comparable arm's length transaction with an unaffiliated
person, except that no sales, transfers or deliveries of Inventory to any
Affiliate or Subsidiary shall be made unless (i) prior written notice
thereof is given by Borrower to Lender, who shall therefor reduce the
Eligible Inventory of Borrower by the net reduction of Eligible Inventory
resulting from such transaction, and (ii) after giving effect to such
reduction, the Loans and Letter of Credit Accommodations would not exceed
the amounts available under the lending formulas and subject to the
sublimits set forth in this Agreement.
(b) Nothing in this Agreement shall prohibit payments by
Borrower (i) to Holdings of proper allocations of ordinary corporate
administrative and operating expenses in an amount not to exceed $1,000,000
in any fiscal year of Borrower or (ii) to directors of customary and
reasonable directors' fees and expenses not to exceed $100,000 in the
aggregate in any fiscal year of Borrower.
9.14 Costs and Expenses. Borrower shall pay to Lender on demand all
filing fees, taxes and all reasonable costs and expenses paid or payable in
connection with the preparation, negotiation, execution, delivery,
recording, administration, collection, liquidation, enforcement and defense
of the Obligations, and the rights of Lender in the Collateral, this
Agreement, the other Financing Agreements and all other documents related
hereto or thereto, including any amendments, supplements or consents which
may hereafter be contemplated (whether or not executed) or entered into in
respect hereof and thereof, including, but not limited to: (a) all
out-of-pocket costs and expenses of filing or recording (including Uniform
Commercial Code financing statement filing taxes and fees, documentary
taxes, intangibles taxes and mortgage recording taxes and fees,
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if applicable); (b) all insurance premiums, appraisal fees and search fees;
(c) reasonable costs and expenses of remitting loan proceeds, collecting
checks and other items of payment, and establishing and maintaining the
Blocked Accounts, together with customary and reasonable charges and fees
of Lender with respect thereto; (d) charges, fees or expenses charged by
any bank or issuer in connection with the Letter of Credit Accommodations;
(e) costs and expenses of preserving and protecting the Collateral; (f)
costs and expenses paid or incurred in connection with obtaining payment of
the Obligations, enforcing the security interests and liens of Lender
selling or otherwise realizing upon the Collateral, and otherwise enforcing
the provisions of this Agreement and the other Financing Agreements or
defending any claims made or threatened against Lender arising out of the
transactions contemplated hereby and thereby (including, without
limitation, preparations for and consultations concerning any such
matters); provided, that Borrower shall not be liable for the costs of
defending claims asserted (x) by Borrower against Lender which claims are
successfully established pursuant to a final, non-appealable judgment of a
court of competent jurisdiction rendered in favor of Borrower against
Lender, or (y) by a person, other than a Borrower, against Lender, which
claims result in a final, non-appealable judgment rendered in favor of such
person against Lender, and which judgment clearly sets forth the basis for
liability as the willful misconduct, bad faith or gross negligence of such
Lender; (g) upon and during the continuance of an Event of Default, all
reasonable out-of-pocket expenses and costs heretofore and from time to
time hereafter incurred by Lender during the course of periodic field
examinations of the Collateral and Borrower's operations, plus a per diem
charge at the rate of $600 per person per day for examiners of Lender in
the field and office; (h) the reasonable fees and disbursements of outside
counsel (including legal assistants) to Lender in connection with any of
the foregoing and (i) the reasonable fees and disbursements of outside
counsel (including legal assistants) to Lender or, upon and during the
continuance of an Event of Default, any Participant in connection with any
of the foregoing (other than legal fees and disbursements of counsel
(including legal assistants) of a Participant incurred to become a
Participant.
9.15 Compliance with ERISA. Borrower shall not with respect to any
"employee benefit plans" maintained by Borrower or any of its ERISA
Affiliates:
(a) (i) terminate any of such employee benefit plans so as to
incur any liability to the Pension Benefit Guaranty Corporation established
pursuant to ERISA, (ii) allow or suffer to exist any prohibited transaction
involving any of such employee benefit plans or any trust created
thereunder which would subject Borrower or such ERISA Affiliates to a tax
or penalty or other liability on prohibited transactions imposed
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under Section 4975 of the Code or ERISA, (iii) fail to pay to any such
employee benefit plan any contribution which it is obligated to pay under
Section 302 of ERISA, Section 412 of the Code or the terms of such plan,
(iv) allow or suffer to exist any accumulated funding deficiency, whether
or not waived, with respect to any such employee benefit plan, (v) allow or
suffer to exist any occurrence of a reportable event or any other event or
condition which presents a material risk of termination by the Pension
Benefit Guaranty Corporation of any such employee benefit plan that is a
single employer plan, which termination could result in any liability to
the Pension Benefit Guaranty Corporation or (vi) incur any withdrawal
liability with respect to any multiemployer pension plan.
(b) As used in this Section 9.15, the term "employee benefit
plans", "accumulated funding deficiency" and "reportable event" shall have
the respective meanings assigned to them in ERISA, and the term "prohibited
transaction" shall have the meaning assigned to it in Section 4975 of the
Code and ERISA.
9.16 No Conflicts with Amount of Maximum Credit. Notwithstanding
anything to the contrary provided herein, Borrower shall not, and shall not
permit Clark Germany or any other Subsidiary of Borrower, to incur
Indebtedness under the German Subsidiary Facilities, as defined in the
Indenture as in effect on the date hereof, in an amount that would reduce
the maximum amount of Indebtedness permitted under the Indenture or any
other agreement to which Borrower or any of its Subsidiaries is now or
hereafter a party to be incurred in favor of Lender under this Agreement at
any time to an amount below $30,000,000, and Borrower shall not take, or
permit Clark Germany or any other Subsidiary of Borrower to take, any other
action that would have the same effect; provided, that nothing in this
Section shall modify the terms and conditions hereof, including Section 2
hereof, upon which Revolving Loans and Letter of Credit Accommodations will
be available to Borrower, or the amounts thereof.
9.17 Further Assurances. At the request of Lender at any time and
from time to time, Borrower shall, at its expense, duly execute and
deliver, or cause to be duly executed and delivered, such further
agreements, documents and instruments, and do or cause to be done such
further acts as may be necessary or proper to evidence, perfect, maintain
and enforce the security interests and the priority thereof in the
Collateral and to otherwise effectuate the provisions or purposes of this
Agreement or any of the other Financing Agreements. Lender may at any time
and from time to time request a certificate from an officer of Borrower
representing that all conditions precedent to the making of Loans and
providing Letter of Credit Accommodations contained herein are satisfied.
In the event of such request by Lender, may, at its option, cease to make
any further Loans or provide any
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further Letter of Credit Accommodations until Lender has received such
certificate and, in addition, Lender has determined that such conditions
are satisfied. Where permitted by law, Borrower hereby authorizes Lender
to execute and file one or more UCC financing statements with respect to
the Collateral signed only by Lender.
SECTION 10. EVENTS OF DEFAULT AND REMEDIES
10.1 Events of Default. The occurrence or existence of any one or
more of the following events are referred to herein individually as an
"Event of Default", and collectively as "Events of Default":
(a) (i) Borrower fails to pay any of the Obligations or within
two (2) Business Days after the due date thereof, or (ii) Borrower fails to
perform any of the terms, covenants, conditions or provisions contained in
this Agreement or any of the other Financing Agreements other than as
described in Section 10.1(a)(i), and, in the case of a failure to comply
with the terms, covenants, conditions or provisions contained in:
(1) Section 9.1, to the extent such failure consists
solely of a failure to be qualified as a foreign corporation
to do business in a jurisdiction, such failure shall
continue for a period of sixty (60) days, or
(2) Section 9.2(a), Lender shall fail to receive
notice of such new location within twenty (20) days after
the opening or establishment thereof (but such twenty (20)
day period shall not apply if any of the Inventory at such
new location is included in any Collateral report delivered
to Lender), or
(3) the first sentence of Section 9.4, such failure
shall continue for a period of thirty (30) days, or
(4) Section 9.6(a)(i), to the extent such failure
consists solely of a failure to deliver timely financial
statements for the third, sixth, ninth or twelfth calendar
months, such failure shall continue for a period of five (5)
days, or
(5) Section 9.6(a)(ii), to the extent such failure
consists solely of a failure to deliver timely the annual
audited financial statements of Borrower, such failure shall
continue for a period of ten (10) days, or
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(6) Section 9.15, to the extent such failure shall
continue for a period of thirty (30) days;
provided, that, such specified periods in clauses (1) through (6) above
shall not apply in the case of: (A) any failure to observe any such term,
covenant, condition or provision which is not capable of being cured at all
or within such specified periods or which has been the subject of a prior
failure within a six (6) month period or (B) an intentional breach by
Borrower or any Obligor of any such term, covenant, condition or provision
or (C) any failure which adversely affects any Collateral or its value or
the rights or interests of Lender therein or thereto;
(b) any representation, warranty or statement of fact made by
Borrower to Lender in this Agreement, the other Financing Agreements or any
other agreement, schedule, confirmatory assignment or otherwise shall when
made or deemed made be false or misleading in any material respect;
(c) any Obligor revokes, terminates or fails to perform any of
the terms, covenants, conditions or provisions of any guarantee,
endorsement or other agreement of such party in favor of Lender;
(d) (i) any judgment for the payment of money is rendered
against Borrower or any Obligor in excess of $500,000 in any one case, or
in excess of $1,000,000 in the aggregate and shall remain undischarged or
unvacated for a period in excess of forty-five (45) days or execution shall
at any time not be effectively stayed, or (ii) any judgment other than for
the payment of money, or injunction, attachment, garnishment or execution
is rendered against Borrower or any Obligor or any of their assets which
would either (A) have a material adverse effect upon the business or assets
of Borrower or Obligor or (B) have an adverse effect on the value of any
Collateral or the rights of Lender therein or thereto;
(e) any Obligor (being a natural person or a general partner of
an Obligor which is a partnership) dies or Borrower or any Obligor, which
is a partnership or corporation, dissolves or suspends or discontinues
doing business;
(f) Borrower or any Obligor becomes insolvent, makes an
assignment for the benefit of creditors or makes or sends notice of a bulk
transfer;
(g) a case or proceeding under the bankruptcy laws of the United
States of America now or hereafter in effect or under any insolvency,
reorganization, receivership, readjustment of debt, dissolution or
liquidation law or statute of any jurisdiction now or hereafter in effect
(whether at law or in equity) is filed against Borrower or any Obligor or
all or any
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part of its properties and such petition or application is not dismissed
within forty (45) days after the date of its filing or Borrower or any
Obligor shall file any answer admitting or not contesting such petition or
application or indicates its consent to, acquiescence in or approval of,
any such action or proceeding or the relief requested is granted sooner;
(h) a case or proceeding under the bankruptcy laws of the United
States of America now or hereafter in effect or under any insolvency,
reorganization, receivership, readjustment of debt, dissolution or
liquidation law or statute of any jurisdiction now or hereafter in effect
(whether at a law or equity) is filed by Borrower or any Obligor or for all
or any part of its property;
(i) (A) any default by Borrower or any Obligor under any
agreement, document or instrument relating to any indebtedness for borrowed
money owing to any person other than Lender (including, but not limited to,
the Senior Notes and the Note Indenture), or any capitalized lease
obligations, contingent indebtedness in connection with any guarantee,
letter of credit, indemnity or similar type of instrument in favor of any
person other than Lender, in any case where such indebtedness, obligations
or contingent indebtedness is in an amount in excess of $2,000,000, which
default results in a demand for payment or acceleration of any of the
foregoing indebtedness, obligations, or contingent indebtedness, or (B) any
default by Borrower or any Obligor under the Service Agreement, the
Purchase Agreements or any other material contract, lease, license or other
obligation to any person other than Lender other than under an agreement,
document or instrument referred to in clause (A), which default continues
for more than the applicable cure period, if any, with respect thereto, or
any termination of the Service Agreement while any material amount of
Borrower's Inventory or material Records remain in Terex's possession or
under its control;
(j) any Change of Control;
(k) the indictment or threatened indictment of Borrower or any
Obligor under any criminal statute, or commencement or threatened
commencement of criminal or civil proceedings against any Borrower or any
Obligor, pursuant to which statute or proceedings the penalties or remedies
sought or available include forfeiture of any material portion of the
property of Borrower or any Obligor or any Collateral;
(l) there shall be a material adverse change in the business or
assets of Borrower or any Obligor after the date hereof; or
(m) there shall be an event of default under any of the other
Financing Agreements.
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10.2 Remedies.
(a) At any time an Event of Default exists or has occurred and
is continuing, Lender shall have all rights and remedies provided in this
Agreement, the other Financing Agreements, the Uniform Commercial Code and
other applicable law, all of which rights and remedies may be exercised
without notice to or consent by Borrower or any Obligor, except as such
notice or consent is expressly provided for hereunder or required by
applicable law. All rights, remedies and powers granted to Lender
hereunder, under any of the other Financing Agreements, the Uniform
Commercial Code or other applicable law, are cumulative, not exclusive and
enforceable, in Lender's discretion, alternatively, successively, or
concurrently on any one or more occasions, and shall include, without
limitation, the right to apply to a court of equity for an injunction to
restrain a breach or threatened breach by Borrower of this Agreement or any
of the other Financing Agreements. Lender may, at any time or times,
proceed directly against Borrower or any Obligor to collect the Obligations
without prior recourse to the Collateral.
(b) Without limiting the foregoing, at any time an Event of
Default exists or has occurred and is continuing, Lender may, in its
discretion and without limitation, (i) by notice to Borrower accelerate the
payment of all Obligations and demand immediate payment thereof to Lender,
by any or all of Borrower or Obligors (provided, that, upon the occurrence
of any Event of Default described in Sections 10.1(g) and 10.1(h), all
Obligations shall automatically become immediately due and payable), (ii)
with or without judicial process or the aid or assistance of others, enter
upon any premises on or in which any of the Collateral may be located and
take possession of the Collateral or complete processing, manufacturing and
repair of all or any portion of the Collateral, (iii) require Borrower, at
Borrower's expense, to assemble and make available to Lender any part or
all of the Collateral at any place and time designated by Lender, (iv)
collect, foreclose, receive, appropriate, setoff and realize upon any and
all Collateral, (v) remove any or all of the Collateral from any premises
on or in which the same may be located for the purpose of effecting the
sale, foreclosure or other disposition thereof or for any other purpose,
(vi) sell, lease, transfer, assign, deliver or otherwise dispose of any and
all Collateral (including, without limitation, entering into contracts with
respect thereto, public or private sales at any exchange, broker's board,
at any office of Lender or elsewhere) at such prices or terms as Lender may
deem reasonable, for cash, upon credit or for future delivery, with the
Lender having the right to purchase the whole or any part of the Collateral
at any such public sale, all of the foregoing being free from any right or
equity of redemption of Borrower, which right or equity of redemption is
hereby expressly waived and released by Borrower and/or (vii) terminate
this Agreement. If any of the Collateral
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is sold or leased by Lender upon credit terms or for future delivery, the
Obligations shall not be reduced as a result thereof until payment therefor
is finally collected by Lender. Unless the Collateral involved in a sale
or other disposition by Lender is perishable or threatens to decline
speedily in value or is of a type customarily sold in a recognized market,
ten (10) days prior notice of disposition of such Collateral by Lender,
designating the time and place of any public sale or the time after which
any private sale or other intended disposition of any Collateral is to be
made, shall be given to Borrower and shall be deemed to be reasonable
notice thereof and Borrower waives any other notice. In the event Lender
institutes an action to recover any Collateral or seeks recovery of any
Collateral by way of prejudgment remedy, Borrower waives the posting of any
bond which might otherwise be required.
(c) Lender may apply the cash proceeds of Collateral actually
received by Lender from any collection of Receivables, sale, lease,
foreclosure or other disposition of the Collateral to payment of the
Obligations, in whole or in part and in such order as Lender may elect,
whether or not then due. Borrower shall remain liable to Lender for the
payment of any deficiency with interest at the highest rate provided for
herein and all costs and expenses of collection or enforcement, including
attorneys' fees and legal expenses.
(d) Without limiting the foregoing, upon the occurrence of an
Event of Default or an event which with notice or passage of time or both
would constitute an Event of Default, Lender may, at its option, without
notice, (i) cease making Loans or arranging for Letter of Credit
Accommodations or reduce the lending formulas or amounts of Revolving Loans
and Letter of Credit Accommodations available to Borrower and/or (ii)
terminate any provision of this Agreement providing for any future Loans or
Letter of Credit Accommodations to be made by Lender to Borrower.
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS
AND CONSENTS; GOVERNING LAW
11.1 Governing Law; Choice of Forum; Service of Process; Jury Trial
Waiver.
(a) The validity, interpretation and enforcement of this
Agreement and the other Financing Agreements and any dispute arising out of
the relationship between the parties hereto, whether in contract, tort,
equity or otherwise, shall be governed by the internal laws of the State of
New York (without giving effect to principles of conflicts of law).
(b) Each of Borrower and Lender irrevocably consents and submits
to the non-exclusive jurisdiction of the Supreme
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Court of the State of New York, County of New York and the United States
District Court for the Southern District of New York and waives any
objection based on venue or forum non conveniens with respect to any action
instituted therein arising under this Agreement or any of the other
Financing Agreements or in any way connected with or related or incidental
to the dealings of the parties hereto in respect of this Agreement or any
of the other Financing Agreements or the transactions related hereto or
thereto, in each case whether now existing or hereafter arising, and
whether in contract, tort, equity or otherwise, and agrees that any dispute
with respect to any such matters shall be heard only in the courts
described above (except Lender shall have the right to bring any action or
proceeding against Borrower or its property in the courts of any other
jurisdiction which Lender deems necessary or appropriate in order to
realize on the Collateral or to otherwise enforce its rights against
Borrower or its property).
(c) Borrower hereby waives personal service of any and all
process upon it and consents that all such service of process may be made
by certified mail (return receipt requested) directed to its address set
forth on the signature pages hereof and service so made shall be deemed to
be completed five (5) days after the same shall have been so deposited in
the U.S. mails, or, at the option of Lender, by service upon Borrower in
any other manner provided under the rules of any such courts. Within
thirty (30) days after such service, Borrower shall appear in answer to
such process, failing which Borrower shall be deemed in default and
judgment may be entered by Lender against Borrower for the amount of the
claim and other relief requested.
(d) BORROWER AND LENDER HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY
OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING UNDER THIS
AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR (ii) IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES
HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE OTHER FINANCING
AGREEMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT,
EQUITY OR OTHERWISE. BORROWER AND LENDER HEREBY AGREE AND CONSENT THAT ANY
SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT
TRIAL WITHOUT A JURY AND THAT BORROWER OR LENDER MAY FILE AN ORIGINAL
COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE
OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHTS TO TRIAL
BY JURY.
(e) Lender shall not have any liability to Borrower (whether in
tort, contract, equity or otherwise) for losses suffered by Borrower in
connection with, arising out of, or in any way related to the transactions
or relationships contemplated by this Agreement, or any act, omission or
event occurring in
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connection herewith, unless it is determined by a final and non-appealable
judgment or court order binding on Lender, that the losses were the result
of acts or omissions constituting gross negligence, willful misconduct or
bad faith. In any such litigation, Lender shall be entitled to the benefit
of the rebuttable presumption that it acted in good faith and with the
exercise of ordinary care in the performance by it of the terms of this
Agreement.
11.2 Waiver of Notices. Borrower hereby expressly waives demand,
presentment, protest and notice of protest and notice of dishonor with
respect to any and all instruments and commercial paper, included in or
evidencing any of the Obligations or the Collateral, and any and all other
demands and notices of any kind or nature whatsoever with respect to the
Obligations, the Collateral and this Agreement, except such as are
expressly provided for herein. No notice to or demand on Borrower which
Lender may elect to give shall entitle Borrower to any other or further
notice or demand in the same, similar or other circumstances.
11.3 Amendments and Waivers. Neither this Agreement nor any
provision hereof shall be amended, modified, waived or discharged orally or
by course of conduct, but only by a written agreement, signed, in the case
of amendments or modifications, by authorized officers of Borrower and
Lender, and signed, in the case of waivers or discharges in favor of
Borrower, by authorized officers of Lender. Lender shall not, by any act,
delay, omission or otherwise be deemed to have expressly or impliedly
waived any of its rights, powers and/or remedies unless such waiver shall
be in writing and signed by an authorized officer of Lender. Any such
waiver shall be enforceable only to the extent specifically set forth
therein. A waiver by Lender of any right, power and/or remedy on any one
occasion shall not be construed as a bar to or waiver of any such right,
power and/or remedy which Lender would otherwise have on any future
occasion, whether similar in kind or otherwise.
11.4 Waiver of Counterclaims. Borrower waives all rights to
interpose any claims, deductions, setoffs or counterclaims of any nature
(other then compulsory counterclaims) in any action or proceeding with
respect to this Agreement, the Obligations, the Collateral or any matter
arising therefrom relating hereto or thereto.
11.5 Indemnification. Borrower shall indemnify and hold Lender, and
its directors, agents, employees and counsel, harmless from and against any
and all losses, claims, damages, liabilities, costs or expenses imposed on,
incurred by or asserted against any of them in connection with any
litigation, investigation, claim or proceeding commenced or threatened
related to the negotiation, preparation, execution, delivery,
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enforcement, performance or administration of this Agreement, any other
Financing Agreements, or any undertaking or proceeding related to any of
the transactions contemplated hereby or any act, omission, event or
transaction related or attendant thereto, including, without limitation,
amounts paid in settlement, court costs, and the reasonable fees and
expenses of counsel, but excluding any such losses, claims, damages,
liabilities, costs and expenses directly caused to be incurred by reason of
the gross negligence, willful misconduct or bad faith of the person
otherwise to be indemnified and held harmless under this Section, as
determined by a final, non-appealable judgment of a court of competent
jurisdiction. To the extent that the undertaking to indemnify, pay and
hold harmless set forth in this Section may be unenforceable because it
violates any law or public policy, Borrower shall pay the maximum portion
which it is permitted to pay under applicable law to Lender in satisfaction
of indemnified matters under this Section. The foregoing indemnity shall
survive the payment of the Obligations and the termination or non-renewal
of this Agreement.
SECTION 12. TERM OF AGREEMENT; MISCELLANEOUS
12.1 Term.
(a) This Agreement and the other Financing Agreements shall
become effective as of the date set forth on the first page hereof and
shall continue in full force and effect for a term ending on the date three
(3) years from the date hereof (the "Renewal Date"), and from year to year
thereafter, unless sooner terminated pursuant to the terms hereof. Lender
or Borrower may terminate this Agreement and the other Financing Agreements
effective on the Renewal Date or on the anniversary of the Renewal Date in
any year by giving to the other party at least sixty (60) days prior
written notice; provided, that, this Agreement and all other Financing
Agreements must be terminated simultaneously. Upon the effective date of
termination or non-renewal of the Financing Agreements, Borrower shall pay
to Lender, in full all outstanding and unpaid Obligations and shall furnish
cash collateral to Lender in such amounts as Lender determines are
reasonably necessary to secure Lender from loss, cost, damage or expense,
including reasonable attorneys' fees and legal expenses, in connection with
any contingent Obligations, including issued and outstanding Letter of
Credit Accommodations and checks or other payments provisionally credited
to the Obligations and/or as to which Lender have not yet received final
and indefeasible payment. Such payments in respect of the Obligations and
cash collateral shall be remitted by wire transfer in Federal funds to such
bank account of Lender, as Lender may, in its discretion, designate in
writing to Borrower for such purpose. Interest shall be due until and
including the next Business Day, if the amounts so paid by Borrower to the
bank
- 73 -
<PAGE> 79
account designated by Lender are received in such bank account later than
12:00 noon, New York City time.
(b) No termination of this Agreement or the other Financing
Agreements shall relieve or discharge Borrower of its duties, obligations
and covenants under this Agreement or the other Financing Agreements until
all Obligations have been fully and finally discharged and paid, and the
continuing security interest of Lender in the Collateral of Borrower and
the rights and remedies of Lender hereunder, under the other Financing
Agreements and applicable law, shall remain in effect until all such
Obligations have been fully and finally discharged and paid. Thereupon,
Lender shall, at the request of Borrower, execute and deliver to Borrower,
at Borrower's cost and expense, such UCC termination statements as are
necessary to evidence the discharge and release of any then remaining
Collateral.
(c) If for any reason this Agreement is terminated prior to the
end of the then current term or renewal term of this Agreement, in view of
the impracticality and extreme difficulty of ascertaining actual damages
and by mutual agreement of the parties as to a reasonable calculation of
Lender's lost profits as a result thereof, Borrower agrees to pay to
Lender, upon the effective date of such termination, an early termination
fee in the amount set forth below if such termination is effective in the
period indicated:
<TABLE>
<CAPTION>
Amount Period
------ ------
<S> <C> <C>
(i) 3% of Maximum Credit November 27, 1996 to and including
November 26, 1997
(ii) 2% of Maximum Credit November 27, 1997 to and including
November 26, 1998
(iii) 1% of Maximum Credit November 27, 1998 to and including
November 26, 1999
</TABLE>
Such early termination fee shall be presumed to be the amount of damages
sustained by Lender as a result of such early termination and Borrower
agrees that it is reasonable under the circumstances currently existing.
The early termination fee provided for in this Section 12.1 shall be deemed
included in the Obligations.
(d) Notwithstanding anything to the contrary set forth in
Section 12.1(c) above, in the event that Borrower terminates this Agreement
and the other Financing Agreements prior to the Renewal Date concurrently
with the consummation of a Qualified Public Offering (as hereafter defined)
or a Qualified Refinancing
- 74 -
<PAGE> 80
(as hereafter defined), the early termination fee payable by Borrower to
Lender shall be reduced to an amount equal to fifty (50%) percent of the
early termination fee otherwise payable pursuant to Section 12.1(c) upon
the effective date of such termination (the "Reduced Termination Fee")
provided that each of the following conditions is satisfied on such
termination date: (i) Lender shall have received not less than thirty (30)
days prior written notice of the intention of Borrower to so terminate this
Agreement and the other Financing Agreements, which notice sets forth the
intended termination date (the "Termination Notice"), (ii) no Event of
Default or condition or event which, with notice or the passage of time, or
both, shall exist or have occurred and be continuing on either the date
Lender receives the Termination Notice or on such termination date, and
(iii) on such termination date Lender receives full and final repayment of
all outstanding Obligations, cash collateral for all outstanding contingent
Obligations, each as provided in Section 12.1(a), and payment of the
Reduced Termination Fee from the proceeds of a Qualified Public Offering or
from the initial loans to Borrower pursuant to a Qualified Refinancing.
(e) As used herein, the term "Qualified Public Offering" shall
mean a bona fide sale of Borrower's or Holdings' common stock to the public
pursuant to an effective registration statement under the Securities Act of
1933, as amended, in which the net cash proceeds received by Borrower or
Holdings therefrom (after deducting underwriting discounts and commissions,
and all offering and other expenses related thereto) are not less than the
amounts required to be paid by Borrower to Lender pursuant to clause (iii)
of Section 12.1(d) upon termination of the Financing Agreements.
(f) As used herein, the term "Qualified Refinancing" shall mean
a secured credit facility (the "New Credit Facility") entered into between
Borrower and a financial institution ("New Lender"), other than Lender,
after satisfaction of each of the following conditions: (i) Lender shall
have received the written request of Borrower for additional loans and
other credit accommodations by Lender to Borrower in a specified amount
(the "Requested Acquisition Financing Amount") for the purpose of financing
the proposed purchase by Borrower of substantially all of the assets or all
of the capital stock of a corporation in the same business as Borrower or a
business closely related thereto (the "Proposed Acquisition") and future
working capital needs of Borrower and the acquired business; (ii) Lender
shall have received all information required by Lender in order to consider
such request from Borrower; (iii) Lender shall have notified Borrower in
writing that Lender is unwilling to finance the Proposed Acquisition by
providing additional loans and other financial accommodations in the
Requested Acquisition Financing Amount (the "Declination Notice"); (iv)
within sixty (60) days after receiving the Declination Notice, New Lender
and Borrower
- 75 -
<PAGE> 81
shall have entered into the New Credit Facility pursuant to which New
Lender shall have initially loaned to Borrower not less than the amounts
required to be paid by Borrower to Lender pursuant to clause (iii) of
Section 12.1(d) upon termination of the Financing Agreements and also shall
have committed to lend to Borrower not less than the Requested Acquisition
Financing Amount for the purpose of financing the Proposed Acquisition and
future working capital needs of the acquired business.
12.2 Notices. All notices, requests and demands hereunder shall be
in writing and (a) made to Lender by sending it to Lender at its address
set forth below and to Borrower by sending it to Borrower at its chief
executive office set forth below, or to such other address as either party
may designate by written notice to the other in accordance with this
provision, and (b) deemed to have been given or made: if delivered in
person, immediately upon delivery; if by telex, telegram or facsimile
transmission, immediately upon sending and upon confirmation of receipt; if
by nationally recognized overnight courier service with instructions to
deliver the next business day, one (1) business day after sending; and if
by certified mail, return receipt requested, five (5) days after mailing.
12.3 Partial Invalidity. If any provision of this Agreement is held
to be invalid or unenforceable, such invalidity or unenforceability shall
not invalidate this Agreement as a whole, but this Agreement shall be
construed as though it did not contain the particular provision held to be
invalid or unenforceable and the rights and obligations of the parties
shall be construed and enforced only to such extent as shall be permitted
by applicable law.
12.4 Successors.
(a) This Agreement, the other Financing Agreements and any other
document referred to herein or therein shall be binding upon and inure to
the benefit of and be enforceable by Lender, Borrower, and their respective
successors and assigns, except that Borrower may not assign its rights
under this Agreement, the other Financing Agreements and any other document
referred to herein or therein without the prior written consent of Lender.
Lender may, after notice to Borrower, assign its rights and delegate its
obligations under this Agreement and the other Financing Agreements and
further may assign, or sell participations in, all or any part of the
Loans, the Letter of Credit Accommodations or any other interest herein to
another financial institution or other person, in which event, the assignee
or Participant shall have, to the extent of such assignment or
participation, the same rights and benefits as it would have if it were the
Lender hereunder, except as otherwise provided by the terms of such
assignment or participation.
- 76 -
<PAGE> 82
(b) If Lender shall assign its entire rights and delegate its
obligations under this Agreement and the other Financing Agreements, such
that Lender is no longer the person administering the financing
arrangements hereunder, including making the determinations of the amount
of Revolving Loans and Letter of Credit Accommodations available to
Borrower pursuant to the lending formulas hereunder (such an assignment and
delegation, a "Full Assignment"), unless (i) Lender shall have obtained
Borrower's prior written consent to such Full Assignment (which consent, if
requested, shall not be unreasonably withheld or delayed) or (ii) such Full
Assignment is in connection with a sale of the business of Lender, or a
sale of all or a substantial portion of the loan portfolio of Lender, or
(iii) such Full Assignment is to an affiliate of Lender, or (iv) such Full
Assignment is made after and during the continuance of an Event of Default,
then, following a Full Assignment not described in any of clauses (i),
(ii), (iii) or (iv) of this Section 12.4(b), Borrower shall have the option
to terminate this Agreement (the "Special Termination Option") in
accordance with Section 12.1 hereof, except without payment of any early
termination fee otherwise payable pursuant to Section 12.1(c) hereof;
provided, however, such termination by Borrower pursuant to the Special
Termination Option must be completed in accordance with Section 12.1
hereof, within one hundred eighty (180) days following Borrower's receipt
of notice of such Full Assignment.
12.5 Participant's Security Interest. If a Participant shall at any
time participate with Lender in the Revolving Loans, Letter of Credit
Accommodations or other Obligations, each Borrower hereby grants to such
Participant and such Participant shall have and is hereby given, a
continuing lien on and security interest in any money, securities and other
property of each Borrower in the custody or possession of the Participant,
including the right of setoff, to the extent of the Participant's
participation in the Obligations, and such Participant shall be deemed to
have the same right of setoff to the extent of its participation in the
Obligations, as it would have if it were a direct lender.
12.6 Entire Agreement. This Agreement, the other Financing
Agreements, any supplements hereto or thereto, and any instruments or
documents delivered or to be delivered in connection herewith or therewith
represents the entire agreement and understanding concerning the subject
matter hereof and thereof between the parties hereto, and supersede all
other prior agreements, understandings, negotiations and discussions,
representations, warranties, commitments, proposals, offers and contracts
concerning the subject matter hereof, whether oral or written.
- 77 -
<PAGE> 83
12.7 Confidentiality.
(a) Lender shall use all reasonable efforts to keep
confidential, in accordance with their customary procedures for handling
confidential information and safe and sound lending practices, any
non-public information supplied to it by Borrower pursuant to this
Agreement which is clearly and conspicuously marked as confidential at the
time such information is furnished by Borrower to Lender, provided, that,
nothing contained herein shall restrict the disclosure of any such
information: (i) to the extent required by statute, rule, regulation,
subpoena or court order, (ii) to bank examiners and other regulators,
auditors and/or accountants, (iii) in connection with any litigation to
which Lender is a party, (iv) to any assignee or Participant (or
prospective assignee or Participant) so long as such assignee or
Participant (or prospective assignee or Participant) shall have first
agreed in writing to treat such information as confidential in accordance
with this Section 12.7, or (v) to counsel for Lender or any Participant or
assignee (or prospective Participant or assignee).
(b) In no event shall this Section 12.7 or any other provision
of this Agreement or applicable law be deemed: (i) to apply to or restrict
disclosure of information that has been or is made public by Borrower or
any third party without breach of this Section 12.7 or otherwise become
generally available to the public other than as a result of a disclosure in
violation hereof, (ii) to apply to or restrict disclosure of information
that was or becomes available to Lender on a non-confidential basis from a
person other than Borrower, (iii) to require Lender to return any materials
furnished by Borrower to Lender, or (iv) prevent Lender from responding to
routine informational requests in accordance with the Code of Ethics for
the Exchange of Credit Information promulgated by The Robert Morris
Associates or other applicable industry standards relating to the exchange
of credit information.
IN WITNESS WHEREOF, Lender and Borrower have caused these presents to
be duly executed as of the day and year first above written.
<TABLE>
<CAPTION>
LENDER BORROWER
- ------ --------
<S> <C>
CONGRESS FINANCIAL CORPORATION CLARK MATERIAL HANDLING COMPANY
By: /s/ By: /s/
--------------------------- ---------------------------
Title: Title:
------------------------ ------------------------
<CAPTION>
Address: Chief Executive Office:
- ------- ----------------------
<S> <C>
1133 Avenue of the Americas 172 Trade Street
New York, New York 10036 Lexington, Kentucky 40510
</TABLE>
- 78 -
<PAGE> 1
EXHIBIT 10.3
STOCK AND ASSET PURCHASE AND SALE AGREEMENT
AMONG
TEREX CORPORATION,
CMH ACQUISITION CORP.,
CMH ACQUISITION INTERNATIONAL CORP.,
CLARK MATERIAL HANDLING INTERNATIONAL, INC.
AND
CLARK MATERIAL HANDLING COMPANY
as Sellers
AND
CMHC ACQUISITION CORPORATION
as Buyer
Dated as of November 9, 1996
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 1
SALE AND PURCHASE OF SHARES AND ASSETS
1.1 Sale and Purchase of Clark Germany Shares . . . . . . . . . 2
1.2 Sale and Purchase of CMH Acquisition Shares . . . . . . . . 2
1.3 Sale and Purchase of CMHC Assets . . . . . . . . . . . . . 2
1.4 Sale and Purchase of Clark Korea Shares . . . . . . . . . . 5
ARTICLE 2
PURCHASE PRICE
2.1 The Purchase Price . . . . . . . . . . . . . . . . . . . . 5
2.2 Payment of Purchase Price. . . . . . . . . . . . . . . . . 5
2.3 Purchase Price Adjustment . . . . . . . . . . . . . . . . . 5
ARTICLE 3
CLOSING
3.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLERS AND TEREX
4.1 Organization . . . . . . . . . . . . . . . . . . . . . . . 8
4.2 Authorization . . . . . . . . . . . . . . . . . . . . . . . 8
4.3 Corporate Records . . . . . . . . . . . . . . . . . . . . . 8
4.4 Consents of Third Parties . . . . . . . . . . . . . . . . . 8
4.5 Capitalization . . . . . . . . . . . . . . . . . . . . . . 9
4.6 Ownership of Shares . . . . . . . . . . . . . . . . . . . . 9
4.7 Title to CMHC Assets . . . . . . . . . . . . . . . . . . . 10
4.8 Financial Statements . . . . . . . . . . . . . . . . . . . 10
4.9 Absence of Certain Changes . . . . . . . . . . . . . . . . 11
4.10 Liabilities . . . . . . . . . . . . . . . . . . . . . . . . 12
4.11 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.12 Material Contracts, etc. . . . . . . . . . . . . . . . . . 13
4.13 Absence of Defaults . . . . . . . . . . . . . . . . . . . . 14
4.14 Personnel and Employee Benefits . . . . . . . . . . . . . . 14
4.15 Litigation; Compliance with Laws . . . . . . . . . . . . . 16
4.16 Properties . . . . . . . . . . . . . . . . . . . . . . . . 17
4.17 [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . 17
4.18 Patents and Trademarks . . . . . . . . . . . . . . . . . . 18
4.19 Environmental Matters . . . . . . . . . . . . . . . . . . . 18
4.20 Conflicts of Interest . . . . . . . . . . . . . . . . . . . 20
4.21 Accounts Receivable; Inventory; Backlog . . . . . . . . . . 21
4.22 Brokers and Finders . . . . . . . . . . . . . . . . . . . . 21
4.23 Misleading Statements . . . . . . . . . . . . . . . . . . . 22
4.24 Products Liability . . . . . . . . . . . . . . . . . . . . 22
4.25 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.26 Obligations to Register . . . . . . . . . . . . . . . . . . 23
4.27 Renewal of Representations at Closing . . . . . . . . . . . 23
</TABLE>
-i-
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C>
4.28 Compliance with Covenants Prior to Closing . . . . . . . . 23
4.29 Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER
5.1 Organization . . . . . . . . . . . . . . . . . . . . . . . 23
5.2 Authorization . . . . . . . . . . . . . . . . . . . . . . . 24
5.3 Consents of Third Parties . . . . . . . . . . . . . . . . . 24
5.4 Litigation . . . . . . . . . . . . . . . . . . . . . . . . 24
5.5 Investment . . . . . . . . . . . . . . . . . . . . . . . . 24
5.6 Brokers or Finders . . . . . . . . . . . . . . . . . . . . 24
ARTICLE 6
FURTHER AGREEMENTS OF THE PARTIES
6.1 Conduct of the Business Pending Closing . . . . . . . . . . 25
6.2 Access . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.3 Commercially Reasonable Efforts; Other Actions . . . . . . 26
6.4 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.5 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.6 Transfer Taxes . . . . . . . . . . . . . . . . . . . . . . 27
6.7 Preservation of Records . . . . . . . . . . . . . . . . . . 27
6.8 Certain Excluded Obligations . . . . . . . . . . . . . . . 28
6.9 Confidentiality . . . . . . . . . . . . . . . . . . . . . . 28
6.10 Continuing Insurance Coverage . . . . . . . . . . . . . . . 28
6.11 CMHC Cash and Intercompany Accounts at Closing . . . . . . 30
6.12 Drexel Note . . . . . . . . . . . . . . . . . . . . . . . . 31
6.13 Employment and Employee Benefit Issues . . . . . . . . . . 31
6.14 Change of Name . . . . . . . . . . . . . . . . . . . . . . 32
6.15 Covenant Not to Compete . . . . . . . . . . . . . . . . . . 33
6.16 Financial Information . . . . . . . . . . . . . . . . . . . 33
6.17 Tax Assessments . . . . . . . . . . . . . . . . . . . . . . 33
6.18 Transfer of Clarklift Washington Shares . . . . . . . . . . 33
6.19 Consent to Assignment of Agreements . . . . . . . . . . . . 34
6.20 Guaranties, Letters of Credit, Etc . . . . . . . . . . . . 34
6.21 Buyer's Financing . . . . . . . . . . . . . . . . . . . . . 35
6.22 Inspections . . . . . . . . . . . . . . . . . . . . . . . . 37
6.23 Korean Fines and Penalties . . . . . . . . . . . . . . . . 37
6.24 Retrospective Premiums . . . . . . . . . . . . . . . . . . 37
6.25 Undertaking . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE 7
CONDITIONS OF CLOSING;
DOCUMENTS DELIVERED AT CLOSING
7.1 Condition Precedent to Obligations of Buyer . . . . . . . . 38
7.2 Conditions Precedent to Obligations of Sellers . . . . . . 38
7.3 Documents to be Delivered at Closing . . . . . . . . . . . 39
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 8
TERMINATION AND OTHER MATTERS
8.1 Termination by Mutual Consent . . . . . . . . . . . . . . . 40
8.2 Termination Either by Sellers and Terex or by Buyer . . . . 40
8.3 Termination by Sellers and Terex . . . . . . . . . . . . . 41
8.4 Termination by Buyer . . . . . . . . . . . . . . . . . . . 41
8.5 Effect of Termination . . . . . . . . . . . . . . . . . . . 41
8.6 Standstill Agreement . . . . . . . . . . . . . . . . . . . 41
ARTICLE 9
SURVIVAL; INDEMNIFICATION
9.1 Survival . . . . . . . . . . . . . . . . . . . . . . . . . 42
9.2 Indemnification . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE 10
TAX MATTERS
10.1 Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . 47
10.2 Liability for Taxes . . . . . . . . . . . . . . . . . . . . 50
10.3 Certain Tax Payment Responsibility . . . . . . . . . . . . 50
10.4 Tax Contests . . . . . . . . . . . . . . . . . . . . . . . 51
10.5 Refunds, Tax Credits . . . . . . . . . . . . . . . . . . . 52
10.6 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . 53
10.7 Indemnification for Post-Closing Transactions . . . . . . . 53
ARTICLE 11
MISCELLANEOUS
11.1 Transfer of Assets and Liabilities to Terex . . . . . . . . 53
11.2 Entire Agreement . . . . . . . . . . . . . . . . . . . . . 53
11.4 Bulk Transfer Laws . . . . . . . . . . . . . . . . . . . . 54
11.5 Schedules; Tables of Contents and Headings . . . . . . . . 54
11.6 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 54
11.7 Severability . . . . . . . . . . . . . . . . . . . . . . . 55
11.8 Extension; Waiver . . . . . . . . . . . . . . . . . . . . . 55
11.9 Assignment; Binding Effect; Benefit . . . . . . . . . . . . 56
11.10 Interpretation . . . . . . . . . . . . . . . . . . . . . . 56
11.11 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . 56
11.12 Counterparts . . . . . . . . . . . . . . . . . . . . . . . 56
</TABLE>
-iii-
<PAGE> 5
STOCK AND ASSET PURCHASE AND SALE AGREEMENT
STOCK AND ASSET PURCHASE AND SALE AGREEMENT, dated as of November 9,
1996, among TEREX CORPORATION, a Delaware corporation ("Terex"), CMH
ACQUISITION CORP., a Delaware corporation and a wholly owned subsidiary of
Terex ("CMH Acquisition"), CMH ACQUISITION INTERNATIONAL CORP., a Delaware
corporation and a wholly owned subsidiary of Terex ("CMH International"),
CLARK MATERIAL HANDLING COMPANY, a Kentucky corporation and a wholly owned
subsidiary of CMH Acquisition ("CMHC"), CLARK MATERIAL HANDLING INTERNATIONAL,
INC., a Michigan corporation and a wholly owned subsidiary of CMH Acquisition
("Clark Michigan"; CMH Acquisition, CMH International, CMHC and Clark Michigan
collectively, "Sellers" and individually, a "Seller"), and CMHC ACQUISITION
CORPORATION, a Delaware corporation ("Buyer").
RECITALS
WHEREAS, CMH International wishes to sell to Buyer, and Buyer wishes
to purchase from CMH International, the shares (the "Clark Germany Shares") of
Clark Material Handling GmbH, an entity organized under the laws of Germany
("Clark Germany"), owned by CMH International;
WHEREAS, Clark Michigan wishes to sell to Buyer, and Buyer wishes to
purchase from Clark Michigan, its sole asset, all of the shares (the "Clark
Korea Shares") of capital stock of Clark Forklift Korea, Inc., an entity
organized under the laws of South Korea ("Clark Korea");
WHEREAS, CMH Acquisition wishes to sell to Buyer and Buyer wishes to
purchase from CMH Acquisition, (a) the shares of capital stock of Clark
Material Handling of Canada, Ltd., a Canadian corporation ("Clark Canada"),
owned by it (the "Clark Canada Shares") and (b) the Clark Germany Shares owned
by it (Clark Canada, Clark Germany and Clark Korea are referred to
individually as a "Company" and together as the "Companies"); and
WHEREAS, CMHC wishes to sell to Buyer and Buyer wishes to purchase
from CMHC, all of the assets and business of CMHC, subject to liabilities as
provided for herein.
NOW, THEREFORE, in consideration of the foregoing, of the
representations, warranties, covenants and agreements contained herein, and of
other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, and intending to be legally bound hereby, the parties
hereto agree as follows:
<PAGE> 6
ARTICLE 1
SALE AND PURCHASE OF SHARES AND ASSETS
1.1 Sale and Purchase of Clark Germany Shares. Subject to the terms and
conditions of this Agreement, at the closing referred to in Section 3.1 (the
"Closing"), CMH International shall sell, assign and transfer to Buyer, and
Buyer shall purchase from CMH International, the Clark Germany Shares owned by
CMH International for the consideration specified in Section 2.1.
1.2 Sale and Purchase of CMH Acquisition Shares. Subject to the terms
and conditions of this Agreement, at the Closing, CMH Acquisition shall sell,
assign and transfer to Buyer, and Buyer shall purchase from CMH Acquisition,
the Clark Canada Shares and the Clark Germany Shares, owned by CMH Acquisition
(collectively, the "CMH Acquisition Shares"; together with the Clark Germany
Shares owned by CMH International and the Clark Korea Shares owned by Clark
Michigan, the "Shares") for the consideration specified in Section 2.1.
1.3 Sale and Purchase of CMHC Assets. (a) Subject to the terms and
conditions of this Agreement, at the Closing, CMHC shall sell, assign, convey,
transfer and deliver to Buyer, and Buyer shall purchase from CMHC, for the
consideration specified in Section 2.1, all of CMHC's right, title and
interest in and to the assets and business of CMHC, as the same may exist on
the Closing Date (as defined in Section 3.1), whether tangible or intangible
(collectively, the "CMHC Assets"), including, without limitation, all of
CMHC's right, title and interest in and to the following, as the same may
exist on the Closing Date:
(i) all machinery, equipment, tooling, parts, dies,
vehicles, office furniture, tools and other tangible property;
(ii) all finished goods, raw materials, work-in-process,
component parts, inventories (including inventories held by customers on
a consignment basis) and supplies;
(iii) all accounts and notes receivable;
(iv) all Intellectual Property Rights and Patent Rights
(each capitalized term as defined in Section 4.18), including all of
CMHC's right, title and interest to the name "Clark Material Handling
Company";
(v) subject to paragraph (b) below, all contracts, contract
rights, leases, license agreements, purchase and sales orders,
commitments and other agreements
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to which CMHC is a party, including, without limitation, agreements to
purchase materials, contracts for services or to provide products;
(vi) all franchises, licenses, permits, consents and
certificates of any regulatory, administrative or other governmental body
or agency issued to or held for use by CMHC necessary to the conduct of
their business, including, without limitation, all Environmental Permits;
(vii) all business records, files and data;
(viii) all Owned Property (as defined in Section 4.16);
(ix) all of the shares (the "Clark Brazil Shares") of Clark
Empilhadeiras Do Brasil Ltda, an entity organized under the laws of
Brazil ("Clark Brazil"), owned by CMHC; and
(x) the business of CMHC as a going concern and all
associated goodwill, if any.
The CMHC Assets to be sold and transferred by CMHC on the Closing shall not
include CMHC's (i) cash, cash deposits and other cash equivalents (other than
security deposits, including any security deposits relating to guaranties,
letters of credit, performance bonds or appeal bonds in effect on the Closing
Date, except as provided for in Section 6.11(b)), (ii) right to tax refunds,
(iii) stock books and ledgers, minute books and corporate seals and (iv)
rights under and pursuant to this Agreement (the assets referred to in clauses
(i) through (iv) are hereinafter referred to as the "Excluded Assets"). To
the extent permitted by law, CMHC retains the right to utilize any net
operating loss carrybacks and carryovers and unused tax credit carrybacks and
carryforwards available to it.
(b) To the extent that any of the CMHC Assets are non-assignable or
non-transferable to Buyer, or non-assignable or non-transferable without the
consent of a third party, or shall be subject to any option in any third party
by virtue of a request for permission to assign or transfer by reason of or
pursuant to this Agreement or the transactions contemplated hereby, this
Agreement shall not constitute a contract to assign or transfer the same if an
attempted assignment or transfer would (i) constitute a breach thereof or (ii)
create rights in others not desired by Buyer. If CMHC shall have failed to
procure consent to any such assignment or transfer or waiver of such option
prior to the Closing Date, CMHC and Terex shall use their commercially
reasonable efforts to make the use and benefit of such CMHC Asset available to
Buyer to the same extent, as nearly
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as may be possible, as if such impediment to assignment or transfer did not
exist.
(c) Except as specifically set forth elsewhere in this Agreement,
effective as of the Closing, Buyer shall assume and thereafter pay, perform
and discharge any and all liabilities and obligations of or arising out of or
relating to CMHC, its assets or business, or the operation or ownership by
CMHC of its assets or business, of whatever kind or nature, whether contingent
or absolute, whether arising prior to or on or after, and whether determined
or indeterminable on, the Closing Date, and whether or not specifically
referred to in this Agreement (such liabilities, the "CMHC Liabilities"). The
CMHC Liabilities to be assumed by the Buyer on the Closing shall not include
any liabilities or obligations of CMHC (i) for funded debt and indebtedness
for borrowed money, including, without limitation, its liabilities and
obligations (A) as a guarantor of, or otherwise in connection with, the 13.25%
Senior Secured Notes due 2002 of Terex (the "U.S. Trust Financing"), and (B)
in connection with the Loan and Security Agreement, dated as of May 9, 1995,
among Congress Financial Corporation and Foothill Capital Corporation,
Foothill, as agent for the Lenders, and Terex, CMHC, Koehring Cranes, Inc. and
PPM Cranes, Inc. (the "Congress Financing"), (ii) for Federal, state, local or
foreign income taxes or penalties, fines or interest with respect thereto
payable with respect to the ownership or operation of the CMHC Assets or
payable by or with respect to CMHC for any period prior to the Closing Date
(including payments pursuant to any tax indemnity or tax sharing agreement),
(iii) to indemnify any person by reason of the fact that such person was a
director, officer, employee or agent of any such entity or was serving at the
request of any such entity as a partner, trustee, director, officer, employee
or agent of another entity, (iv) which constitute a breach or violation by
CMHC of any of the representations, warranties, covenants or provisions of
this Agreement, (v) with respect to the Environmental Losses described in
Section 4.19(c) of this Agreement, (vi) with respect to any "employee benefit
plan" within the meaning of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), except to the extent such liabilities or
obligations arise from or relate to benefits provided or accrued under such
plans by virtue of employment with or by CMHC, (vii) arising from costs and
expenses related to the transactions contemplated by this Agreement, (viii)
criminal fines and penalties arising from or related to the conduct of the
business of Clark Korea prior to Closing (the "Korean Fines and Penalties"),
(ix) for retrospective insurance premiums, if any, payable now or in the
future to Liberty Mutual Insurance Company of the type referred to in item 1
of Schedule 4.10 hereto (the "Retrospective Premiums"), (x) for insurance
payments in excess of $431,420 payable to CIGNA or Clark/Ingersoll-Rand
related to item 1 of Schedule 4.10 hereto and (ix) any liabilities of Terex,
Sellers
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or any of their respective affiliates (other than CMHC, the Companies and the
Subsidiaries) not related to the business of CMHC, the Companies or the
Subsidiaries (x) any liabilities of Terex, Sellers or any of their respective
affiliates (including CMHC, the Companies and the Subsidiaries) that (A) would
otherwise constitute CMHC Liabilities due to the membership of one or more of
CMHC, the Companies or the Subsidiaries in a consolidated group and (B) do not
relate to the business historically conducted by CMHC, the Companies or the
Subsidiaries (the liabilities and obligations referred to in clauses (i)
through (x) are collectively hereinafter referred to as the "Excluded
Liabilities").
1.4 Sale and Purchase of Clark Korea Shares. Subject to the terms and
conditions of this Agreement, at the Closing, Clark Michigan shall sell,
assign and transfer to Buyer, and Buyer shall purchase from Clark Michigan,
all of Clark Michigan's right, title and interest in and to the sole asset of
Clark Michigan, the Clark Korea Shares.
ARTICLE 2
PURCHASE PRICE
2.1 The Purchase Price. The aggregate purchase price (collectively, the
"Purchase Price") for the Shares and the CMHC Assets shall be $139,500,000 and
shall be allocated among the Shares and the CMHC Assets as set forth on
Schedule 2.1. Such allocation of the Purchase Price shall be reported in a
manner consistent with such allocation with all federal, state and local and
foreign tax authorities by Sellers and Buyer. The Purchase Price shall be
payable as provided in Section 2.2.
2.2 Payment of Purchase Price. Payment of the Purchase Price shall be
in U.S. dollars, and shall be made by Buyer no later than 2:00 p.m. on the
Closing Date (as defined in Section 3.1) by wire transfer of immediately
available funds to an account or accounts designated at least two (2) business
days prior to the Closing Date by Terex.
2.3 Purchase Price Adjustment. (a) The Purchase Price, as set forth in
Section 2.1 shall be increased or decreased on a dollar-for-dollar basis to
the extent that the Closing Adjusted Working Capital (defined below) is
greater or less than $20,828,000 (the "Purchase Price Adjustment").
(b) As soon as practicable, but not later than 60 calendar days
after the Closing Date, Sellers will provide the Buyer with a Closing Adjusted
Working Capital calculation and a calculation of the amount of the Purchase
Price Adjustment, if any. The components of the Closing Adjusted Working
Capital
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calculation shall be accounted for in accordance with U.S. generally accepted
accounting principles ("GAAP") applied on a basis consistent with the Interim
Balance Sheet. Such calculations will be accompanied by a consolidated
statement of each of the components of the calculation of Closing Adjusted
Working Capital of CMHC, the Companies and the Subsidiaries prepared in
accordance with GAAP applied on a basis consistent with the Interim Balance
Sheet and reported on by Price Waterhouse LLP. Buyer shall allow Sellers and
Price Waterhouse LLP full and complete access to all books and records of CMHC
and the Companies necessary or desirable to allow the Closing Adjusted Working
Capital calculation to be properly made and the audit to be conducted. The
Closing Adjusted Working Capital calculation and the Purchase Price Adjustment
calculation shall be conclusive and binding on the parties hereto unless Buyer
shall deliver to Sellers and Terex notice in writing of an objection to any
item contained in the Closing Adjusted Working Capital calculation within 30
days following the Buyer's receipt of those calculations detailing the nature
of such objection and quantifying the amount in dispute (the "Buyer's
Notice"). If the Buyer timely delivers a Buyer's Notice, the Buyer and
Sellers and their respective accountants shall attempt to resolve Buyer's
objection. If no resolution is reached within 15 days of receipt of Buyer's
Notice, Buyer and Sellers shall, within five business days after the end of
that period, submit all relevant issues to Coopers & Lybrand LLP ("C & L").
C & L shall review those items in dispute within 20 business days after
submission is made to it, and the decision of C & L will be conclusive and
binding on the parties. Buyer and Sellers will each pay one-half of any fees
and expenses charged by C & L. Payment of the Purchase Price Adjustment will
be made by the Buyer or Sellers (who shall be jointly and severally liable
therefor), as the case may be, on (i) if the Buyer makes no objection thereto,
the 35th day after the Buyer receives the Closing Adjusted Working Capital
calculations, or (ii) if any objection has been made, the second business day
after the earlier of (A) the parties' resolution of, or (B) the parties'
receipt of the final decision of C & L with respect to, all such objections
made by the Buyer.
(c) For purposes of any calculation made pursuant to this Section
2.3, (i) "Closing Adjusted Working Capital" shall mean the difference between
the following accounts of Terex's material handling business as of the Closing
Date: (A) the sum of trade receivables (less allowances), net inventories and
other current assets, minus (B) the sum of the current portion of each of
capital lease obligations, trade accounts payable, accrued compensation and
benefits, accrued warranty and product liability, customer deposits (if any)
and other current liabilities to the extent assumed (directly or indirectly
through a Company or Subsidiary), by the Buyer; and (ii) "Interim Balance
Sheet" shall mean the unaudited combined balance sheet as of September 30,
1996 referred to in Section 4.8. For purposes of
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this Section 2.3, the accrued warranty and products liability shall be
computed as of the Closing Date in accordance with reasonable past practice,
but in no event shall such account be less than $17,773,000.
ARTICLE 3
CLOSING
3.1 Closing. (a) The closing of the sale and purchase of the Shares
and the CMHC Assets provided for in Section 1.1 shall take place at the
offices of Robinson Silverman Pearce Aronsohn & Berman LLP, 1290 Avenue of the
Americas, New York, New York 10104 (or at such other place as the parties may
agree in writing), beginning at 10:00 a.m. on a date mutually designated by
Sellers, on the one hand, and Buyer, on the other hand, but in no event later
than the later of the (i) the fifth business day after the satisfaction or
waiver of the last to occur of the conditions specified in Article 7 and (ii)
three days after written notice from Buyer to Terex; provided, however, that
the Closing shall occur no later than December 12, 1996 unless a later date
shall have been agreed to by Sellers and Terex. The date on which the Closing
is held is hereinafter the "Closing Date."
(b) At the Closing, (i) CMH International shall deliver to Buyer a
notarial deed and other instruments required by applicable law to transfer the
Clark Germany Shares it owns (together with all rights then or thereafter
attaching thereto), and Buyer shall deliver to CMH International the
applicable portion of the Purchase Price as set forth in Article 2, (ii) CMH
Acquisition shall deliver to Buyer (A) certificates representing the Clark
Canada Shares it owns (together with all rights then or thereafter attaching
thereto), with valid stock powers attached, and (B) a notarial deed and other
instruments required by applicable law to transfer the Clark Germany Shares it
owns (together with all rights then or thereafter attaching thereto), and
Buyer shall deliver to CMH Acquisition the applicable portion of the Purchase
Price as set forth in Article 2, (iii) Clark Michigan shall deliver to Buyer
certificates representing the Clark Korea Shares (together with all rights
then or thereafter attaching thereto), with valid stock powers attached, and
Buyer shall deliver to Clark Michigan the applicable portion of the Purchase
Price as set forth in Article 2 and (iv) CMHC shall deliver to Buyer duly
executed instruments of transfer and assignment of the CMHC Assets, sufficient
to vest in Buyer good title to the CMHC Assets, and Buyer shall deliver to
CMHC (A) the applicable portion of the Purchase Price as set forth in Article
2 and (B) duly executed instruments of assumption necessary to effect the
assumption of the CMHC Liabilities. The consummation of the transactions
described in Sections 1.1, 1.2, 1.3 and 1.4 are each conditioned upon the
consummation of the others.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLERS AND TEREX
Each Seller and Terex jointly and severally represents and warrants
to Buyer that:
4.1 Organization. (a) Each Seller and Terex is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation with all requisite corporate power and authority
to own, lease and operate its properties and assets and to carry on its
business as now being conducted.
(b) Each Company and each Subsidiary has been duly organized and is
validly existing under the laws of the country of its organization with the
requisite corporate power and authority to own, lease and operate its
properties and assets and to carry on its business as now being conducted.
(c) Schedule 4.1 sets forth a correct and complete list of each
subsidiary of each Company, their jurisdiction of incorporation and
jurisdiction of qualification for doing business, and the percentage ownership
by such Company. For purposes of this Agreement, a "Subsidiary" shall mean
any majority-owned subsidiary of a Company, and "Subsidiaries" shall mean all
majority-owned Subsidiaries of the Companies (i.e., Clark Material Handling
France, Clark Maquinaria, S.A. and Clark Brazil). The parties hereto
acknowledge that certain information concerning the Subsidiaries has not been
included in the Schedules hereto. Terex and the Sellers represent that the
information not included in the Schedules hereto relating to the Subsidiaries
is not material to CMHC, the Companies and the Subsidiaries, taken as a whole.
4.2 Authorization. The execution, delivery and performance of this
Agreement by Terex and each Seller has been duly authorized by all requisite
corporate action of Terex and such Seller. This Agreement constitutes the
valid and binding obligation of each of Terex and each Seller, enforceable
against it in accordance with its terms.
4.3 Corporate Records. Copies of the formation documents of the
Companies and the Subsidiaries previously delivered to Buyer are complete and
correct.
4.4 Consents of Third Parties. Except as set forth in Schedule 4.4, the
execution, delivery and performance of this Agreement by Terex and each Seller
will not (i) violate or conflict with the articles of incorporation or by-laws
of Terex and such Seller; (ii) conflict with, or result in the breach of,
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termination of, give rise to any lien or constitute a default under, or
require the consent of any other party to, any Material Contract (as
hereinafter defined) to which Terex, a Seller or a Company is a party or by
which Terex, a Seller or a Company or any of their assets is bound;
(iii) constitute a violation of any law, regulation, rule, judgment, decree,
court order or plan of reorganization applicable to Terex, any Seller or any
Company. No consent, approval or authorization of any governmental authority
is required on the part of Terex, the Sellers or the Companies in connection
with the execution, delivery and performance of this Agreement, except
(i) filings in connection with the maintenance of qualification to do business
in other jurisdictions (collectively, the "Regulatory Filings") and (ii) as
set forth in Schedule 4.4.
4.5 Capitalization. (a) Schedule 4.5 sets forth the authorized capital
stock, if applicable, of each of the Companies and the Subsidiaries and the
number of issued and outstanding shares of each of the Companies and the
Subsidiaries. No voting agreement exists with respect to such issued and
outstanding shares, and such shares were issued free of preemptive rights.
(b) (i) The Clark Germany Shares are all of the outstanding shares
of capital stock of Clark Germany and are owned of record and beneficially by
CMH International and CMH Acquisition, (ii) the Clark Canada Shares are all of
the outstanding shares of capital stock of Clark Canada and are owned of
record and beneficially by CMH Acquisition, (iii) all of the outstanding
shares of capital stock of Clark Brazil are owned of record and beneficially
99.9% by CMHC and 0.1% by Clark Germany, and (iii) the Clark Korea Shares are
all of the outstanding shares of capital stock of Clark Korea and are owned of
record and beneficially by Clark Michigan. All such shares were duly
authorized for issuance and are validly issued, fully paid and non-assessable.
Other than as set forth in Schedule 4.5, there are no outstanding options,
warrants, calls, subscriptions or other rights, agreements or commitments
obligating any Company or any Subsidiary to issue, transfer or sell any of
their respective equity securities, or any outstanding securities convertible
into, exchangeable for or carrying the right to acquire, equity securities of
such Company or Subsidiary. There are no restrictions of any kind on the
transfer of the Shares, except (1) as may be imposed by applicable federal and
state securities laws and (2) as are disclosed on Schedule 4.5 (which shall be
released at or prior to Closing).
4.6 Ownership of Shares. CMH International is, and at the Closing will
be, the record and beneficial owner of the Clark Germany Shares to be
transferred by it to Buyer hereunder, CMH Acquisition is, and at the Closing
will be, the record and beneficial owner of the CMH Acquisition Shares to be
transferred by it to Buyer hereunder, and Clark Michigan is, and at the
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Closing will be, the record and beneficial owner of the Clark Korea Shares to
be transferred by it to Buyer hereunder, in each case free and clear of any
claim, lien, security interest or other encumbrance ("Liens"), except as
disclosed on Schedule 4.6 (which shall be released at or prior to Closing).
At the Closing, the applicable Seller will transfer and deliver to Buyer legal
and valid title to all of the Shares owned by it, free and clear of all Liens,
other than Liens created or suffered by Buyer.
4.7 Title to CMHC Assets. CMHC has good legal title, of record and
beneficially, to all of the CMHC Assets and at the Closing, CMHC will transfer
and deliver to Buyer legal and valid title to the CMHC Assets, free and clear
of all Liens, other than (i) Liens created by Buyer, (ii) Liens disclosed on
Schedule 4.7 or Schedule 4.16, (iii) with respect to Owned Property, reflected
in any title insurance policies listed on Schedule 4.16, (iv) with respect to
Owned Property, imperfections of title, easements, pledges, charges,
restrictions and encumbrances, including, without limitation, survey matters,
and Liens, if any, that do not materially detract from the value of the
property subject thereto or materially interfere with the manner in which it
is currently being used and (v) taxes and general and special assessments not
in default and payable without penalty or interest. Liens on the CMHC Assets
shall be released at or prior to Closing to the extent such Liens relate to
any Excluded Liability, including, but not limited to, Liens created in
connection with the U.S. Trust Financing and the Congress Financing.
4.8 Financial Statements. Sellers have delivered to Buyer copies of the
following financial statements (collectively, the "Financial Statements"):
(i) audited combined balance sheet ("1995 Balance Sheet") and the related
combined statements of operations, stockholder's deficit and cash flow of
Terex's material handling business as of December 31, 1995 and 1994, and the
results of their operations and cash flows for each of the three years in the
period ended December 31, 1995 (collectively, the "1995 Financial Statements")
and (ii) the unaudited combined balance sheet as of September 30, 1996 and
related consolidating income statement for the nine months then ended of
Terex's material handling business (collectively, the "Interim Financial
Statements"). The Interim Financial Statements are attached to Schedule 4.8.
The Financial Statements have been prepared from and are in accordance with
the books and records of the respective entity described therein, have been
prepared in accordance with GAAP (except that the unaudited Financial
Statements have been prepared without footnote disclosures) consistently
applied and fairly present in all material respects the financial position and
results of operations for the entities described therein at the dates and for
the periods indicated therein (subject, in the case of unaudited Financial
Statements,
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to normal year-end adjustments). There has been no change in the methodology
used by the Sellers, the Companies or the Subsidiaries to calculate any
reserves reflected in the Financial Statements from and after December 31,
1995 and such methodology has been consistently applied in accordance with
GAAP.
4.9 Absence of Certain Changes. (a) Except as set forth on Schedule
4.9, since December 31, 1995, the Business (defined below) has not suffered a
Material Adverse Change. For all purposes of this Agreement, "Material
Adverse Change" shall mean a change affecting CMHC, the Companies, or the
Subsidiaries, taken as a whole ("the Business") which, singly or together with
other changes (both favorable and adverse), is, or with reasonable
probability, will be, materially adverse to the net assets, operating income,
financial condition, operations or future prospects of the Business measured
as of, or from, December 31, 1995.
(b) Since December 31, 1995, each Seller, Company and Subsidiary
has operated its business in the ordinary course consistent with reasonable
past practice and, except as set forth on Schedule 4.9, there has not been:
(i) any damage, destruction or loss to real or
personal property (A) not covered by insurance that has exceeded $500,000
(in the aggregate) or (B) covered by insurance that results in a Material
Adverse Change;
(ii) any transaction between CMHC, any Company or any
Subsidiary, on the one hand, and any Seller or Terex, on the other hand,
except in the ordinary course of business consistent with reasonable past
practice;
(iii) any issuance of an option to purchase, or other
right to acquire, capital stock or any security or other instrument
convertible into capital stock of any class of the Companies or the
Subsidiaries;
(iv) any issuance of shares of capital stock
(including treasury shares) of the Companies or the Subsidiaries;
(v) any transaction by CMHC, any Company or any
Subsidiary other than in the ordinary course of business consistent with
reasonable past practice or as otherwise specifically permitted or
contemplated by this Agreement;
(vi) any incurrence, assumption or guarantee by CMHC,
any Company or any Subsidiary of any indebtedness or liability for or in
respect of borrowed money in excess of $50,000 (in the aggregate) or any
commitment to do the same, other than borrowings in the ordinary course
of business
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consistent with reasonable past practice and other than indebtedness,
liabilities or guarantees released at or prior to Closing;
(vii) any grant by CMHC, any Company or any Subsidiary
of any severance or termination pay to an executive officer, director or
a group of employees of CMHC, the Companies or the Subsidiaries or any
increase in compensation or benefits payable under existing employment
agreements or severance or termination pay policies with respect to any
of their respective employees, other than (a) increases or bonuses in the
ordinary course of business consistent with reasonable past practice, (b)
increases or grants required by contracts disclosed pursuant hereto or by
applicable law, or (c) increases, agreements and bonuses disclosed in
Schedule 4.14;
(viii) any employment, bonus or deferred compensation
agreement entered into with any of the directors, officers or other
employees of CMHC, any Company or any Subsidiary, other than oral
employment agreements terminable at will and other than as disclosed in
Schedule 4.14; or
(ix) any amendment of the articles of incorporation
or by-laws of any Company or any Subsidiary.
4.10 Liabilities. Except for liabilities and obligations (i) relating
to product liability and warranty claims and suits or (ii) (A) which have
arisen in the ordinary course of business since December 31, 1995 or (B)
reflected or disclosed in the Financial Statements or on Schedule 4.10 hereto,
to the knowledge of Terex and Sellers, none of CMHC, any Company or any
Subsidiary has any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise and whether due or to become due) that are
material to Sellers, the Companies and the Subsidiaries, taken as a whole.
4.11 Taxes. Except as set forth in Schedule 4.11, all federal, state,
local and foreign tax returns required to be filed on behalf of each Seller,
Company and Subsidiary have been duly filed (taking into account all
extensions of due dates), and all such returns are accurate in all material
respects and such companies have duly paid or made provisions for the payment
of all taxes and other amounts which are due and payable pursuant to such
returns, or pursuant to any assessment with respect to taxes in such
jurisdictions, whether or not in connection with such returns. The liability
for taxes reflected in the 1995 Balance Sheet is sufficient for the payment of
all unpaid taxes, accrued or applicable for the period ended December 31, 1995
and for all years and periods ended prior thereto except for taxes being
disputed in good faith. The federal income tax returns of each
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Seller have been audited by the Internal Revenue Service, or the statutes of
limitations with respect to federal income taxes have all expired, for all
fiscal years to and including 1986. State and foreign income tax returns of
each Seller, Company and Subsidiary have been audited by appropriate tax
authorities through the respective dates set forth on Schedule 4.11. Except
as set forth in Schedule 4.11, all deficiencies asserted as a result of the
examinations referred to in the preceding two sentences have been paid, fully
settled or adequately provided for in the Financial Statements. Except as set
forth in Schedule 4.11, there are no claims asserted for taxes of any Seller,
Company or Subsidiary, nor are there outstanding agreements or waivers
extending the statutory period of limitation applicable to any tax return of
any Seller, Company or Subsidiary for any period. No Seller, Company or
Subsidiary, with regard to any property or assets held or acquired or to be
acquired by them at any time, has filed a consent to the application of
Section 341(f)(2) of the Internal Revenue Code of 1986, as amended (the
"Code"). Amounts have been withheld by each Seller, Company and Subsidiary
from their respective employees or other recipients of payments or
distributions for all prior periods in compliance with the tax withholding
provisions of all applicable federal, state, local and other laws. In all
material respects, accurate and complete federal, state, local and other
returns have been filed on behalf of each Seller, Company and Subsidiary for
all periods for which returns were due with respect to income tax withholding
and social security and unemployment taxes; and except as set forth in
Schedule 4.11, the amounts shown on such returns to be due and payable have
been paid in full or adequate provision therefor has been included in the
Financial Statements. None of the CMHC Assets constitutes an interest in an
entity classified as a partnership for federal income tax purposes.
4.12 Material Contracts, etc. Buyer has been provided access to correct
and complete copies of, and Schedule 4.12 lists, (a) all commitments and
agreements for the purchase of any materials, supplies, machinery, capital
assets or services that involve an expenditure by CMHC, any Company or any
Subsidiary, as the case may be, of more than $750,000 for any one commitment
or agreement, other than such commitments or agreements entered into in the
ordinary course consistent with reasonable past practice and (i) to be
performed within a period of 90 days or (ii) which can be canceled by CMHC,
such Company or such Subsidiary, as the case may be, without liability,
premium or penalty on 90 days' or less notice; (b) all personal property
leases under which CMHC, any Company or any Subsidiary is either lessor or
lessee and which involve annual payments or receipts of $750,000 or more; (c)
all other orders, leases, commitments, agreements and instruments (including,
but not limited to, mortgages, indentures and other agreements and instruments
relating to indebtedness for borrowed money) to which CMHC, any Company or any
Subsidiary is a party or by which it or its properties are bound that require
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annual payments by CMHC, such Company or such Subsidiary, as the case may be,
in any 12-month period and of more than $750,000, other than any agreements
which are listed on Schedule 4.16; (d) all government contracts and all other
agreements with customers that involve an annual payment to CMHC, any Company
or any Subsidiary of more than $750,000 for any one contract, other than such
contracts or agreements entered into in the ordinary course consistent with
reasonable past practice and (i) to be performed within a period of 90 days or
(ii) which can be canceled by CMHC, such Company or such Subsidiary, as the
case may be, without liability, premium or penalty on 90 days' or less notice.
The agreements and commitments referred to in subparagraphs (a), (b), (c) and
(d) of this Section 4.12 are collectively hereinafter referred to as the
"Material Contracts."
4.13 Absence of Defaults. Except as disclosed in Schedule 4.13, none of
CMHC, any Company or any Subsidiary is in default under the terms of any
Material Contract.
4.14 Personnel and Employee Benefits. (a) Schedule 4.14 sets forth a
list of all plans, contracts, agreements, programs and policies established or
maintained by or as to which CMHC, the Companies or the Subsidiaries
contribute or are a party, related to their employees', officers' and
directors' employment, compensation and fringe benefits, including bonuses,
profit-sharing, percentage compensation, deferred compensation, pensions,
retirement, stock option or other incentive, medical, vision, dental,
hospitalization or other health insurance, life insurance, disability
insurance or any other employee benefit plan (collectively, the "Employee
Benefit Plans"). The Employee Benefit Plans include each "employee benefit
plan" as defined in Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA") (including Employee Benefit Plans exempt
from the provisions of ERISA) and any other plans that provide for employee
benefits under any other applicable foreign law, statute, order, rule, code,
or regulation.
(b) Except as set forth on Schedule 4.14, the Sellers, the
Companies and the Subsidiaries have paid in all material respects the amounts
required, if any, under applicable law or any Employee Benefit Plan or any
agreement relating to an Employee Benefit Plan to which it is a party, to be
paid as contributions to or benefits under any Employee Benefit Plan as of the
last day of the most recent fiscal year of such Employee Benefit Plan ended
prior to the date hereof (except for benefits payable on claims under Employee
Benefit Plans that are subject to review in the ordinary course of
administration thereof). Except as set forth on Schedule 4.14, the Sellers,
the Companies and the Subsidiaries have made adequate provision in the
Financial Statements or on their books and records for liabilities to make
contributions or benefit payments with
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respect to periods during the Employee Benefit Plans' current fiscal years up
to the date hereof.
(c) Sellers, the Companies and the Subsidiaries do not maintain a
plan and related trust intended to be qualified under Sections 401(a) and
501(a) of the Code except for the Terex Corporation Employees' 401(k)
Retirement Savings Plan (the "401(k) Plan"). The most recent favorable
determination letter issued by the Internal Revenue Service as to the
qualified status of the 401(k) Plan is dated July 31, 1995, and a copy thereof
has been furnished to Buyer. No act or omission has occurred since July 31,
1995 with respect to the 401(k) Plan which resulted or which Sellers, the
Companies and the Subsidiaries believe would result in a revocation of the
Plan's tax qualified status. None of Sellers, the Companies and the
Subsidiaries has an obligation to pay contributions to a multi-employer
pension plan subject to ERISA.
(d) Except as set forth on Schedule 4.14, none of Sellers, the
Companies or the Subsidiaries is party to a collective bargaining agreement
and there are no labor strikes, slowdowns or stoppages taking place or, to the
knowledge of Sellers and Terex, threatened against or involving any Seller,
Company or Subsidiary. Except as set forth on Schedule 4.14, there is not
pending as of the date hereof any complaint against CMHC, any Company or any
Subsidiary issued by the National Labor Relations Board.
(e) To the knowledge of Sellers and Terex, there have been no
transactions with respect to the Employee Benefit Plans which would subject
any Seller, Company or Subsidiary to a tax, penalty or liability for a
prohibited transaction or breach of fiduciary duty under Section 406, 407, 409
or 502(i) of ERISA or Section 4975 of the Code, and there have been no
material failures to comply with any applicable requirements of ERISA, the
Code or other foreign statutes, orders, rules or regulations with respect to
the Employee Benefit Plans. Except as set forth on Schedule 4.14, there is no
pending litigation, arbitration or adjudication proceeding with respect to the
Employee Benefit Plans, and none of Sellers and Terex is aware of any
threatened litigation, arbitration, adjudication proceeding or governmental
investigation with respect to the Employee Benefit Plans.
(f) Sellers and the Companies have delivered to Buyer or given
Buyer access to true, correct and complete copies of (A) all Employee Benefit
Plans and any related trust agreements, custodial agreements, investment
management agreements, insurance contracts or policies, and administrative
service contracts, all as in effect as of the date hereof, together with all
amendments thereto which will become effective at a later date; (B) the latest
Summary Plan Description and any modifications thereto for each Employee
Benefit Plan requiring same under ERISA; (C) the
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most recent Summary Annual Report for each Employee Benefit Plan requiring
same under ERISA; and (D) the most recent Form 5500 and/or Form 990 series
filing (including required schedules and financial statements) for each
Employee Benefit Plan required to file such form. None of Sellers, the
Companies and the Subsidiaries nor any officer, employee representative or
agent thereof, has been authorized to make any written or oral representations
or statements to any current or former employees, dependents, participants or
beneficiaries or other persons which are inconsistent in any material manner
with the provisions of these documents.
(g) With respect to any of the Employee Benefit Plans which are
"group health plans" under Section 162(k) or Section 4980B of the Code and
Section 607(1) of ERISA and related regulations (relating to the benefit
continuation rights imposed by the Consolidated Omnibus Budget Reconciliation
Act of 1986 ("COBRA"), as amended), there has been timely compliance in all
material respects with all requirements imposed by COBRA, as and when
applicable to such plans, so that Sellers, the Companies and the Subsidiaries
have no (or will not incur any) material loss, assessment, penalty, loss of
federal income tax deduction or other sanction arising out of or in respect of
any failure to comply with any COBRA benefit continuation requirement, which
is capable of being assessed or asserted directly or indirectly against
Sellers, the Companies and the Subsidiaries or other member of their corporate
control group, with respect to any such plan.
4.15 Litigation; Compliance with Laws. (a) Other than with respect to
product liability and warranty claims, suits or investigations, and except as
set forth on Schedule 4.15, (i) to the knowledge of Terex or Sellers, there is
no claim pending or threatened in writing against CMHC, the Companies or the
Subsidiaries and (ii) there is no action, suit, litigation, proceeding,
administrative action, arbitration or mediation pending, or to the knowledge
of Terex or Sellers, threatened, or any order, injunction or decree
outstanding, against CMHC, any Company or any Subsidiary.
(b) Except as set forth in Schedule 4.15, and except with respect
to compliance with Environmental Laws which is dealt with exclusively in
Section 4.19, as of the date hereof, CMHC, the Companies and the Subsidiaries
have been in compliance in all material respects with all applicable federal,
state, local and foreign laws, ordinances, rules, regulations, judgments,
decrees and orders ("Laws") of any governmental entity or authority having
jurisdiction over CMHC, the Companies and the Subsidiaries or their respective
properties or assets (each, a "Governmental Authority").
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(c) A list of warranty litigation pending as of September 30, 1996
is set forth in Schedule 4.15.
4.16 Properties. Except as set forth in Schedule 4.16, (i) each of
CMHC, the Companies and the Subsidiaries has good and marketable title to all
real property (the "Owned Property") and other property that they purport to
own, including the properties reflected in the Financial Statements (other
than inventory sold in the ordinary course of business and other items of
personal property which have been disposed of in the ordinary course of
business since December 31, 1995), (ii) all such properties are held free and
clear of all Liens and are not, in the case of real property, subject to any
rights of way, building or use restrictions, exceptions, variances,
reservations or limitations of any nature whatsoever, except, with respect to
both clauses (i) and (ii), other than (a) Liens reflected in any title
insurance policies listed on Schedule 4.16 and (b)(i) Liens for current taxes
and assessments not due or delinquent or which are being contested in good
faith, (ii) minor imperfections of title, liens, encumbrances and easements
and (iii) mechanics', carriers', workers', repairmen's and other similar
liens, rights of way, building or use restrictions, exceptions, variances,
reservations and other limitations of any kind, if any, which in the case of
clause (b) do not materially detract from the value of or materially interfere
with the present use of any of the properties subject thereto or affected
thereby or otherwise materially impair the business operations conducted by
CMHC, any Company or any Subsidiary. Set forth on Schedule 4.16 is a correct
and complete list of all real property (i) owned by CMHC, any Company or any
Subsidiary in the conduct of its business and (ii) leased by CMHC, any Company
or any Subsidiary. Except as set forth in Schedule 4.16, to the knowledge of
Sellers and Terex, all Owned Property, plants and structures owned or leased
by CMHC, any Company or any Subsidiary, and all machinery and equipment owned
or leased by CMHC, any Company or any Subsidiary, which are material to their
operations are in operating condition and repair consistent with their past
experience and are generally adequate for the uses to which they are being
put. Except as set forth in Schedule 4.16, none of CMHC, any Company or any
Subsidiary has received any written notice of any violation of any building,
zoning or other law, ordinance or regulation in respect of such property or
structures or their use thereof. Notwithstanding the foregoing, Liens
affecting Owned Property or such other properties shall be released at or
prior to Closing to the extent such Liens relate to liabilities not being
assumed by Buyer pursuant to this Agreement, including, the Excluded
Liabilities and the Company Excluded Liabilities (as defined in Section 6.8).
4.17 [Reserved].
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4.18 Patents and Trademarks. CMHC, the Companies and the Subsidiaries
have, or have valid, legal rights to use, all patents, patent applications,
trademarks, trademark applications, service marks, trade names, copyrights,
licenses and rights (collectively, the "Intellectual Property Rights") which
are necessary to their respective businesses. Schedule 4.18 sets forth a list
of all inventions which are the subject of issued letters patent or an
application therefor and all trade and service marks which have been
registered or for which an application for registration is pending, in each
case which are owned and used or held for use by CMHC, the Companies or the
Subsidiaries (the "Patent Rights"), specifying as to each, as applicable: (i)
the patent number or description of trade or service mark; (ii) the
jurisdictions by or in which such Patent Right has been issued or registered
or in which an application for such issuance or registration has been filed,
including the respective registration or application numbers; and (iii)
material licenses, sublicenses and other agreements to which CMHC, any Company
or any Subsidiary is a party and pursuant to which any person is authorized to
use such Patent Right. Except as set forth on Schedule 4.18, neither CMHC,
the Companies nor the Subsidiaries (i) is a defendant in any claim, suit,
action or proceeding relating to their respective businesses which involves a
claim of infringement of any patents, trademarks or service marks, (ii) has
any knowledge of any existing infringement by another person of any of the
Patent Rights belonging to CMHC, such Companies or such Subsidiaries or (iii)
has received written notice of the infringement by CMHC, any Company or any
Subsidiary of any infringement of the patent, trademark, copyright or other
intellectual property rights of a third party, except such existing
infringements, or claims, suits, actions or proceedings the adverse
determination of which would not alter in any material respect the manner in
which CMHC, any Company or any Subsidiary currently conducts its business or
manufactures its products. Except as disclosed on Schedule 4.18, no Patent
Right is subject to any outstanding order, judgment, decree, stipulation or
agreement restricting the use thereof by CMHC, the Companies or the
Subsidiaries or restricting the licensing thereof by CMHC, the Companies or
the Subsidiaries to any person.
4.19 Environmental Matters. (a) Except as disclosed on Schedule 4.19,
(i) the Facilities, whether owned or leased, whether used for manufacturing,
sales or otherwise, are in compliance in all material respects with all
applicable Environmental Laws, (ii) each Seller, Company and Subsidiary has
all necessary, and is in compliance in all material respects with, such
Environmental Permits, (iii) there is no condition with respect to any of the
Facilities which would subject the Buyer, CMHC, the Companies or the
Subsidiaries to fines, penalties or enforcement actions due to violations of
Environmental Laws or Environmental Permits, (iv) Sellers and the Companies
have provided to Buyer complete and accurate copies of
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all inspection reports, compliance evaluations, or other documents in their
possession which describe (A) the condition of soil and groundwater on the
Facilities and (B) the environmental compliance status of the Facilities, (v)
there are no lawsuits, orders, consent decrees, administrative enforcement
actions, environmental cleanup proceedings or notices of violation pending or,
to the knowledge of Terex and Sellers, threatened, with respect to compliance
with Environmental Laws, (vi) none of the Facilities has been placed on or is
proposed to be placed on the National Priorities List ("NPL"), the
Comprehensive Environmental Response Compensation and Liability System
("CERCLIS") or state or foreign equivalents of such lists, including laws
which establish registers of historically contaminated sites and (vii) none of
the Facilities has above or underground storage tanks which are in a condition
which exposes the Buyer, CMHC, the Companies or the Subsidiaries to
Environmental Losses nor has there been a Release of Hazardous Substances from
any such tanks which exposes the Buyer, CMHC, the Companies or the
Subsidiaries to Environmental Losses.
(b) The execution, delivery and performance of this Agreement do
not and will not violate any Environmental Laws or Environmental Permits in
any material respects.
(c) Notwithstanding anything in this Agreement to the contrary,
Buyer, the Companies or the Subsidiaries shall not be liable or responsible
for any Environmental Losses arising from, in respect of, incurred as a
consequence of or in connection with any and all real property, business
entities or assets, whether domestic or foreign, not acquired pursuant to this
Agreement (including any property previously sold).
(d) For purposes of this Agreement, the following definitions
shall apply:
(i) "Environmental Laws" shall mean all present and future
laws, foreign and domestic statutes, ordinances, rules, regulations,
orders, consent decrees, policies and determinations of any governmental
authority, pertaining to health, protection of the environment, natural
resources, conservation, wildlife, waste management, regulation of
activities involving Hazardous Substances, as that term is defined in
this Agreement, including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"), 42
U.S.C. 9601, et seq., as amended; the Resource Conservation and Recovery
Act ("RCRA"), 42 U.S.C. 6901 et seq., as amended; the Federal Water
Pollution Control Act as amended by the Clean Water Act ("CWA") and
subsequent amendments, 33 U.S.C. 1251 et seq.; the Clean Air Act ("CAA")
42 U.S.C. 7401 et seq., as amended; the Toxic Substances Control Act
("TSCA"), 15 U.S.C. 2601 et seq., as amended; the Hazardous Materials
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Transportation Act ("HMTA"), 49 U.S.C. 5101 et seq., as amended, and the
Occupational Safety and Health Act, 29 U.S.C., 651 et seq., as amended
and the regulations promulgated thereunder.
(ii) "Hazardous Substances" shall mean solid or hazardous
waste, toxic substance, hazardous chemical, pollutant, contaminant,
radioactive substance, or other material of whatever kind that is in any
way regulated by Environmental Laws or which will subject the Buyer,
Sellers, the Companies or the Subsidiaries to liability.
(iii) "Release" shall mean any spilling, emitting, leaking,
pumping, injecting, depositing, disposing, discharging, dispersing,
leaching or migrating into the environment of any Hazardous Substance
whether through the air, soil, surface water, groundwater or other
medium.
(iv) "Environmental Permit" shall mean any approval,
license, order, permission, contract or similar authorization of, with or
by any governmental authority necessary for the ownership and operation
of any of the Facilities in compliance with Environmental Laws.
(v) "Facilities" shall mean the properties and assets to be
acquired, directly or indirectly, by Buyer pursuant to this Agreement,
including, without limitation, properties owned by the Companies and the
Subsidiaries, foreign and domestic real or personal property, whether
owned, leased, occupied or otherwise operated by Sellers, the Companies
and the Subsidiaries as of the Closing Date.
(vi) "Environmental Losses" shall mean any and all costs
associated with any actions, claims, lawsuits, orders, consent decrees,
enforcement actions, damages, defenses, demands, disbursements, expenses,
fines, judgments, liabilities, liens, obligations, penalties or
proceedings, including attorneys' and consultants' fees in connection
with the non-compliance with the Environmental Laws.
4.20 Conflicts of Interest. To the knowledge of Sellers and Terex, no
officer or director of Terex, any Seller, any Company or any Subsidiary has or
claims to have (i) any interest in the property, real or personal, tangible or
intangible, including, without limitation, intangibles, licenses, inventions,
technology, processes, designs, computer programs, know-how and formulae used
in the business of any Seller, any Company or any Subsidiary (ii) any
contract, commitment, arrangement or understanding with any Seller, any
Company or any Subsidiary, except (A) to the extent applicable, as a
shareholder of Terex, any Seller, any Company or any Subsidiary (B) as set
forth in Schedule 4.20 or (C) except for interests which employees may
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have in technology, processes, designs and know-how under applicable law
except to the extent such interests may be modified by binding agreements.
Except as set forth on Schedule 4.20, to the knowledge of Sellers and
Terex, no officer or director of Terex, any Seller, any Company or any
Subsidiary has any ownership or stock interest in any other enterprise, firm,
corporation, trust or any other entity which is engaged in any line or lines
of business which are the same as, or competitive with, the line or lines of
business of any Seller, any Company or any Subsidiary. For purposes of this
representation, ownership of not more than 5% of the voting stock of any
publicly held company whose stock is listed on any recognized securities
exchange or traded over the counter shall be disregarded.
4.21 Accounts Receivable; Inventory; Backlog. (a) All accounts
receivable of each Seller, each Company and each Subsidiary represent sales
actually made in the ordinary course of business. There has not been any
material adverse change in the collectability of accounts receivable of each
Seller, each Company and each Subsidiary since December 31, 1995.
(b) The inventory of CMHC, the Companies and the Subsidiaries is of
a quality and quantity usable in the ordinary course of business of CMHC, the
Companies and the Subsidiaries in all material respects, except for obsolete,
damaged, defective or otherwise unsalable items as to which a provision
determined in a manner consistent with prior practice has been made on the
books of CMHC, the Companies and/or the Subsidiaries, as the case may be. The
value of all inventory items, including finished goods, work-in-process and
raw materials, has been recorded on the books of CMHC, the Companies and the
Subsidiaries at the lower of cost (determined in accordance with the
accounting inventory valuation methods of such entity) or fair market value.
(c) As of September 30, 1996, the amount of all unfilled firm
orders to purchase products of CMHC, the Companies and the Subsidiaries was
approximately $76,900,000.
4.22 Brokers and Finders. None of Terex, the Sellers, the Companies or
the Subsidiaries nor any of their officers, directors or employees has
employed any broker or finder or incurred any liability for any brokerage
fees, commissions, finders, fees or similar fees or expenses and no broker or
finder has acted directly or indirectly for any of them in connection with
this Agreement or the transactions contemplated hereby, other than Salomon
Brothers Inc. No investment banking, financial advisory or similar fees have
been incurred or are or will be payable by CMHC, any Company or any Subsidiary
in connection with this Agreement or the transactions contemplated hereby.
Buyer shall have no liability for any fees described
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herein or arising from the actions of Terex, the Sellers, the Companies or the
Subsidiaries under this Section 4.22.
4.23 Misleading Statements. Terex and the Sellers have, to their
knowledge, disclosed to Buyer all facts material to the business, operations,
assets or financial condition or future prospects of CMHC, the Companies and
the Subsidiaries, taken as a whole. No representation or warranty by Terex,
any Seller or any Company contained in this Agreement, and no statement
contained in any Schedule (including any supplement or amendment thereto) and
the documents to be delivered at the Closing by or on behalf of Terex, any
Seller, any Company or any of their representatives in connection with the
transactions contemplated hereby contains or will contain any untrue statement
of a material fact, or omits or will omit to state any material fact
necessary, in light of the circumstances under which it was or will be made,
in order to make the statements herein or therein not misleading.
4.24 Products Liability. (a) To the knowledge of Sellers and Terex,
the product liability claims presently pending against CMHC, the Companies and
the Subsidiaries do not present loss contingencies, which, in the aggregate,
are inconsistent with the loss contingency experience of CMHC, the Companies
and the Subsidiaries since July 31, 1992.
(b) Except as set forth in Schedule 4.24, Sellers and Terex are not
aware of any product liability claim which, in the last five years, has
resulted in a punitive damage award against CMHC, the Companies or the
Subsidiaries.
(c) Sellers and Terex are not aware of any facts that indicate that
the reserves for product liability claims of CMHC, the Companies and the
Subsidiaries reflected in the Financial Statements are understated based upon
CMHC's, the Companies' and the Subsidiaries' historical method of establishing
such reserves.
(d) To Sellers' and Terex's knowledge, all agreements insuring
CMHC, the Companies or the Subsidiaries against claims for product liability,
since July 31, 1992, are in full force and effect.
(e) To Sellers' and Terex's knowledge, Schedule 4.24 contains, in
all material respects, a list, as of October 17, 1996, of all CMHC, the
Companies or the Subsidiaries pending and threatened product liability
litigation and claims, except for immaterial claims as to which such parties
maintain no records.
4.25 Insurance. Buyer has been provided access to correct and complete
copies of all fire, liability and other insurance carried by Terex, CMHC, any
Company or any Subsidiary and insuring CMHC, any Company or any Subsidiary.
All such insurance
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is in full force and effect, and no notice of cancellation or termination, or
reduction of coverage or intention to cancel, terminate or reduce coverage,
has been received with respect to any policy for such insurance. The
insurance coverage provided by such policies of insurance will not terminate
or lapse by reason of the transactions contemplated by this Agreement.
4.26 Obligations to Register. None of Terex, any Seller or any Company
has agreed to register or is otherwise under any obligation to register any
Shares under the Securities Act of 1933, as amended, and the rules and
regulations thereunder.
4.27 Renewal of Representations at Closing. The representations and
warranties of Terex and Sellers contained in this Agreement shall be true and
correct in all material respects at and as of the Closing Date with the same
force and effect as though made at and as of the Closing Date, except for any
representation or warranty made or given as of a specified date, which shall
have been true and correct in all material respects as of such date.
4.28 Compliance with Covenants Prior to Closing. Terex and Sellers shall
have performed and complied in all material respects with the agreements and
covenants required by this Agreement to be performed or complied with by Terex
or Sellers prior to or at the Closing.
4.29 Disclaimer. BUYER ACKNOWLEDGES THAT SELLERS MAKE NO REPRESENTATIONS
OR WARRANTIES, EXPRESS OR IMPLIED, OF ANY NATURE WHATSOEVER, OTHER THAN THE
REPRESENTATIONS AND WARRANTIES OF SELLERS SPECIFICALLY SET FORTH IN THIS
ARTICLE 4, AND THE CMHC ASSETS AND BUSINESS OF CMHC BEING SOLD TO BUYER AT
CLOSING ARE TO BE CONVEYED HEREUNDER "AS IS WHERE IS" ON THE CLOSING DATE, AND
IN THEIR THEN PRESENT CONDITION, AND BUYER SHALL RELY UPON ITS OWN EXAMINATION
THEREOF. IN ANY EVENT, SELLERS MAKE NO WARRANTY OF MERCHANTABILITY,
SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR QUALITY, WITH RESPECT TO
ANY OF THE TANGIBLE ASSETS BEING SO SOLD, OR AS TO THE CONDITION OR
WORKMANSHIP THEREOF OR THE ABSENCE OF ANY DEFECTS THEREIN, WHETHER LATENT OR
PATENT.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as follows:
5.1 Organization. Buyer is a corporation duly incorporated, validly
existing and in good standing under the laws of Delaware with all requisite
corporate power and authority to own, lease and operate its properties and
assets and to carry on its business as now being conducted.
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5.2 Authorization. The execution, delivery and performance of this
Agreement by Buyer have been duly authorized by all requisite corporate action
of Buyer. This Agreement constitutes the valid and binding obligation of
Buyer enforceable against it in accordance with its terms, except to the
extent enforceability may be limited by bankruptcy, insolvency or other
similar laws affecting the enforcement of creditors' rights in general and
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
5.3 Consents of Third Parties. The execution, delivery and performance
of this Agreement by Buyer will not (i) violate or conflict with the articles
of incorporation or by-laws of Buyer; (ii) conflict with, or result in the
breach of, termination of, or give rise to any lien or constitute a default
under, any material agreement, understanding or commitment to which Buyer is a
party or by which Buyer is bound; (iii) constitute a violation of any law,
regulation, rule, judgment or decree applicable to Buyer; or other than
violations, conflicts, breaches, terminations, accelerations, defaults and
creations specified in the foregoing clauses (ii) and (iii) which will not,
individually or in the aggregate, materially adversely affect the ability of
Buyer to consummate the transactions contemplated by this Agreement in
accordance with the terms hereof. No consent, approval or authorization of
any governmental authority is required on the part of Buyer in connection with
the execution, delivery and performance of this Agreement except the
Regulatory Filings or as set forth in Schedule 5.3.
5.4 Litigation. There is no suit, litigation, proceeding or
governmental action pending, or to the knowledge of Buyer, threatened, or any
order, injunction or decree outstanding, against Buyer that, if adversely
determined, would materially adversely affect the ability of Buyer to
consummate the transactions contemplated by this Agreement in accordance with
the terms hereof.
5.5 Investment. Buyer is purchasing the Shares for investment purposes
and not with a view to the resale or distribution of the Shares, and will not
sell the Shares in violation of applicable federal or state securities laws.
5.6 Brokers or Finders. Except as set forth in Schedule 5.6, neither
the Buyer nor any of its affiliates has employed any broker or finder or
incurred any liability for any brokerage fees, commissions or finder's fees in
connection with this Agreement or the transaction contemplated herein.
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ARTICLE 6
FURTHER AGREEMENTS OF THE PARTIES
6.1 Conduct of the Business Pending Closing. Except as specifically
contemplated by this Agreement, from the date hereof until the Closing, except
as approved by Buyer in writing in advance, Terex and Sellers covenant and
agree that:
(a) The Sellers, the Companies and the Subsidiaries shall operate
their respective businesses in the ordinary course of business consistent with
reasonable past practice;
(b) Other than as may be provided in any employment arrangement
listed on Schedule 4.14, and other than in its ordinary course of business,
neither CMHC nor any Company will (i) grant or agree to grant any (A) bonus to
any employee, (B) general increase in the rates of salaries or compensation of
its employees or (C) specific increase to any employee, except such as are in
accordance with regularly scheduled periodic increases, or (ii) provide for
any new pension, retirement or other employment benefits to any of its
employees or any increase in any existing benefits;
(c) Except for cash dividends and cash payments in respect of
intercompany accounts, CMHC will not declare, set aside or pay any dividends
or other distributions in respect of its capital stock or redeem, purchase or
otherwise acquire any of its capital stock, except in accordance with
reasonable past practice, which includes, without limitation, the continued
implementation of the current cash management practices of Terex and Sellers;
(d) No Company or Subsidiary will amend its articles of
incorporation or by-laws, except as required by law;
(e) CMHC and each Company and Subsidiary will use reasonable
efforts to maintain and preserve intact its business, to keep available the
services of its present employees and to maintain its relationships with
customers, suppliers and others having business relationships with it;
(f) Except as set forth on Schedule 4.9, neither CMHC, the
Companies nor any Subsidiary shall sell, assign, voluntarily encumber, grant a
security interest in or license with respect to, or dispose of, any of their
respective assets or properties, tangible or intangible, having a fair market
value of $10,000 individually or $100,000 in the aggregate, or incur any
material liabilities (including, without limitation, liabilities with respect
to capital leases or guarantees thereof not exceeding $200,000 in the
aggregate), except for sales and dispositions made or liabilities incurred,
including the creation
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of purchase money security interests, in the ordinary course; provided, that
nothing herein shall preclude CMHC, the Companies or any Subsidiary from using
their existing borrowing or credit facilities in any manner and to the full
extent permitted thereunder;
(g) CMHC, the Companies and the Subsidiaries will collect their
accounts receivable in the ordinary course of business consistent with
reasonable past practice; and
(h) The Companies will not declare, set aside or pay any dividends
or other distributions in respect of their respective capital stock or redeem,
purchase or otherwise acquire any of their respective capital stock, including
but not limited to, any distribution of the proceeds of any sale of Flandres
Manutention S.A., or make any loans to or for the benefit of Terex and
Sellers.
6.2 Access. From the date of this Agreement until the Closing Date,
Sellers will at reasonable times and upon reasonable notice furnish Buyer and
its representatives (including Jefferies & Company, Inc., Bear, Stearns &
Co., Inc., Citibank, N.A. and their respective representatives) with access to
or copies of (at Sellers' discretion) such financial and operating data and
such other information relating to CMHC, the Companies and the Subsidiaries as
Buyer may from time to time reasonably request. Any disclosure whatsoever
during any investigation by or on behalf of Buyer shall not constitute an
enlargement of or additional representations or warranties of Sellers and
Terex beyond those specifically set forth in Article 4. All such information
and access shall be subject to the terms and conditions of the Confidentiality
Agreement referenced in Section 6.9.
6.3 Commercially Reasonable Efforts; Other Actions. (a) Subject to the
terms and conditions herein provided, each of the parties hereto agrees to
(i) use commercially reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done as promptly as practicable, all things
necessary, proper or advisable under applicable laws to consummate and make
effective the transactions contemplated by this Agreement, including obtaining
any governmental or other consents, transfers, orders, qualifications,
waivers, authorizations, exemptions and approvals, providing all notices and
making all registrations, filings and applications necessary or desirable for
the consummation of the transactions contemplated herein; (ii) use
commercially reasonable efforts to defend any lawsuits or other legal
proceedings (whether judicial or administrative) challenging this Agreement or
the consummation of the transactions contemplated hereby, including seeking to
have any stay or temporary restraining order entered by any court or other
Governmental Authority vacated or reversed; and (iii) use
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commercially reasonable efforts to fulfill or obtain the fulfillment of all
conditions to the obligations of the other parties to consummate the
transactions contemplated by this Agreement, including, without limitation,
the execution and delivery of all agreements or other documents contemplated
hereunder to be so executed and delivered.
(b) Each party hereto agrees that from and after the Closing Date,
if reasonably requested by any other party hereto, it will execute and deliver
to the other parties such further instruments and documents as may be
reasonably necessary to carry out the provisions of this Agreement.
6.4 Expenses. Except as otherwise specifically provided in this
Agreement, Buyer, on the one hand, and Sellers and Terex, on the other hand,
shall bear their own respective expenses incurred in connection with this
Agreement and in connection with all obligations required to be performed by
each of them under this Agreement.
6.5 Publicity. Terex and Buyer shall consult with each other before
issuing any press release concerning the transactions contemplated by this
Agreement and, except as may be required by applicable law, will not issue any
such press release without the prior written consent of the other.
6.6 Transfer Taxes. Any sales, stock transfer taxes, real property
transfer taxes, personal property transfer taxes, real property gains or
conveyance taxes (other than income taxes) or other like taxes or recording
fees payable in connection with the sale of the Shares or the CMHC Assets
shall be paid equally by Buyer on the one hand, and Sellers, on the other.
6.7 Preservation of Records. Buyer agrees that it shall, at its own
expense, preserve and keep the records of CMHC, the Companies and the
Subsidiaries delivered to it pursuant to this Agreement for a period of seven
years from the Closing Date, or for any longer periods as may be required by
any government agency or ongoing litigation, and shall make such records
available to Sellers as may be reasonably required by Sellers in connection
with, among other things, any insurance claim, legal proceeding, environmental
matter or governmental investigation relating to Sellers, the Companies or the
Subsidiaries; provided, however, that records relating to products liability
matters will be preserved and kept by Buyer for a time period consistent with
the reasonable past practice of CMHC. In the event Buyer wishes to destroy
such records after that time, it shall first give 60 days' prior written
notice to Terex and Terex shall have the right at its option and expense to
take possession of the records within 100 days thereafter.
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6.8 Certain Excluded Obligations. Sellers and Terex acknowledge that
Buyer and the Companies shall have no obligation or responsibility for (a) any
liabilities arising out of or relating to Drexel Industries, Inc., or the
assets, business, operations or ownership thereof, except that Buyer shall
assume the obligations of CMHC under Section 6.12, 6.13 and 6.14 of the
Amended and Restated Stock Purchase Agreement (the "Drexel Agreement"), dated
April 15, 1994, by and between CMH Acquisition Corp. and DAC Acquisition
Corp., (b) the Korean Fines and Penalties, (c) civil damages, costs and
expenses or claims of Clark Korea employees arising from the Korean Fines and
Penalties, (d) liabilities or obligations of the Companies for the U.S. Trust
Financing and the Congress Financing, (e) liabilities or obligations which
arise from a breach or violation by Terex or a Seller of any of the
representations, warranties, covenants or provisions of this Agreement, (f)
liabilities or obligations of the Companies and the Subsidiaries with respect
to any "employee benefit plan" within the meaning of ERISA or any other
employee benefit plans, including bonuses, profit-sharing, percentage
compensation, deferred compensation, pensions, retirement, stock option or
other incentive, medical, vision, dental, hospitalization or other health
insurance, life insurance, disability insurance or any other employee benefit
plan, except to the extent such liabilities or obligations arise from or
relate to benefits provided or accrued under such plans by virtue of
employment with or by any Company or any Subsidiary, (g) liabilities or
obligations which arise from costs and expenses incurred by a Company or any
Subsidiary related to the transactions contemplated by this Agreement and
(h) with respect to the Environmental Losses described in Section 4.19(c) of
this Agreement (the liabilities and obligations referred to in clauses (a)
through (h) are collectively herein referred to as the "Company Excluded
Liabilities").
6.9 Confidentiality. The letter agreement, dated as of March 20, 1996,
between Terex and [Citicorp Venture Capital, Ltd.] (the "Confidentiality
Agreement") is hereby incorporated by reference herein in its entirety and
shall continue in full force and effect until the Closing, at which time such
Confidentiality Agreement (other than provisions therein dealing with
information and other matters concerning Terex and not CMHC or the Companies,
which provisions shall continue in full force and effect) and the obligations
of Buyer under this Section 6.9 shall terminate. If this Agreement is, for
any reason, terminated prior to the Closing, the Confidentiality Agreement
shall continue in full force and effect.
6.10 Continuing Insurance Coverage. (a) From and after the Closing
Date, Buyer shall procure, or shall caused to be procured, at its own expense
and shall maintain in full force and effect (with reputable and financially
sound U.S. domestic insurance companies having a rating of A or better by A.M.
Best &
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Company as of their respective latest evaluation dates and otherwise
acceptable to Terex, or with such other insurance companies acceptable to
Terex) the insurance coverage in the amounts, of the types and the
characteristics set forth in this Section 6.10 and Schedule 6.10 attached
hereto (each an "Insurance Policy", and collectively, the "Insurance
Policies").
(b) Buyer shall deliver to Terex, on the Closing Date and at least
45 days prior to each anniversary of the Closing Date, a certificate of
authorized officers of Buyer (i) confirming that all of the Insurance Policies
are in full force and effect on and as of such date and, with respect to such
certificates being delivered in respect of an anniversary date, that all of
such Insurance Policies will be in full force and effect on and as of such
anniversary date, (ii) confirming the names of the companies issuing such
Insurance Policies, (iii) confirming the amounts, the effective dates and the
expiration dates of such Insurance Policies, (iv) confirming that all premiums
in respect of such Insurance Policies have been paid in full and (v)
certifying that such Insurance Policies fully comply with the requirements of
this Section 6.10. Such certificate shall be accompanied by a certificate of
a licensed insurance agent, broker or insurer approved by Terex (which
approval shall not be unreasonably withheld) confirming the matters specified
in the preceding sentence. In the event Buyer shall at any time fail to
procure or maintain any of the Insurance Policies required hereby, Terex or
any of its subsidiaries or affiliates may (but shall not be obligated to)
procure and maintain such Insurance Policies in its own name or in the name of
Buyer, CMHC or the Companies, as Terex shall elect, and Buyer shall and shall
cause the Companies jointly and severally to reimburse Terex and its
subsidiaries and affiliates for all costs and expenses (including, without
limitation, all premiums) incurred or paid by Terex or any of its subsidiaries
or affiliates in respect of such Insurance Policies.
(c) Promptly upon receipt thereof and in any event within 30 days
after the Closing Date, Buyer shall deliver to Terex a duplicate copy,
certified by a licensed insurance agent, broker or insurer approved by Terex
(which approval shall not be unreasonably withheld) of each Insurance Policy,
each bearing a notation evidencing payment in full of the premium therefor
listing Terex and Clark Equipment Company, a Delaware corporation ("CEC") and
their respective past, present and future subsidiaries, affiliates and
successors (including CMHC and the Companies) as additional insureds and
stating that Terex is to be notified in writing in advance if the policy or
policies are cancelled or coverage amounts reduced. Not less than 45 days
prior to the expiration date of any Insurance Policy, Buyer shall deliver to
Terex a certificate of insurance or binder of insurance with respect to each
renewal policy in respect thereof, certified in each case by a licensed
insurance agent, broker or
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insurer approved by Terex (which approval shall not be unreasonably withheld)
listing Terex and CEC and their respective past, present and future
subsidiaries, affiliates and successors (including CMHC and the Companies) as
additional insureds and stating that Terex is to be notified in writing in
advance if the policy or policies are cancelled or coverage amounts reduced.
Promptly after receipt thereof and in any event within 30 days after the
effective date of any such renewal policy, Buyer shall deliver to Terex a
duplicate copy, certified by a nationally recognized insurance broker approved
by Terex, of each such renewal policy, each bearing a notation evidencing
payment in full of the premium therefor.
(d) All of the Insurance Policies shall be written on an
"occurrence" basis, unless otherwise agreed in writing by Terex, and shall (i)
name Terex and CEC and their respective past, present and future subsidiaries,
affiliates and successors (including CMHC and the Companies) as additional
insureds, (ii) insure the interests of Terex, CEC and their respective
subsidiaries, affiliates and successors regardless of any change in ownership
of all or any portion of the Companies or any of their respective businesses
or assets, (iii) waive any right of subrogation of the insurer(s) against
Terex, CEC and their respective subsidiaries, affiliates and successors, (iv)
waive any right of the insurer(s) to any set-off or counterclaim or any other
deduction and (v) include a severability of interest and cross liability
clause.
(e) Buyer shall promptly notify Terex on a monthly basis of (i) any
loss covered by any Insurance Policy and (ii) any material change in coverage
under any of the Insurance Policies including, but not limited to, any
reduction in coverage or amount, any increase in deductibles or self-insured
retentions, or any change of insurer(s); provided that no alteration of any of
the terms or conditions of any Insurance Policy which adversely affects
Terex's, CEC's or any of their respective subsidiaries', affiliates' or
successors (or any of their respective past, present or future directors',
officers', employees' or agents') coverage thereunder (including, without
limitation, any reduction in the scope or limit of coverage or any increase in
deductibles or self-insured retentions) may be made to any of the Insurance
Policies without the prior written consent of Terex which shall not be
unreasonably withheld or delayed; provided further that any change to
Insurance Policies shall be deemed not to adversely affect Terex, CEC or such
other parties if it meets or exceeds the standards sets forth in Schedule
6.10.
6.11 CMHC Cash and Intercompany Accounts at Closing. (a) CMHC shall be
entitled, prior to the Closing, to collect and retain or cause to be collected
and retained the proceeds of all items received in any bank account of CMHC
(collectively, the
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"Bank Accounts") or otherwise in respect of CMHC, (including the amount of any
checks received by CMHC), and all other cash on hand, through the close of
business on the day immediately preceding the Closing Date (the "Pre-Closing
Cash"); provided, however, that CMHC may at its option not collect but leave
in any of the Bank Accounts or other locations of CMHC, all or any portion of
the Pre-Closing Cash, and the aggregate amount of such uncollected Pre-Closing
Cash shall be paid to CMHC together with and in the same manner as the
Purchase Price. If after the Closing it is determined that the amount of
Pre-Closing Cash is greater or less than the sum of the amount, if any, that
was collected by CMHC and the amount, if any, that was uncollected and paid
together with the Purchase Price, Buyer shall pay CMHC or CMHC shall pay
Buyer, as applicable, the difference between the two amounts promptly after
such determination.
(b) At the Closing, Buyer shall cause the release of Terex and all
Sellers from any and all of their liabilities and obligations (contingent or
otherwise) with respect to any and all guaranties, letters of credit,
performance bonds and appeal bonds in effect on the Closing Date relating to
the business, properties and/or assets of CMHC. CMHC has the right to retain,
or Buyer shall cause to be paid to CMHC, (i) the lesser of $326,500 or 50% of
the cash which is collateralizing or securing the guaranties, letters of
credit, performance bonds and appeal bonds in effect on the date hereof
relating to the business, properties and/or assets of CMHC and (ii) all cash
which is collateralizing or securing any such guaranties, letters of credit,
performance bonds and appeal bonds put into effect after the date hereof.
(c) All intercompany accounts between Terex or any Seller, on the
one hand, and any Company or any Subsidiary, on the other hand, shall be
cancelled prior to the Closing Date, except accounts related to the purchase
of equipment, goods or materials.
6.12 Drexel Note. Notwithstanding anything contained to the contrary in
this Agreement, (i) Sellers shall retain the notes receivable issued in
connection with the sale of Drexel pursuant to the Drexel Agreement (the
"Drexel Note") and (ii) the Drexel Note shall not be included in any
calculation of Adjusted Working Capital pursuant to Section 2.3 of this
Agreement.
6.13 Employment and Employee Benefit Issues. (a) Buyer shall offer
employment, commencing on the Closing Date, to all salaried and hourly
employees of CMHC on the Closing Date, at substantially the same salary and
wages which each such employee was receiving at such time from CMHC, other
than those executive employees set forth on Schedule 6.13. Those employees
who accept employment at the Closing Date or thereafter, are hereinafter
referred to collectively as the "Transferred Employees." Buyer
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shall indemnify CMHC and its affiliates for any claims by any Transferred
Employee (i) for severance pay or other compensation or benefits alleged to be
owing by reason of the transactions contemplated hereby pursuant to any of the
plans or policies referred to in Schedule 4.14 and (ii) under the Worker
Adjustment Retraining and Notification Act, R.L. 100-379, as amended ("WARN").
Nothing contained herein shall (i) confer any third-party beneficiary right
(actual or implied) upon any Transferred Employee or obligate Buyer to
continue any Transferred Employee in its employ for any specified period of
time or at any specified salary, wages or benefits after the Closing Date or
(ii) create any liability or obligation on the part of Buyer, the Companies or
the Subsidiaries with respect to the agreements referred to in item 1 of
Schedule 4.9, all of which obligations shall be solely the responsibility of
Terex or its affiliates (other than the Companies or the Subsidiaries).
(b) Buyer shall establish or provide for the Transferred Employees
hospitalization, medical, surgical, life insurance, severance, vacation plans
and other employee benefit plans and programs similar to those that such
Transferred Employees were receiving from CMHC immediately prior thereto.
Buyer also shall credit Transferred Employees with their past service with
CMHC for purposes of determining eligibility for vacation, severance payments
and other employee benefits to the same extent such service was recognized
under the corresponding plans of CMHC. Buyer will waive the eligibility and
waiting periods normally applicable to its employee benefit plans and will
also waive actively at work and preexisting conditions exclusions except to
the extent such exclusions are applicable to the particular Transferred
Employee under CMHC's employee benefit plans. Buyer shall be responsible for
all benefits earned by Transferred Employees through service with CMHC prior
to the Closing Date including, without limitation, vacation time.
6.14 Change of Name. (a) On or prior to the Closing, CMHC shall
deliver to Buyer a duly executed and acknowledged certificate of amendment to
its certificate of incorporation or other appropriate documents in form and
substance suitable to Buyer for filing with the Secretary of State of the
Commonwealth of Kentucky, which are required to change CMHC's corporate name
to a new name bearing no resemblance to its present name so as to make the
present name of CMHC available to Buyer from and after the Closing. Buyer is
hereby authorized to file such certificate or other documents in order to
effectuate such change of name at or after the Closing as Buyer shall elect.
(b) On or prior to the Closing, CMHC shall deliver to Buyer a duly
executed and acknowledged certificate of amendment to the certificate of
incorporation or other appropriate documents in form and substance suitable to
Buyer for filing with the Secretary of State of the State of Michigan, which
are
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required to change the corporate name of Clarklift of Western Michigan, Inc.
to a new name bearing no resemblance to its present name. Buyer is hereby
authorized to file such certificate or other documents in order to effectuate
such change of name at or after the Closing as Buyer shall elect.
6.15 Covenant Not to Compete. From and after the Closing Date, without
the prior written consent of Buyer, each of Terex, CMHC, and each Seller will
not (i) directly or indirectly, engage in any business, activity or operation
competitive with Buyer's conduct of the current business of CMHC and the
Companies, (ii) manufacture, market or sell anywhere in the world any products
currently being manufactured, marketed or sold by CMHC or the Companies or any
product presently under development by CMHC or the Companies or (iii) directly
or indirectly, induce, solicit, aid or assist any other person to induce or
solicit, employees, salespersons, agents, consultants, distributors,
representatives, advisors, customers or suppliers of such business to
terminate, curtail or otherwise limit their employment or business
relationships with the business of CMHC and the Companies conducted by Buyer;
provided, however, that notwithstanding anything else contained in this
Section 6.15 to the contrary, from and after the Closing Date, Terex, each
Seller and any affiliates thereof (excluding CHMC and the Companies)
("Affiliates") shall be permitted to (i) engage in any business, activity or
operation that Terex, any Seller or their Affiliates are currently engaged or
(ii) manufacture, market or sell any products that Terex, any Seller or any
Affiliate currently manufactures, markets or sells or any product currently
under development by any of them. This covenant not to compete shall extend
for a period of ten years from the Closing Date.
6.16 Financial Information. Sellers shall deliver to Buyer copies of
the Statutory 1995 financial statements of Clark Germany when such financial
statements are filed with the applicable governmental authorities.
6.17 Tax Assessments. Sellers and Terex shall cause the tax assessment
referred to on Schedule 4.11 to be paid or otherwise satisfied prior to
Closing.
6.18 Transfer of Clarklift Washington Shares. Subject to compliance
with the terms and conditions of this Agreement, and subject further to
compliance with the terms of that certain Agreement, dated April 1, 1982,
among Clarklift of Washington/Alaska, Inc., C.T. Caughell, R.K. Mathias, Jr.
and Clark Equipment Company (as assignee of Clark Equipment Credit Corporation
("Clarklift Washington Shareholders Agreement"), at the Closing, CMH
Acquisition shall transfer and assign to Buyer, and Buyer shall accept from
CMH Acquisition, all of the shares of Clarklift Washington/Alaska, Inc. (the
"Clark Washington Shares") owned by CMH Acquisition, for no additional
consideration;
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provided that, if prior to Closing, CMH Acquisition shall have sold the
Clarklift Washington Shares, CMH Acquisition, at the Closing, shall remit the
net proceeds of sale received by it to Buyer in lieu of transferring and
assigning the Clarklift Washington Shares. If CMH Acquisition is unable to
comply with the terms of the Clarklift Washington Shareholders Agreement and
effect the transfer and assignment of the Clarklift Washington Shares to
Buyer, at the Closing, CMH Acquisition shall have no obligation to transfer
and assign the Clarklift Washington Shares to Buyer and the Purchase Price
specified in Section 2.1 shall not be reduced; provided that in lieu thereof,
CMH Acquisition shall assign to Buyer, at Closing, all of its rights to
receive payment or other distributions with respect to those shares and
otherwise reasonably provide Buyer with all of the benefits, risks,
liabilities and burdens of ownership of the Clark Washington Shares.
6.19 Consent to Assignment of Agreements. Terex and Sellers agree to
obtain the consent required of any third parties to the assignment to Buyer of
the agreement listed on Schedule 6.19(c) on or prior to the Closing Date.
Notwithstanding the foregoing or anything to the contrary contained herein,
Buyer acknowledges and agrees that none of the Sellers or Terex will obtain
consent of any third parties to the assignment to Buyer of the agreements
listed on Schedule 6.19 as a condition to Closing hereunder; provided,
however, such acknowledgment and agreement does not constitute a waiver by
Buyer of any of its rights to indemnification pursuant to Article 9.
6.20 Guaranties, Letters of Credit, Etc. (a) At the Closing, Buyer
shall cause the release of Terex and all Sellers from any and all of their
liabilities and obligations (contingent or otherwise) with respect to any and
all guaranties, letters of credit, performance bonds and appeal bonds
disclosed to Buyer and relating to the business, properties and/or assets of
any of the Companies or the Subsidiaries. If the Buyer is unable to obtain a
release of any guaranty of Terex or any Seller after use of all commercially
reasonable efforts by Buyer, such inability shall not constitute a breach of
this Section 6.20, provided that Buyer shall deliver to Terex or Seller, as
the case may be, a guaranty in favor of Terex or Seller, as the case may be,
substantially in the form of such guaranty continuing after the Closing and
otherwise reasonably acceptable to Terex and the Sellers.
(b) After the Closing, Buyer shall use commercially reasonable
efforts to promptly cause the release of Terex and all Sellers from any and
all of their liabilities and obligations (contingent or otherwise) with
respect to any and all guaranties of Terex or the Sellers continuing after the
Closing Date pursuant to clause 6.20(a) above and any and all guaranties,
letters of credit, performance bonds and appeal bonds determined to exist
after the Closing which relate to the business,
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properties and/or assets of any of the Companies or the Subsidiaries as soon
as practicable after the Closing Date.
6.21 Buyer's Financing. (a) Sellers and Terex shall cooperate with
Buyer in respect of any proposed public offering or private placement of
securities and arrangements of other financing by Buyer, a portion of the
proceeds of which are to be used to finance the Purchase Price by Buyer,
working capital and fees and expenses in connection therewith (the
"Financing"); provided, however, that neither Sellers nor Terex shall be
obligated to participate in the Financing or incur any liability with respect
thereto. Each party providing all or a portion of the Financing shall be
entitled to rely in connection therewith on the documents delivered in
accordance with Section 7.3(a). Buyer shall use commercially reasonable
efforts to complete the Financing prior to or on December 12, 1996.
(b) Buyer shall give Sellers and Terex a reasonable opportunity to
review any references to Sellers, Terex, this Agreement or the transactions
contemplated hereby in any registration statement or private placement
memorandum relating to the Financing (the "Offering Documentation") and any
amendments or supplements thereto by providing to Sellers and Terex drafts of
such Offering Documentation or any amendments or supplements thereto prior to
filing such documents with the Securities and Exchange Commission or
distributing such documents to potential purchasers of privately placed
securities and allowing Sellers and Terex a reasonable opportunity to review
and comment thereon.
(c) Buyer acknowledges and agrees that the cooperation by Sellers
and Terex provided for in clause (a) hereof and any review of any Offering
Documentation and any comments thereon provided by Sellers and Terex pursuant
to clause (b) hereof shall not render Sellers or Terex in any way responsible
for such Offering Documentation, or the accuracy or completeness thereof.
(d) As an inducement to Sellers and Terex to cooperate with Buyer
under this Section 6.21, (i) Buyer will, and hereby does, indemnify and hold
harmless each of Terex and the Sellers (each, a "Terex Entity" and
collectively, the "Terex Entities"), and each of their respective directors,
officers, partners, counsel, employees, agents and affiliates and each other
person or entity, if any, who controls each Terex Entity within the meaning of
the Securities Act of 1933, as amended (the "Securities Act") or the
Securities Exchange Act of 1934, as amended (the "Exchange Act") (together
with the Terex Entities, the "Indemnified Party"), to the fullest extent from
and against losses, claims, damages, or liabilities, joint or several, to
which such Indemnified Party may become subject under the Securities Act, the
Exchange Act or any other federal, state or
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common law rule or regulation, or otherwise, insofar as such losses, claims,
damages or liabilities, joint or several (or actions or proceedings, whether
commenced or threatened, in respect thereof), arise out of, are based upon or
relate to the Financing and the Offering Documentation, and Buyer will
reimburse each Indemnified Party for any legal or other expenses incurred by
them in connection with investigating, preparing or defending any such loss,
claim, liability, action or proceeding, whether or not in connection with
litigation in which any Indemnified Party is a party; provided, however, that
Buyer shall not be liable in any such case to the extent that any such loss,
claim, damage or liability (or action or proceeding, in respect thereof) or
expense is based upon an untrue statement or omission made or alleged untrue
statement or omission made in reliance on and in conformity with written
information furnished to Buyer, including, but not limited to, the
representations and warranties contained in this Agreement.
(ii) If for any reason the foregoing indemnity is unavailable to
an Indemnified Party or insufficient to hold an Indemnified Party harmless,
then Buyer, to the fullest extent permitted by law, shall contribute to the
amount paid or payable by such Indemnified Party as a result of such losses,
claims, liabilities, actions, proceedings or expenses (A) in such proportion
as is appropriate to reflect the relative fault of Buyer on the one hand and
the Terex Parties on the other, which resulted in such losses, claims,
liabilities, actions, proceedings or expenses, as well as any other relevant
equitable considerations, or (B) if allocation provided by clause (A) is not
permitted under applicable law, in such proportion as is appropriate to
reflect not only the relative fault but also the relative benefits received by
Buyer on the one hand and the Terex Parties on the other, as well as any
relevant equitable considerations. Buyer and Terex and Sellers agree that it
would not be just and equitable if the contribution were determined by pro
rata allocation or by any other method of allocation which does not take into
account the equitable considerations referred to herein.
(iii) The provisions of this Section 6.21 shall (A) remain in full
force regardless of any investigation made by or on behalf of any Indemnified
Party, (B) survive both the termination of this Agreement pursuant to Article
8 hereof and the Closing and have no expiration date, (C) be in addition to
any liability that Buyer might otherwise have under this Agreement and (D) be
binding upon any successors or assigns of Buyer and successors and assigns to
all or substantially all of Buyer's business and assets.
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6.22 Inspections. Between the date of execution of this Agreement and
Closing, Buyer shall have the right to perform an inspection consistent with
the current standards of environmental due diligence of the Facilities,
including both an inspection equivalent to that described in ASTM Standard E
1527-94 and an adequate regulatory compliance assessment. The Buyer shall
conduct such tests of soil, groundwater and evaluations of the environmental
compliance of the Facilities as Buyer deems necessary in its reasonable
judgment. Sellers and Terex shall provide Buyer and its agents reasonable
access to the Facilities during normal business hours upon reasonable notice
to conduct such inspections and tests. Buyer shall promptly inform Seller of
the results of its tests and evaluations. Buyer's rights under this Section
6.22 are subject to the condition that the inspections and testing to be
conducted shall not (i) unreasonably interfere with the business operations of
Terex, any Seller, any Company or any Subsidiary, (ii) damage any asset or
property of Terex, any Seller, any Company or any Subsidiary and (iii) cause
Terex, any Seller, any Company or any Subsidiary to be in material breach of
any lease or other agreement relating to the Facilities; provided, however,
that neither Terex nor any Seller shall be deemed to have breached any
representation or warranty herein to the extent that such breach was caused
(as opposed to discovered) by Buyer's actions under this Section 6.22.
6.23 Korean Fines and Penalties. Buyer agrees to use commercially
reasonable efforts to take, and cause to be taken, all actions, and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws to minimize any Korean Fines and Penalties. Buyer shall not take any
action to, and shall cause no action to be taken to, directly or indirectly,
cause any increase in any Korean Fines and Penalties.
6.24 Retrospective Premiums. Buyer shall provide Terex and the Sellers
with such information and records, and use such commercially reasonable
efforts, as may be necessary or desirable to assist Terex in researching,
substantiating and defending any claim for payment of Retrospective Premiums
by Terex or any Seller.
6.25 Undertaking. (a) Sellers and Terex agree to undertake any action
necessary to cause the Companies and the Subsidiaries to comply with the
covenants set forth in this Article 6, to the extent applicable to the
Companies and the Subsidiaries, as the case may be.
(b) To the extent permitted, Sellers shall cause Buyer and any
permitted assignee under this Agreement to be listed as "named insureds" on
all insurance policies carried by the Sellers and the Companies.
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ARTICLE 7
CONDITIONS OF CLOSING;
DOCUMENTS DELIVERED AT CLOSING
7.1 Condition Precedent to Obligations of Buyer. The obligation of
Buyer to consummate the purchase of the Shares and the CMHC Assets under this
Agreement is subject to the fulfillment, prior to or at the Closing, of each
of the following conditions, any of which may be waived by Buyer:
(a) There shall not be in effect any injunction or restraining
order issued by a court of competent jurisdiction which prohibits the
consummation of the transactions contemplated by this Agreement.
(b) No statute, rule or regulation shall have been enacted by any
Governmental Authority which prohibits the consummation of the transactions
contemplated herein or makes such consummation illegal.
(c) All Liens related to Excluded Liabilities, the Company Excluded
Liabilities and any other liability not assumed by Buyer hereunder, including
Liens marked with a double asterisk on Schedules 4.6, 4.7 and 4.16 shall have
been released or removed.
(d) Buyer having received the proceeds of the Financing required to
effect the transactions contemplated by this Agreement and to pay related fees
and expenses on such terms and conditions as are reasonably satisfactory to
Buyer in an amount equal to at least $145,000,000, prior to or at the Closing.
7.2 Conditions Precedent to Obligations of Sellers. The obligation of
CMH International to consummate the sale of the Clark Germany Shares owned by
it, CMH Acquisition to consummate the sale of the CMH Acquisition Shares owned
by it, CMHC to consummate the sale of the CMHC Assets and Clark Michigan to
consummate the sale of the Clark Korea Shares under this Agreement is subject
to the fulfillment, prior to or at the Closing, of each of the following
conditions, any of which may waived by Sellers:
(a) Buyer shall have performed and complied in all material
respects with the agreements and covenants required by this Agreement to be
performed or complied with by it prior to or at the Closing.
(b) There shall not be in effect any injunction or restraining
order issued by a court of competent jurisdiction
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which prohibits the consummation of the transactions contemplated by this
Agreement.
(c) No statute, rule or regulation shall have been enacted by any
Governmental Authority which prohibits the consummation of the transactions
contemplated herein or makes such consummation illegal.
7.3 Documents to be Delivered at Closing. (a) At the Closing, Terex
and Sellers shall deliver, or cause to be delivered, to Buyer the following:
(i) certificates representing the Shares (together with all
rights then or thereafter attaching thereto), with valid stock powers
attached or, with respect to the Clark Germany Shares, a notarial deed or
deeds;
(ii) bills of sale, assignments and assumptions of leases,
assignments and assumptions of contracts, a deed for the Owned Property
and such other instruments of transfer and assignment of the CMHC Assets;
(iii) a copy of resolutions of the board of directors of
Terex and each Seller authorizing the execution, delivery and performance
of this Agreement by Terex and such Seller and a certificate of the
secretary or assistant secretary of Terex and each Seller, dated the
Closing Date, that such resolutions were duly adopted and are in full
force and effect;
(iv) a certificate, dated the Closing Date, of the President
or a Vice President of Terex and each Seller certifying that the
representations and warranties specified in Sections 4.27 and 4.28 are
true and correct; it being understood that (A) for the purposes of the
certificate delivered pursuant to this Section 7.3(a)(iv), the
representations and warranties of Terex and Sellers specified in Sections
4.27 and 4.28 shall be true and correct in all material respects unless
the facts, events or circumstances giving rise to any untruths or
inaccuracies in such representations or warranties are such as to result
in a Material Adverse Change and (B) the foregoing standard of
materiality shall not apply in connection to any claims for
indemnification by Buyer under Article 9 hereof;
(v) an affidavit of Sellers required by Section 1445(b)(2)
of the Code;
(vi) opinion of general counsel of Terex in the form
attached hereto as Exhibit A;
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(vii) the written resignations of the directors and officers
of each of the Companies and Subsidiaries as Buyer shall request at least
five business days prior to Closing;
(viii) stock powers, notarial deeds and other instruments
necessary to transfer to Buyer or its nominees, without additional
consideration, Shares owned by any person other than the Sellers,
including, but not limited to, the directors and employees of the
Companies referenced on Schedule 4.5; and
(ix) an agreement relating to the distribution of parts
through the Terex Distribution Center substantially in the form attached
as Exhibit B.
(b) At the Closing, Buyer shall deliver to Terex and Sellers the
following:
(i) payment of the Purchase Price and evidence of the wire
transfer referred to in Section 2.2;
(ii) instruments of assumption of the CMHC Liabilities
(collectively, the "Assumption"); and
(iii) a copy of the resolutions of the board of directors of
Buyer authorizing the execution, delivery and performance of this
Agreement by Buyer, and a certificate of its secretary or assistant
secretary, dated the Closing Date, that such resolutions were duly
adopted and are in full force and effect.
ARTICLE 8
TERMINATION AND OTHER MATTERS
8.1 Termination by Mutual Consent. This Agreement may be terminated at
any time prior to the Closing by the mutual written consent of Buyer, on the
one hand, and Sellers and Terex, on the other hand.
8.2 Termination Either by Sellers and Terex or by Buyer. This Agreement
may be terminated either by Sellers and Terex, on the one hand, or by Buyer,
on the other hand, if a United States federal or state court of competent
jurisdiction or United States federal or state governmental, regulatory or
administrative agency or commission shall have issued an order, decree or
ruling or taken any other action permanently restraining, enjoining or
otherwise prohibiting the transactions contemplated by this Agreement and such
order, decree, ruling or other action shall have become final and
non-appealable.
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8.3 Termination by Sellers and Terex. This Agreement may be terminated
by Sellers and Terex at any time prior to the Closing if: (a) the Closing
shall not have occurred on or prior to December 12, 1996, and the parties
hereto agree that time is of the essence with respect to such date; (b) there
has been a material breach of any representation or warranty of Buyer
contained in this Agreement; and (c) there has been a material breach of any
of the covenants or agreements contained in this Agreement on the part of
Buyer, which breach is not curable or, if curable, is not cured within the
earlier of (i) 30 days after written notice of such breach is given by Terex
or any Seller to Buyer and (ii) December 12, 1996.
8.4 Termination by Buyer.
(a) This Agreement may be terminated by Buyer at any time prior to
the Closing, if (i) the Closing shall not have occurred on or prior to
December 12, 1996 or (ii) the conditions to Closing set forth in Section 7.1
shall not have been satisfied or waived.
(b) In the event that Buyer fails to consummate the purchase of the
Shares and the CMHC Assets under this Agreement for any reason other than (i)
termination by Buyer as permitted pursuant to Sections 8.1 or 8.2, (ii) the
failure by Terex and Sellers to satisfy the conditions precedent as set forth
in Sections 7.1 (a), (b) and (c), (iii) the failure to satisfy the conditions
precedent as set forth in Sections 7.2(b) or (c), or (iv) the failure of Terex
and the Sellers, at the Closing, to deliver, or cause to be delivered, to
Buyer, the respective documents and instruments required to be delivered by
them pursuant to Section 7.3(a), Buyer shall pay to Terex and Sellers as
liquidated damages an amount equal to $5,000,000 (the "Buyer Payment") as
compensation, and not as a penalty, for any and all losses, costs, damages and
expenses, whether foreseen or unforeseen, all or a part of which may be
incapable of accurate measurement. Buyer acknowledges that the right of Terex
and Sellers to receive liquidated damages was specifically bargained for by
Terex and Sellers and constitutes a material inducement to Terex and Sellers
to enter into this Agreement. The payment by Buyer of the Buyer Payment and
Terex's and Sellers' right to receive such payments shall constitute full and
final satisfaction of all liabilities and obligations of Buyer to Terex,
Sellers, the Companies and the Subsidiaries under this Agreement and shall
constitute the sole remedy of Terex, Sellers, the Companies and the
Subsidiaries with respect to Buyer's failure to consummate the transactions
contemplated by this Agreement.
8.5 Effect of Termination. In the event of termination of this
Agreement pursuant to this Article 8, all rights and obligations of the
parties hereto shall terminate, except the
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rights and obligations of the parties pursuant to the provisions of Sections
6.4, 6.5, 8.4(b), 11.1, 11.2, 11.3, 11.5, 11.7, 11.8, 11.9 and the
Confidentiality Agreement referred to in Section 6.9.
8.6 Standstill Agreement. Terex has been in negotiations with other
parties concerning a possible sale of the Business and such other parties have
obtained certain information relating thereto. Terex and Sellers each agree
to immediately terminate, and to cause their representatives, agents,
officers, employees, lawyers and accountants to terminate, all negotiations
and communications with or on behalf of other parties and, after the date of
execution of this Agreement up to the date of Closing, agree not to, and to
cause their representatives, agents, officers, employees, lawyers and
accountants not to, directly or indirectly, solicit, communicate, negotiate or
enter into other discussions with, or on behalf of, any parties relating to
the sale of all or any part of the Business except Buyer, and further agree,
without limitation of the foregoing, not to provide this Agreement or any
financial or operating information to any other party. Buyer shall be
entitled to pursue any and all remedies to which it may be entitled at law or
in equity for violations of this Section 8.6. Terex and the Sellers agree
that Buyer will suffer irreparable damage in the event that any of the
provisions of this Section 8.6 were not performed in accordance with its terms
or was otherwise breached. It is accordingly agreed that Buyer shall be
entitled to the remedy of specific performance of the terms of this Section
8.6 and injunctive relief preventing any breach of the terms of this Section
8.6, by Terex, Sellers, the Companies and the Subsidiaries this being in
addition to any other remedy to which Buyer may be entitled at law or in
equity. Sellers and Terex agree to cause the Companies and the Subsidiaries
to comply with all of the terms of this Section 8.6.
ARTICLE 9
SURVIVAL; INDEMNIFICATION
9.1 Survival. The representations and warranties of Terex, Sellers and
the Companies contained in this Agreement shall survive the Closing for the
period set forth in this Section 9.1. All of the representations and
warranties of Sellers and Terex contained in this Agreement and all claims and
causes of action with respect thereto shall terminate upon expiration of 16
months after the Closing Date, except that (a) the representations and
warranties in Sections 4.2, 4.6, 4.7, 4.22 and 4.27 shall have no expiration
date and (b) the representation and warranty in Section 4.11 shall survive,
with respect to any Tax Return, until the applicable statute of limitations
has run for any such Tax Return required to be filed on or before the date of
this
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Agreement. All of the representations and warranties of Buyer contained in
this Agreement and all claims and causes of action with respect thereto shall
terminate upon expiration of 16 months after the Closing Date, except that the
representations and warranties in Sections 5.2, 5.5 and 5.6 shall have no
expiration date; it being understood that in the event notice of any claim for
indemnification under Section 9.2(a)(i) or Section 9.2(b)(i)(x) hereof shall
have been given (within the meaning of Section 11.5) within the applicable
survival period, the representations and warranties that are the subject of
such indemnification claim shall survive with respect to such claim only until
such time as such claim is finally resolved. The covenants and agreements of
Terex, Sellers, the Companies and Buyer contained in this Agreement shall
survive the Closing and have no expiration date. No investigation by Buyer or
on its behalf heretofore or hereafter conducted shall affect the
representations, warranties or covenants of Sellers and Terex set forth in
this Agreement.
9.2 Indemnification. (a) If the Closing shall occur, subject to the
provisions of this Article 9, Sellers and Terex shall jointly and severally
indemnify Buyer and its affiliates (including the Companies and the
Subsidiaries) and hold each of them harmless from and against, and in respect
of, any damages, claims, losses, charges, actions, suits, proceedings,
deficiencies, taxes, interest, penalties, and reasonable costs and expenses
(including without limitation reasonable attorneys' fees and expenses)
(collectively, "Losses") which are incurred or suffered by any of them (i) by
reason of the breach of any of the representations or warranties made by Terex
and Sellers herein for the period such representation or warranty survives,
(ii) by reason of the failure by Terex or Sellers to perform or comply with
any of the covenants or agreements contained in this Agreement to be performed
or complied with by Terex or Sellers, (iii) with respect to the Excluded
Liabilities and the Company Excluded Liabilities or (iv) by reason of failure
to obtain the consents to assignment referenced in Schedules 6.19. Any
recovery by Buyer and its affiliates for a Loss incurred or suffered by reason
of a breach of any of (x) the representations and warranties made by Terex and
Sellers or (y) the covenants and agreements of Terex and Sellers pursuant to
Sections 6.1(a), 6.1(e) and 6.19, shall be limited as follows: (1) Buyer and
its affiliates shall not be entitled to any recovery unless a claim for
indemnification is made within the time period of survival set forth in
Section 9.1; (2) Buyer and its affiliates shall not be entitled to recover any
amount for indemnification claims under this Section 9.2(a) unless and until
the amount which Buyer and its affiliates are entitled to recover in respect
of such claims exceeds, in the aggregate, $2,000,000, in which event (subject
to clause (3) below) the entire amount which Buyer and its affiliates are
entitled to recover in respect of such claims less the amount of $1,000,000
shall be payable; and (3) the
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maximum aggregate amount recoverable by Buyer and its affiliates for all
indemnification claims under this Section 9.2(a) shall in the aggregate be
equal to $25,000,000; provided, however, that (x) with respect to Losses
resulting from the assignment of the item listed on Schedule 6.19(a) the
limitation set forth in clause (2) of this Section 9.2(a) shall not apply and
(y) with respect to Losses resulting from Excluded Liabilities or Company
Excluded Liabilities the limitations set forth in clauses (2) and (3) of this
Section 9.2(a) shall not apply.
(b) If the Closing shall occur:
(i) Buyer, the Companies and the Subsidiaries shall jointly
and severally indemnify Sellers and Terex and their respective affiliates
and hold each of them harmless from and against all Losses which are
incurred or suffered by any of them (x) by reason of the breach by Buyer
of any of the representations or warranties made by Buyer herein for the
period such representation or warranty survives or (y) by reason of the
failure by Buyer (and from and after the Closing, the Companies and the
Subsidiaries) to perform or comply with any of the covenants or
agreements contained in this Agreement or in the Assumption to be
performed or complied with by any of them at or after the Closing,
provided, however, that Sellers and Terex and their respective affiliates
shall not be entitled to any recovery unless a claim for indemnification
is made in accordance with paragraph (d)(i) of this Section 9.2 and
within the time period of survival set forth in Section 9.1.
(ii) Buyer, the Companies and the Subsidiaries shall,
without restriction as to time, minimum or maximum, jointly and severally
indemnify Sellers and Terex and their respective affiliates and hold each
of them harmless from and against all Losses which are incurred or
suffered by any of them with respect to or arising out of the CMHC
Assets, the CMHC Liabilities and the respective businesses of the
Companies and the Subsidiaries (except for Losses with respect to or
arising out of the Excluded Liabilities or the Company Excluded
Liabilities) (whether the event or occurrence giving rise to such Loss
occurs prior to or after the Closing), including, without limitation,
Losses relating to Environmental Laws, product liability, relations with
customers or creditors, third party claims, employee benefit matters,
insurance matters, Owned Property, Leased Property or Intellectual
Property Rights. The indemnification provided herein by Buyer, the
Companies and the Subsidiaries in favor of Terex shall not expand the
scope or amount of the indemnification obligations that Buyer, the
Companies and the Subsidiaries would otherwise have pursuant to this
Article 9.
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(iii) Without limiting the generality of clauses (i) and (ii)
of this Section 9.2(b), with respect to any actions, suits and
proceedings against, and any Losses (as hereinafter defined) and other
liabilities of CMHC, the Companies or the Subsidiaries arising out of
events or circumstances occurring or existing prior to the Closing Date
which are covered by existing insurance policies of Sellers, Terex, the
Companies or the Subsidiaries except as may relate to Excluded
Liabilities (each, a "Covered Liability"), the Buyer, the Companies and
the Subsidiaries jointly and severally, shall indemnify Sellers and Terex
for all deductibles, self-insured retentions, exclusions and other
amounts, losses and expenses to the full extent not paid, for whatever
reason, under such policies. Buyer shall or shall cause the Companies
and the Subsidiaries to prosecute and defend each such Covered Liability
in a timely and prudent fashion. The Buyer may, and may cause the
Companies and the Subsidiaries to, settle or compromise any such Covered
Liabilities without Terex's prior written consent only so long as the
Sellers and Terex are indemnified fully hereunder. All out-of-pocket
costs of prosecuting, defending and administering such Covered
Liabilities and all costs incurred in settlement or by judgment or order
or otherwise in respect thereof, including but not limited to amounts
necessary to maintain claim funds, and the allocable share of all
increased retrospective premiums (excluding the Retrospective Premiums)
payable under such insurance policies, shall be the joint and several
responsibility of Buyer, the Companies and the Subsidiaries, and such
responsible parties shall promptly, reimburse Sellers and Terex for any
amounts which are advanced by Sellers and Terex for these purposes, it
being understood that Sellers and Terex shall be under no obligation to
make any such advance.
(iv) Buyer, on the one hand, and Sellers and Terex, on the
other hand, agree that the amount of any Covered Liability referred to in
Section 9.2(b)(iii) which is not payable or paid under any insurance
policy referred to in Section 9.2(b)(iii) because (w) it is part of the
deductible or self-insured retention, (x) it exceeds the maximum coverage
under any such policy, (y) of the inability or refusal of the insurance
carrier(s) to pay such Covered Liability or (z) for any other reason,
shall be the joint and several obligation and responsibility of Buyer,
the Companies and the Subsidiaries unless the reason for non-payment
arises from any action or inaction of the Sellers, Terex or any Company
on or prior to the Closing Date.
Notwithstanding anything to the contrary contained in this Article 9, Clark
Germany shall be required to indemnify hereunder only to the extent that its
obligations to indemnify are lawful
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under applicable law and do not result in material adverse tax consequences.
In the event of the sale of Clark Germany to one or more entities that are not
affiliates of Buyer, Clark Germany shall be relieved of its indemnification
obligations hereunder, provided that the proceeds of sale of Clark Germany are
retained by Buyer for use in the business, including, without limitation, the
payment of funded indebtedness.
(c) Sellers and Terex shall jointly and severally indemnify Buyer
and its officers, directors, employees, agents, advisors, representatives or
controlling persons and hold each of them harmless from any Losses that arise
after the date of this Agreement with respect to any claim, action, suit or
proceeding relating to the Stock and Asset Purchase and Sale Agreement among
Terex Corporation, CMH Acquisition Corp., CMH Acquisition International Corp.,
Clark Material Handling International, Inc. Clark Material Handling Company
and Clark Acquisition Corp. dated as of July 24, 1996 or the termination
thereof.
(d) (i) In the event that any party shall incur or suffer any
Losses in respect of which indemnification may be sought by such party
pursuant to the provisions of this Section 9.2, the party seeking to be
indemnified hereunder (the "Indemnitee") shall assert a claim for
indemnification by written notice (a "Notice") to the party from whom
indemnification is sought (the "Indemnitor") stating the nature and basis of
such claim. In the case of Losses arising by reason of any third party claim,
the Notice shall be given within 30 days of the filing or other written
assertion of any such claim against the Indemnitee, but the failure of the
Indemnitee to give the Notice within such time period shall not relieve the
Indemnitor of any liability that the Indemnitor may have to the Indemnitee
except to the extent that the Indemnitor is prejudiced thereby.
(ii) The Indemnitee shall provide to the Indemnitor on
request all information and documentation reasonably necessary to support and
verify any Losses which the Indemnitee believes give rise to a claim for
indemnification hereunder and shall give the Indemnitor reasonable access to
all books, records and personnel in the possession or under the control of the
Indemnitee which would have bearing on such claim.
(iii) In the case of third party claims for which
indemnification is sought, the Indemnitor shall have the option (x) to conduct
any proceedings or negotiations in connection therewith, (y) to take all other
steps to settle or defend any such claim and (z) to employ counsel to contest
any such claim or liability in the name of the Indemnitee or otherwise. In
any event, the Indemnitee shall be entitled to participate at its own expense
and by its own counsel in any proceedings relating to any third party claim.
The Indemnitor shall, within 45 days of receipt of the Notice, notify the
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Indemnitee of its intention to assume the defense of such claim. Until the
Indemnitee has received notice of the Indemnitor's election whether to defend
any claim, the Indemnitee shall take reasonable steps to defend (but may not
settle) such claim. If the Indemnitor shall decline to assume the defense of
any such claim, or shall fail to notify the Indemnitee within 45 days after
receipt of the Notice of the Indemnitor's election to defend such claim, the
Indemnitee shall defend against such claim (provided that the Indemnitee shall
not settle such claim without the consent of the Indemnitor, which consent
shall not be unreasonably withheld). The expenses of all proceedings,
contests or lawsuits in respect of such claims (other than those incurred by
the Indemnitee which are referred to in the second sentence of this
subparagraph (iii)) shall be borne by the Indemnitor but only if the
Indemnitor is responsible pursuant hereto to indemnify the Indemnitee in
respect of the third party claim and, if applicable, only to the extent
required by the second sentence of Section 9.2(a). Regardless of which party
shall assume the defense of the claim, the parties agree to cooperate fully
with one another in connection therewith. In the case of a claim for
indemnification made under Section 9.2(a) or 9.2(b)(i), (a) if (and to the
extent) the Indemnitor is responsible pursuant hereto to indemnify the
Indemnitee in respect of the third party claim, then within 10 days after the
occurrence of a final non-appealable determination with respect to such third
party claim, the Indemnitor shall pay the Indemnitee, in immediately available
funds, the amount of any Losses (or such portion thereof as the Indemnitor
shall be responsible for pursuant to the provisions hereof, including, without
limitation, the second sentence of Section 9.2(a)), and (b) in the event that
any Losses incurred by the Indemnitee do not involve payment by the Indemnitee
of a third party claim, then, if (and to the extent) the Indemnitor is
responsible pursuant hereto to indemnify the Indemnitee against such Losses,
the Indemnitor shall within 10 days after agreement on the amount of Losses or
the occurrence of a final non-appealable determination of such amount pay to
the Indemnitee, in immediately available funds, the amount of such Losses (or
such portion thereof as the Indemnitor shall be responsible for pursuant to
the provisions hereof, including, without limitation, the second sentence of
Section 9.2(a)).
(e) The provisions of paragraph (d) of this Section 9.2 shall apply
to all claims for indemnification hereunder except indemnification claims
which involve tax matters pertaining to any of the Companies, which claims
shall be governed by Article 10.
(f) If the Closing shall occur, the indemnification provided in
this Section 9.2 shall be the sole and exclusive remedy of Buyer, Sellers,
Terex and the Companies under this Agreement for any inaccuracy or breach of
any representation or
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warranty of Buyer or Sellers or Terex or any failure of Buyer or Sellers or
Terex to comply with any of the covenants or agreements contained herein. All
amounts payable by one party in indemnification of the other shall be
considered an adjustment to the Purchase Price.
(g) In no event shall Sellers, Terex, the Companies, the
Subsidiaries or Buyer be liable for loss of profits or consequential damages
under this Article 9.
ARTICLE 10
TAX MATTERS
10.1 Tax Returns. (a) Subject to Section 10.1(c), Terex, CMH
Acquisition and CMH International (individually, a "Parent Company" and
together the "Parent Companies") shall be responsible for the preparation and
timely filing of any return, report, information return or other document
(including any related or supporting information) filed or required to be
filed with any taxing authority in connection with the determination,
assessment, collection, administration or imposition of any Taxes (as
hereinafter defined) (collectively, "Tax Returns") of the Companies and the
Subsidiaries relating to any taxable year or period that ends on or before the
Closing Date (a "Pre-Closing Period"). Tax Returns relating to a Pre-Closing
Period are hereinafter referred to as "Pre-Closing Tax Returns." Pre-Closing
Tax Returns shall be filed on or before their respective due dates (including
extensions). Such Tax Returns shall be prepared on a basis consistent with
Tax Returns prepared for prior taxable periods, except as otherwise required
by law or regulation. If any such Tax Returns cannot be completed and filed
by a Parent Company until after the Closing Date, Buyer shall cause the
relevant officer(s) of the Companies and Subsidiaries to sign and file such
Tax Returns after they have been completed by such Parent Company (and before
the due date of such Tax Returns), and each Parent Company agrees that such
post-Closing execution shall not detract from or otherwise affect such Parent
Company's liability for any Taxes shown on such Tax Returns to the extent
provided in Section 10.2(a). "Taxes" shall mean all taxes, charges, fees,
levies or other assessments, including, without limitation, income, excise,
employment, property, sales, franchise, use and gross receipts taxes and
withholding taxes imposed by the United States or any state, county, local or
foreign government or subdivision or agency thereof, and shall also include
any interest, penalties or additions to tax attributable to such assessments.
(b) Buyer shall be responsible for the preparation and timely
filing of all Tax Returns of the Companies and the Subsidiaries for all
taxable periods commencing after the Closing
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Date (the "Post-Closing Period"). If Buyer takes any position or uses any
methodology on any such Tax Return that is inconsistent with any position or
methodology taken or used by the Companies, the Subsidiaries or any Parent
Company in prior periods (unless Buyer's position or methodology giving rise
to the inconsistency is required (i) by a law or regulation, or (ii) in the
opinion (reasonably acceptable to Parent Companies and their counsel) of a
reputable law firm (the "Law Firm") reasonably satisfactory to Parent
Companies and their counsel, by other applicable legal authorities in effect
for the taxable period covered by such Tax Return), then Buyer shall be
responsible for, and shall indemnify and hold harmless, on an after-tax basis,
Parent Companies against, any increase in Taxes with respect to any
Pre-Closing Period resulting from such inconsistent position or methodology.
Buyer shall not make any assertion or make any election the effect of which
would be to exclude the Companies or the Subsidiaries, to the extent otherwise
eligible therefor, from any Parent Company's consolidated federal Tax Return
(or any consolidated or combined state, county or local Tax Return of such
Parent Company's consolidated group) for any Pre-Closing Period unless
required by law or regulation.
(c) Notwithstanding anything to the contrary contained in Section
10.1(a), Buyer shall be responsible for the preparation and timely filing of
any Tax Returns of the Companies and the Subsidiaries for taxable periods, if
any, that begin before the Closing Date and end on or after the Closing Date
("Straddling Returns"). Straddling Returns shall be prepared on a basis
consistent with Tax Returns prepared for prior taxable periods (except as
otherwise required (i) by law or regulation, or (ii) in the opinion
(reasonably acceptable to Parent Companies and their counsel) of the Law Firm,
by other applicable legal authorities). Notwithstanding anything to the
contrary contained in this Article 10, at least 15 days prior to the filing of
any Straddling Returns required to be caused to be filed by Buyer hereunder,
Buyer shall submit copies of such returns to Parent Companies for their review
and approval and Parent Companies shall have 10 days after receipt of such
returns to approve or state all objections to such returns. In the event of
any dispute with respect to any Straddling Returns, Buyer shall file the final
form of such returns prior to the due date therefor without prejudice to
Seller's right to dispute the amount of Taxes for the tax period covered
thereby. Seller shall pay to Buyer, as and when required to do so under
Section 10.3(a), so much of any Tax liability shown on a Straddling Return as
is properly allocable to a Pre-Closing Period, net of any current Tax savings
directly or indirectly received by Buyer as a result of paying such Tax
liability. The portion of each Company's and each Subsidiary's taxable
income, gain, loss and any resulting Tax shown on a Straddling Return which is
properly allocated to a Pre-Closing Period shall be determined by (i) assuming
that each Company's and each Subsidiary's taxable year ends as of the close
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of business on the Closing Date, (ii) allocating to the Pre-Closing Period any
other income, gain, loss or deduction of each Company and each Subsidiary's
from any source, by closing, on an actual basis (or if an actual closing is
not feasible, on a pro forma basis taking into account extraordinary items,
allocated solely to the Pre-Closing Period) on the books of the Companies and
the Subsidiaries as of the close of business on the Closing Date, and (iii)
preparing Tax Returns based on the income, gain and losses determined on a
basis consistent with the methodology and elections employed by the Companies
and the Subsidiaries in prior years as adjusted to reflect any subsequent
adjustments to such returns.
(d) Except as otherwise required by any then effective law or
regulation or, in the opinion (reasonably acceptable to Parent Companies and
their counsel) of the Law Firm by other applicable legal authorities, without
the prior written consent of Parent Companies, (i) Buyer and its affiliates
shall not make or cause the Companies or the Subsidiaries to make any
election, change an annual accounting period or adopt or change any accounting
method if any such election, adoption or change would have the effect of
increasing the Tax liability of the Companies or the Subsidiaries with respect
to any Pre-Closing Period or (ii) Buyer and its affiliates shall not engage in
or cause any of the Companies or the Subsidiaries to engage in, any
transactions or activities on the Closing Date that are outside the ordinary
course of business that would have the effect of increasing the Tax liability
of any of Terex or the Sellers or any of their Affiliates.
(e) If, consistent with the provisions of this Article 10, a Parent
Company desires to amend a Pre-Closing Tax Return, Buyer shall cooperate in
such matter to the extent reasonable. Each Parent Company shall indemnify and
hold the Companies, the Subsidiaries and Buyer harmless, on an after-tax
basis, against any increase in any Taxes with respect to Post-Closing Periods
resulting from any such amendment.
(f) Each Parent Company shall retain all books, records, returns,
schedules, documents and all papers or relevant items of information relating
to the Federal, state, foreign or other Tax liability of the Companies and the
Subsidiaries for any Pre-Closing Period, until the expiration of all statutes
of limitations for claims to which such documents may pertain; provided that
if the statute of limitations for such claims survive indefinitely (for
example, with respect to net operating losses), such Parent Company shall
retain the documents pertaining to such claims for a period of seven years
after the Closing Date. Thereafter, such Parent Company shall have the right
to dispose of or destroy any such items; provided that, as to any items
identified by Buyer, Buyer shall have the right, at its sole cost and expense,
promptly to remove or obtain copies
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(or, if necessary, originals) of such items and take whatever action Buyer may
desire with respect to such items. Notwithstanding the foregoing, each Parent
Company shall reasonably cooperate with Buyer and furnish copies of any such
items to Buyer, at Buyer's sole cost and expense, upon written request.
10.2 Liability for Taxes. Parent Companies and Buyer hereby covenant
and agree that, as between Parent Companies, on the one hand, and Buyer, on
the other hand, and except as otherwise provided in Section 10.3:
(a) Except as otherwise provided in Section 10.1(b), Parent
Companies shall be liable for all Taxes payable by or with respect to the
Companies, the Subsidiaries or Parent Companies (i) for the Pre-Closing
Periods, and (ii) for the portion of periods covered by Straddling Returns
that are properly allocated to Pre-Closing Periods under Section 10.1(c).
(b) Buyer shall be liable for and shall pay, or shall cause the
Companies or the Subsidiaries, as applicable, to pay, and Parent Companies
shall not be required to pay or reimburse Buyer or the Companies or
Subsidiaries for, all Taxes payable by the Companies and the Subsidiaries for
all periods, other than Taxes for which either Parent Company is responsible
pursuant to Sections 10.1(e) and 10.2(a).
10.3 Certain Tax Payment Responsibility. Notwithstanding anything in
this Article 10 to the contrary:
(a) If a Parent Company is liable under Section 10.2(a) for any
Taxes that are required to be reported on a Tax Return prepared by such Parent
Company, such Parent Company shall be responsible for paying such Taxes to the
relevant taxing authorities on or before the date that such Taxes are due. If
Buyer is liable under Section 10.2(b) for any Taxes that are required to be
reported on a Tax Return prepared by Buyer, Buyer shall be responsible for
paying such Taxes to the relevant taxing authorities on or before the date
such Taxes are due. If one party (the "Payor") is liable for a Tax pursuant
to Section 10.2 and such tax is required to be reported on a Tax Return
prepared by the other party (the "Preparer") under Section 10.1, including any
Tax imposed as a result of any subsequent adjustment, the Payor shall pay such
Tax to the Preparer on or before the later of (i) five days before the date
the Preparer intends to pay the Tax, provided the Preparer's request for
payment is in a writing signed by an officer of the Preparer and is
accompanied by a copy of the applicable Tax Return and, if necessary, a
statement reflecting the calculation of the amount of the Tax for which the
Payor is liable, and, where applicable, (ii) the date by which the Parent
Companies are required to approve or object to the Tax Return under the
procedures described in Section 10.1(c). If there is an objection to a
Straddling Period return which is not
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resolved prior to the due date for the Tax in questions, Seller shall pay the
undisputed portion of such tax no later than such due date. The dispute with
regard to the balance of such Tax shall be resolved by C & L whose fee shall
be paid in equal shares by Seller and Buyer. Seller shall, within two days
after C & L decision pay the balance of tax due from Seller, if any, together
with interest based on the statutory interest rate applicable to deficiencies
of such Tax. The Preparer shall remit, or cause to be remitted, any amount
paid to the Preparer by the Payor to the appropriate taxing authority within
two days after the Preparer receives such payment (but in no event after the
due date), and, if the Preparer does not so remit the funds, such Tax shall
become a liability of the Preparer for purposes of this Agreement, and the
Payor shall have no further liability hereunder with respect to such Tax.
(b) Buyer agrees that it shall not set off, offset or recoup any
amounts due to a Parent Company pursuant to this Section 10.3 and shall not
defend any failure to make payment when due in accordance with this Section
10.3 by reason of the alleged failure of such Parent Company to indemnify and
hold harmless Buyer in accordance with the provisions of Section 9.1(a).
10.4 Tax Contests. (a) Each Parent Company and its duly appointed
representatives shall have the sole right to supervise or otherwise coordinate
any examination process and to negotiate, resolve, settle or contest any
asserted Tax deficiencies or assert and prosecute any claim for refund with
respect to Pre-Closing Periods, including, for purposes of this Section
10.4(a), the entire taxable period (whether or not occurring on, before or
after the Closing Date) with respect to any asserted Tax deficiencies that
would increase the tax for which Seller is liable as to Straddling Returns.
Each party hereto shall within 14 days after it has knowledge of the assertion
or commencement thereof notify the other party of the written assertion of any
claim or the commencement of any suit, action, proceeding, investigation or
audit (any of which may be hereinafter referred to as a "Tax Contest") with
respect to any Pre-Closing Periods (but only if such Tax Contest would affect
the Tax liability of the other party), and shall provide the other party with
copies (subject to deletion of unrelated information) of all correspondence
relating to such Tax Contest. The costs of such Tax Contest shall be borne by
Seller.
(b) Buyer and its duly appointed representatives shall have the
sole right and the obligation to supervise or otherwise coordinate any
examination process and to negotiate, resolve, settle or contest any asserted
Tax deficiencies or assert and prosecute any claim for refund with respect to
Post-Closing Periods. Each party hereto shall within 14 days after it has
knowledge thereof notify the other party of the written
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assertion or the commencement of a Tax Contest with respect to any
Post-Closing Periods (but only if such Tax Contest would affect the Tax
liability of the other party), and shall provide the other party with copies
(subject to deletion of unrelated information) of all correspondence relating
to such Contest. The costs of such Tax Contest shall be borne by Buyer.
10.5 Refunds, Tax Credits. To the extent that Buyer receives a refund
of, or an offset with respect to, Taxes or a Tax credit arising from or with
respect to the Pre-Closing Periods, Buyer shall pay to or reimburse, or shall
cause the Companies or the Subsidiaries, as applicable, to pay to or
reimburse, Parent Companies for the amount of any such Tax refund or credit
received net of any Taxes payable by Buyer, the Companies or the Subsidiaries
on such Tax refund or credit. To the extent that a Parent Company receives a
refund of, or an offset with respect to, Taxes or a Tax credit arising from or
with respect to any of the Post-Closing Periods, such Parent Company shall
reimburse Buyer, the Companies and the Subsidiaries for the amount of any such
Tax refund or credit received net of any Taxes payable by such Parent Company
on such Tax refund or credit. This provision does not apply to any tax
benefit that Buyer may realize through the utilization of any net operating
loss or tax credit carryovers of the Companies or the Subsidiaries arising
from any pre-closing period.
10.6 Cooperation. After the Closing Date, Buyer, on the one hand, and
Parent Companies, on the other hand, shall make available to the other, as
reasonably requested, and to any taxing authority, all information, records or
documents relating to tax liabilities or potential tax liabilities of the
Companies and the Subsidiaries and shall preserve all such information,
records and documents until the expiration of any applicable statute of
limitations or extensions thereof.
10.7 Indemnification for Post-Closing Transactions. Buyer agrees to
indemnify each Parent Company for any additional Tax owed by such Parent
Company (including Taxes owed by such Parent Company due to this
indemnification payment) resulting from any transaction not in the ordinary
course of business occurring on the Closing Date after Buyer's purchase of the
Shares.
10.8 Tax information for employees. CMHC and Buyer agree to follow the
Standard Procedure specified in Rev. Proc. 84-77, 1984-2 C.B 753, whereby,
among other things, each will be responsible for the reporting duties with
respect to its own payment of wages and compensation to employees. Buyer will
provide Seller and CMHC with access to all information necessary or desirable
to comply with the foregoing.
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ARTICLE 11
MISCELLANEOUS
11.1 Transfer of Assets and Liabilities to Terex. Notwithstanding
anything to the contrary herein contained, between the date hereof and the
Closing Date, Sellers and Terex shall have the right, exercisable in their
sole discretion, to transfer all or any portion of the CMHC Assets, the CMHC
Liabilities and/or the Shares from a Seller to Terex, whether by merger,
dividend, distribution, sale or otherwise. In the event of such transfer, all
references herein to Sellers shall include Terex and Terex shall be
responsible for, and shall perform, all obligations of the Sellers under this
Agreement with respect to the transferred assets and liabilities.
11.2 Entire Agreement. This Agreement, the Schedules hereto and the
Confidentiality Agreement and any documents delivered by the parties in
connection with this Agreement constitute the entire agreement among the
parties with respect to the subject matter hereof and supersede all prior
agreements and understandings (oral and written) among the parties with
respect thereto.
11.3 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York without regard to its
rules of conflict of laws. Each Seller and Buyer hereby irrevocably and
unconditionally consents to submit to the jurisdiction of any federal, state
or county court sitting in the State of New York (the "New York Courts") for
any litigation arising out of or relating to this Agreement and the
transactions contemplated hereby (and agrees not to commence any litigation
relating thereto except in such courts), waives any objection to the laying of
venue of any such litigation in the New York Courts and agrees not to plead or
claim that such litigation brought in any New York Courts has been brought in
an inconvenient forum. Each Seller and Buyer agrees that service of process
or notice in any action, suit or proceeding shall be effective if in writing
and sent by certified or registered mail, return receipt postage requested,
prepared to the address set forth in Section 11.6.
11.4 Bulk Transfer Laws. Buyer hereby waives compliance by CMHC with
the provisions of any so-called bulk transfer law in any jurisdiction in
connection with the transactions contemplated hereby. Sellers and Terex shall
jointly and severally indemnify Buyer and its affiliates (including the
Companies and the Subsidiaries) and hold them harmless from and against any
Losses incurred or suffered by any of them by reason of Buyer's waiver of
compliance with the provisions of any such so-called bulk transfer laws;
provided, however, that the foregoing shall in no way affect or limit Buyer
obligations with respect to the CMHC
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Liabilities to be assumed by Buyer pursuant to the terms of this Agreement.
11.5 Schedules; Tables of Contents and Headings. Any matter disclosed
on any Schedule to this Agreement shall be deemed to have been disclosed on
all other Schedules to this Agreement to the extent that it should have been
disclosed on such other Schedules, but shall expressly not be deemed to
constitute an admission by Sellers or to otherwise imply that any such matter
is material for the purposes of this Agreement. The table of contents and
section headings of this Agreement and titles given to Schedules to this
Agreement are for reference purposes only and are to be given no effect in the
construction or interpretation of this Agreement.
11.6 Notices. All notices and other communications under this Agreement
shall be in writing and shall be deemed given (i) when delivered if by hand or
overnight courier, (ii) three days after mailing by first-class registered
mail, return receipt requested, postage prepaid, or (iii) when telecopied,
provided that concurrently therewith a copy is mailed by first-class
registered mail, return receipt requested, postage prepaid, to the parties at
the following addresses (or to such address as a party may have specified by
notice given to the other party pursuant to this provision):
If to any Seller or to Terex to:
Terex Corporation
500 Post Road East
Westport, Connecticut 06880
Attention: Marvin B. Rosenberg, Esq.
Senior Vice President, Secretary
and General Counsel
Fax No.: (203) 227-1647
With a copy to:
Robinson Silverman Pearce
Aronsohn & Berman LLP
1290 Avenue of the Americas
New York, New York 10104
Attention: Stuart A. Gordon, Esq.
Fax No.: (212) 541-1360
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If to Buyer, to:
CMHC Acquisition Corporation
c/o Citicorp Venture Capital Ltd.
399 Park Avenue
New York, New York 10043
Attention: Michael A. Delaney
Fax No.: (212) 888-2940
With a copy to:
Dechert Price & Rhoads
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, Pennsylvania 19102
Attention: G. Daniel O'Donnell, Esq.
Fax No.: (215) 994-3197
11.7 Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or otherwise affecting the validity or enforceability of any of the
terms or provisions of this Agreement in any other jurisdiction. If any
provision of this Agreement is so broad as to be unenforceable, the provision
shall be interpreted to be only so broad as is enforceable.
11.8 Extension; Waiver. The parties may: (a) extend the time for
performance of any of the obligations or other acts of the other party hereto,
(b) waive any inaccuracies in the representations or warranties contained
herein and (c) waive compliance with any of the agreements, covenants or
conditions contained herein. Any such extension or waiver shall be valid only
if in a writing executed by the party against whom such extension or waiver is
sought to be enforced.
11.9 Assignment; Binding Effect; Benefit. Neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned by any
of the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other parties. Notwithstanding the foregoing,
Buyer may assign some or all of its rights under this Agreement to one or more
persons that it controls, is controlled by or is under common control with
("Assignee"), provided that notwithstanding such assignment, (i) Buyer shall
remain fully liable for the performance of all of its obligations under this
Agreement and (ii) each such Assignee shall be deemed to be a "Buyer" for all
purposes under this Agreement. Subject to the preceding sentences, this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their
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respective successors and assigns. Notwithstanding anything contained in this
Agreement to the contrary, nothing in this Agreement, express or implied, is
intended to confer on any person other than the parties hereto or their
respective heirs, successors, executors, administrators and assigns any
rights, remedies, obligations or liabilities under or by reason of this
Agreement.
11.10 Interpretation. In this Agreement, unless the context otherwise
requires, words describing the singular number shall include the plural and
vice versa, and words denoting any gender shall include all genders and words
denoting natural persons shall include corporations and partnerships and vice
versa. Whenever used in this Agreement, "to the knowledge of Terex and
Sellers" (or words of similar import, whether expressed in the positive or
negative) shall mean only the actual knowledge, after reasonable inquiry, of
those persons who are listed on Schedule 11.9.
11.11 Amendment. This Agreement may be amended by the parties hereto at
any time. This Agreement may not be amended or modified except by an
instrument in writing signed by or on behalf of each of the parties hereto.
11.12 Counterparts. This Agreement may be executed in counterparts,
each of which shall be an original, but all of which together shall constitute
one and the same Agreement.
(Intentionally Left Blank)
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IN WITNESS WHEREOF, the parties have executed this Agreement and caused
the same to be duly delivered on their behalf as of the day and year first
written above.
TEREX CORPORATION
By: /s/
----------------------------
Name: David J. Langevin
Title: Executive Vice President
CMH ACQUISITION CORP.
By: /s/
----------------------------
Name: David J. Langevin
Title: Vice President
CMH ACQUISITION INTERNATIONAL CORP.
By: /s/
----------------------------
Name: David J. Langevin
Title: Vice President
CLARK MATERIAL HANDLING COMPANY
By: /s/
----------------------------
Name: David J. Langevin
Title: Vice President
CLARK MATERIAL HANDLING INTERNATIONAL, INC.
By: /s/
----------------------------
Name: David J. Langevin
Title: Vice President
CMHC ACQUISITION CORPORATION
By: /s/
----------------------------
Name: Dr. Martin M. Dorio
Title: President and Chief
Executive Officer
<PAGE> 63
Exhibits and Schedules Omitted
<PAGE> 1
EXHIBIT 10.4
EXECUTION COPY
SERVICE AGREEMENT
<PAGE> 2
EXECUTION COPY
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 1 General Description of Services
to be Provided by TDC . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2 Customer Support Services
2.01 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.02 Transfer of CLARK Team . . . . . . . . . . . . . . . . . . . . . . . 2
2.03 Severance and Other Liability . . . . . . . . . . . . . . . . . . . 3
Section 3 Warehousing Services
3.01 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.02 Receiving . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.03 Warehousing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.04 Stocking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.05 Picking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.06 Packaging . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.07 Shipping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.08 MANUFACTURER's Access to Warehouse . . . . . . . . . . . . . . . . . 7
3.09 Inventory Plans . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.10 Annual Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.11 Inventory Records . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.12 Title/Risk of Loss . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 4 Computer Services
4.01 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.02 Availability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.03 Computer Services Fees . . . . . . . . . . . . . . . . . . . . . . . 9
4.04 Capacity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.05 Telecommunications . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 5 Accounting Services
5.01 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.02 Cash Management . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.03 Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.04 General Ledger . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.05 Accountant Services Fees . . . . . . . . . . . . . . . . . . . . . . 11
5.06 Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.07 Sales Transactions . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.08 Invoices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.09 Accounts Payable . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.10 Invoice Inquiries . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.11 Inventory Accountant . . . . . . . . . . . . . . . . . . . . . . . . 14
5.12 Establishment of Standard Cost . . . . . . . . . . . . . . . . . . 14
5.13 Inventory Shrinkage . . . . . . . . . . . . . . . . . . . . . . . . 15
5.14 Financial Reports . . . . . . . . . . . . . . . . . . . . . . . . . 15
</TABLE>
i
<PAGE> 3
EXECUTION COPY
TABLE OF CONTENTS
(Continued)
<TABLE>
<S> <C> <C>
Section 6 Consideration to TDC
6.01 Base Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.02 Other Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.03 Cost Improvements . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.04 Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 7 Control and Rights of Parties
7.01 Independent Contractor Status . . . . . . . . . . . . . . . . . . . 18
7.02 Employment of Workers by TDC . . . . . . . . . . . . . . . . . . . . 19
Section 8 Insurance
8.01 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 9 Duration and Termination
9.01 Initial Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
9.02 Early Termination . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 10 Indemnification
10.01 Indemnity Provisions . . . . . . . . . . . . . . . . . . . . . . . . 20
10.02 MANUFACTURER Responsibility . . . . . . . . . . . . . . . . . . . . 21
10.03 Other Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 11 Trademarks and Trade Names . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 12 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 13 Force Majeure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 14 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 15 No Waiver of Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 16 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 17 Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 18 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 19 Governing Law and Choice of Forum . . . . . . . . . . . . . . . . . . . . . 24
Exhibit 1 - Terex Distribution Center Performance Objectives. . . . . . . . . . 26
Exhibit 2 - Schedule of Service Fees . . . . . . . . . . . . . . . . . . . . . 29
Exhibit 3 - TDC System Services Data Center Services . . . . . . . . . . . . . . 30
</TABLE>
ii
<PAGE> 4
EXECUTION COPY
TABLE OF CONTENTS
(Continued)
<TABLE>
<S> <C> <C> <C>
Schedule 2.01 - Clark Team Member Costs . . . . . . . . . . . . . . . . . . . . . . 47
Schedule 2.02 Clark Team Members Employed by TDC
as of November __, 1996 . . . . . . . . . . . . . . . . . . . . . 48
Schedule 3.03 - TDC's Inventory Disposition Procedures . . . . . . . . . . . . . . . 49
Schedule 3.05 - TDC's Picking Procedures . . . . . . . . . . . . . . . . . . . . . . 50
Schedule 4.04 - Computer Contract with Litton Computer Services . . . . . . . . . . 51
Schedule 5.02 - TDC's Cash Management Procedures. . . . . . . . . . . . . . . . . . 52
</TABLE>
iii
<PAGE> 5
EXECUTION COPY
SERVICE AGREEMENT
THIS SERVICE AGREEMENT is made as of November 27, 1996, by and between
TEREX CORPORATION, a Delaware corporation, with its principal offices at 500
Post Road East, Westport, Connecticut 06880 ("TEREX") and CLARK MATERIAL
HANDLING COMPANY (formerly known as CMHC Acquisition Corporation), a
corporation organized under the laws of Delaware with principal offices at 172
Trade Street, Lexington, KY 40511 ("MANUFACTURER").
W I T N E S S E T H
WHEREAS, TEREX and MANUFACTURER have entered into a Purchase Agreement
dated as of November 9, 1996 (the "Purchase Agreement") pursuant to which TEREX
has sold and MANUFACTURER has purchased all of the assets of TEREX's Clark
Material Handling Company subsidiary and the stock of various foreign Clark
subsidiaries (collectively, "CLARK");
WHEREAS, TEREX owns and operates a division with a single facility in
Southaven, Mississippi, the TEREX DISTRIBUTION CENTER ("TDC"), engaged
primarily in the business of aftermarket service parts distribution services
for TEREX's divisions and subsidiaries, including CLARK;
WHEREAS, MANUFACTURER desires to employ certain employees of TDC for
provision of Customer Support Services (as hereinafter defined) and to retain
TDC for the distribution services required by CLARK, and TEREX consents to such
retention in accordance with the terms set forth herein.
NOW THEREFORE, in consideration of the premises and of the mutual
agreements hereinafter set forth, the parties hereto agree as follows
SECTION 1. GENERAL DESCRIPTION OF SERVICES TO BE PROVIDED BY TDC.
TDC shall provide Customer Support Services, Warehousing Services,
Computer Services and Aftermarket Accounting Services, each as defined herein,
to MANUFACTURER
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during the term of this Agreement to support the distribution of MANUFACTURER's
aftermarket service parts ("Parts") at a level of service that is consistent
with the level of service provided to CLARK by TDC prior to execution of the
Purchase Agreement.
SECTION 2. CUSTOMER SUPPORT SERVICES.
2.01 General. In consideration of the Base Fees (as defined in
Section 6 hereof), TDC shall permit not more than thirty-five (35)
CLARK employees (the "CLARK Team") to work at TDC's facility to
provide CLARK with Customer Support Services. "Customer Support
Services" to be performed by the CLARK Team at TDC's facility consist
generally of the purchasing function for all Parts, the material
planning function for all Parts and the provision of customer
service, including technical assistance, to MANUFACTURER's Parts
customers. All members of the CLARK Team shall comply with all work
rules and safety and other guidelines in effect at TDC's facility.
MANUFACTURER shall be solely responsible for all costs incurred in
connection with the provision of Customer Support Services, including,
without limitation, the salaries and other benefits of CLARK Team
members and the purchase cost of Parts. Except as explicitly set
forth in this Agreement, TDC shall have no liability for the CLARK
Team or the provision of Customer Support Services. Attached as
Schedule 2.01 is a list of the costs incurred by the CLARK Team
members in 1995 and for the first six (6) months of 1996, all of which
categories of costs, as well as any additional costs incurred by the
CLARK Team members, shall be the responsibility of MANUFACTURER.
2.02 Transfer of CLARK Team. Attached as Schedule 2.02 is a list
of the members of the CLARK Team who are employed by TDC as of the
date of this Agreement and their respective salaries and other
benefits. Upon execution of this Agreement, MANUFACTURER shall
arrange for CLARK to offer employment, on terms comparable to those
currently provided by TDC, to all CLARK Team members listed on
Schedule 2.02, it being agreed that CLARK Team members who are on
layoff and who have a right to return to work or who are on short term
(up to six (6) months) medical disability (including pregnancy leave)
are to be considered actively employed but that employees on long-term
medical disability and employees whose employment has
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terminated as of the date of this Agreement without any right to
return to work are not to be considered actively employed. TDC shall
use reasonable efforts to cause the CLARK Team members to become
employees of CLARK, which reasonable efforts shall include discussing
terms and conditions of employment with CLARK and MANUFACTURER and
distribution to the CLARK Team members of forms and documents relating
to employment with CLARK. TDC shall deliver to MANUFACTURER and CLARK
copies of all personnel files relating to the CLARK Team members who
accept employment with CLARK.
2.03 Severance and Other Liability. MANUFACTURER shall assume,
discharge, pay and be solely liable for and shall indemnify and hold
TDC harmless from and against all obligation, cost or expense for (i)
any unearned vacation, holiday pay or other fringe benefits relating
to the CLARK Team members as listed on Schedule 2.02, (ii) any health,
disability or life insurance coverage and any medical and dental
benefits payable after the date hereof, (iii) severance pay,
termination indemnity pay, salary continuation or like compensation
under TDC's plans, policies or arrangements and relating to CLARK Team
Members, including, without limitation, any claim of constructive
termination due to the transfer to CLARK or (iv) any other claim or
liability arising out of the employment of the CLARK Team members by
CLARK on of after the date hereof.
SECTION 3. WAREHOUSING SERVICES.
3.01 General. In consideration of the Base Fees, TDC shall provide
the Warehousing Services described in this Section 3. Warehousing
Services shall consist generally of receiving Parts purchased by
MANUFACTURER, storing such Parts, identifying such Parts for shipment
to Parts customers, coordinating with MANUFACTURER's packaging
suppliers, packing such Parts and finally shipping such Parts at level
of service which is consistent with the level of service provided as
of the date of this Agreement. To assist TDC in its operational
planning, MANUFACTURER shall provide TDC with its annual sales plan,
updated quarterly to current projections. The
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sales plan may be expressed either in dollars or preferably in the
number of line items by order class.
3.02 Receiving. TDC shall receive all Parts purchased by
MANUFACTURER at TDC's Southaven, Mississippi facility and shall
visually inspect such Parts to insure conformance with the terms of
the applicable purchase order. TDC shall advise MANUFACTURER of any
damage, other irregularity or shortage which TDC observes during its
receiving process, as TDC deems appropriate. The Base Fees do not
include inbound receiving quality inspecting of materials received at
TDC's facility. Any such services may be provided to MANUFACTURER
upon request at additional cost.
3.03 Warehousing.
(a) Parts owned by MANUFACTURER shall be stored by TDC for
warehousing, order fulfillment and distribution. TDC's
procedures for inventory disposition are attached hereto as
Schedule 3.03. Said inventories shall remain the sole
property of MANUFACTURER and shall not be disposed of by TDC
except under procedures in effect as of the date of this
Agreement or as provided for by specific instructions
established by MANUFACTURER.
(b) MANUFACTURER agrees to pay the full amount of any and
all taxes levied or assessed against sales, inventories or
personal property on the premises of TDC.
(c) TDC shall provide MANUFACTURER with sufficient storage
capacity for up to Twenty-Two Million Dollars ($22,000,000) of
Parts (FIFO value at standard cost adjusted for the average
change in annual standard costs) in the possession of TDC
(excluding inventories in transit, at packagers and return
material processors)(the "Capacity Value"). If MANUFACTURER
requires additional Capacity Value, the parties shall
negotiate an increase to the Base Fees. TDC represents that
as of the date of this Agreement, storage requirements for
CLARK Parts for 1996 has been at approximately Nineteen
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Million Five Hundred Ten Thousand Five Hundred Ninety-three
Dollars (US)($19,510,593).
(d) TDC shall provide sufficient security for MANUFACTURER's
inventories at all times. Said security shall include, but
not be limited to, fire protection systems, hazardous material
storage areas, appropriate bins and racks and controlled
access to TDC warehouse facilities, and shall at a minimum be
at least equal to the TDC security systems, methods and
procedures in effect as of the date of this Agreement.
3.04 Stocking.
(a) TDC shall have the sole responsibility for determining
the stocking location and movement of Parts within TDC's
facility. It is the responsibility of TDC to monitor, track
and control the location of inventories within the custody of
TDC.
(b) MANUFACTURER shall issue timely instructions for the
disposition of any inventory which is being restricted by
MANUFACTURER from sale or normal storage (rejected parts,
unidentified parts, etc.)
(c) Parts received in TDC's facility shall be stored
("putaway") in an appropriate storage area and updated in the
inventory data base within the time periods set forth in Part
A of Exhibit 1. Notwithstanding the foregoing, in the event
that TDC cannot maintain "putaway" and "update" requirements
because of TDC observed holidays or other shutdowns, TDC shall
normalize operations in three (3) workdays for two (2)
consecutive shut down days.
3.05 Picking.
(a) TDC's picking procedures are set forth in Schedule 3.05
attached hereto. All Parts removed from TDC's facility shall
be relieved from the TDC inventory record of Parts delivered
to TDC by MANUFACTURER. MANUFACTURER shall not remove any
Parts or other materials from TDC's facility without
compliance with TDC's procedures.
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(b) Parts orders shall be transmitted by MANUFACTURER to the
TDC warehouse computer between 7:00 a.m. and 7:00 p.m.
(Central Time) on scheduled workdays. The Base Fees do not
include processing of manual orders for which MANUFACTURER
shall pay the additional charges set forth in Exhibit 2.
(c) MANUFACTURER uses a system of Parts order codes which
have different service priorities. TDC shall fill orders
according to MANUFACTURER service objectives and priorities;
provided, however, that TDC shall not be liable for delays due
in whole or in part to MANUFACTURER's delay in payment of Part
suppliers, delays by Part suppliers or packagers or other
events beyond the reasonable control of TDC. Order codes and
their corresponding order fulfillment objectives are specified
in Part B of Exhibit 1. TDC shall maintain sufficient
manpower, equipment and other resources required to obtain the
order fulfillment requirements specified in Exhibit 1 provided
rush order line volumes (Codes 1 and 2, as currently defined)
on any given day do not exceed 150% of the daily line average
over the preceding twelve months.
3.06 Packaging. MANUFACTURER has the primary responsibility for
defining and contracting prepackaging, which shall include reasonable
TDC specifications for handling and storage requirements.
MANUFACTURER shall be responsible for all shipment costs, including
freight, insurance and duty costs incurred in the shipment of
materials to and from the packagers. The Base Fees include the cost
of relabeling, repackaging, or correcting minor packager errors that
do not cause TDC to incur incremental labor or material cost. TDC
shall promptly advise MANUFACTURER of major packager errors. At
MANUFACTURER's request, TDC will correct such errors and charge
MANUFACTURER at the special charges rates set forth in Exhibit 2. The
Base Fees do not include charges for unpacking and restocking canceled
orders, which services shall be performed for MANUFACTURER at the
rates set forth in Exhibit 2.
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3.07 Shipping.
(a) TDC shall arrange for the shipment of all Parts to
MANUFACTURER's customers, including by providing for customer
order pick-ups during normal working hours.
(b) TDC shall provide domestic and export inbound and
outbound transportation services, all rate negotiations, and
have responsibility for reviewing freight and brokerage
invoices for accuracy. Shipping costs are not included in the
Base Fees and shall be paid by checks prepared by TDC and
drawn on MANUFACTURER's account in accordance with the cash
management procedures set forth in Section 5.02 hereof.
(c) TDC shall debit an account designated by MANUFACTURER on
a daily basis to cover the shipping costs incurred as of that
date in accordance with the cash management procedures set
forth in Section 5.02 hereof. TDC shall use commercially
reasonable efforts to consolidate customer orders whenever
possible, unless otherwise instructed by MANUFACTURER.
(d) TDC shall provide outbound packing materials for normal
and Canadian orders not requiring special handling or packing.
Export or special handling or packing may result in additional
fees which shall be invoiced to MANUFACTURER. MANUFACTURER
may request special handling, marking or packing on specific
orders. The incremental costs of these special requirements
over standard packing material costs shall be invoiced to
MANUFACTURER.
(e) TDC shall use packing materials methods and procedures
which will protect materials when handled with normal care
customary for the specified mode of shipment.
3.08 MANUFACTURER's Access to Warehouse. MANUFACTURER and its
employees shall have access to TDC's facility. In addition, TDC shall
make its facility
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available during normal working hours, upon reasonable notice, for
dealer and prospective customers; provided, however, that TDC may, if
it deems necessary to do so, impose reasonable time limits on the
duration and quantity of such visits. The foregoing not withstanding,
MANUFACTURER shall not arrange any warehouse tours of duration beyond
one hour, with any competitor of TDC without prior approval of TDC.
3.09 Inventory Plans. MANUFACTURER shall provide TDC its annual
inventory plan, updated quarterly to current projections, by the end
of the first month of each calendar quarter. The parties shall
establish an annual calendar of operations during each preceding
December which specifies holidays to be observed, annual inventory
dates and any other planned shutdown of regular operations. In
connection therewith, unless otherwise agreed, in no event will TDC
operations be suspended for more than a maximum of two consecutive
workdays.
3.10 Annual Inventory. During the Initial Term (as defined in
Section 9), and for each succeeding twelve (12) month period
thereafter, TDC shall complete a cycle count of one hundred percent
(100%) of MANUFACTURER's inventory. Any inventory discrepancies
discovered shall be investigated on the day the discrepancy is noted.
In addition to ongoing cycle counting, during the Term and each
succeeding twelve (12) month period thereafter, TDC's operations shall
be suspended for a maximum of one and one-half working days for an
annual statistical sample inventory. The parties shall negotiate in
good faith the parameters of the annual statistical sample inventory
at least thirty (30) days prior to commencement of the sample
inventory. TDC shall provide sufficient resources for the annual
statistical sample inventory. The cost of the annual statistical
sample inventory, excluding MANUFACTURER's direct resource costs, is
included within the Base Fees. Prior to a full physical inventory, if
one is necessary, the parties shall agree upon a plan to combine
resources to ensure that the shutdown period does not exceed two (2)
working days. MANUFACTURER shall provide resources, including human
resources, as required for reconciling a physical count, if any, to
the perpetual inventory records. A full physical inventory, if
necessary, may require additional downtime. The cost of a full
physical inventory is not included in the Base Fees.
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3.11 Inventory Records. All Parts removed from TDC facilities must
be relieved from the TDC inventory record of Parts delivered to TDC by
MANUFACTURER. MANUFACTURER will not remove any Parts or materials
from the TDC warehouse without complying with mutually agreed
procedures, which, at a minimum, will provide for adequate inventory
accounting.
3.12 Title/Risk of Loss. Title to the Products delivered by
or on behalf of MANUFACTURER to TDC shall remain vested in
MANUFACTURER until the Products are purchased and delivered to
MANUFACTURER's customers. Except as provided for in this Agreement,
TDC shall not assert or claim any right of ownership in the Products
and shall not encumber, lease, transfer, sell or otherwise dispose of
any of the Products. TDC hereby waives and releases any right, claim,
interest or lien in and to the Products that may arise by operation of
law. In addition, TDC shall not possess or acquire any interest,
whether directly or indirectly, in the accounts arising from such
sales, and all invoices for such sales shall be mailed for the account
of MANUFACTURER to the persons purchasing the Products in accordance
with the provisions of this Agreement. Except for inventory shrinkage
in reasonable and customary amounts as set forth in Section 5.13
hereof, TDC shall bear the risk of loss with respect to the Products
stored at TDC's facility.
SECTION 4. COMPUTER SERVICES.
4.01 General. In consideration of the Base Fees, TDC shall provide
Computer Services, as defined in this Section 4, to support the
aftermarket operations of MANUFACTURER at the levels currently
provided by TDC to CLARK. The systems provided by TDC under this
Agreement are as specified in Exhibit 3.
4.02 Availability. TDC shall provide on-line (CICS) availability
of the systems between 7:00 a.m. and 7:00 p.m. (Central Time), Monday
though Friday, excluding previously schedules non-working days
(collectively, the "prime hours"). In the event of non-scheduled
system downtime during prime hours, TDC agrees to provide non-prime
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time on-line CICS availability of duration and timing that allows the
MANUFACTURER and TDC backlog of on-line transactions, caused by system
downtime, to be made current as soon as feasible. TDC shall maintain
average on-line system availability during CICS prime hours at a
minimum of ninety-eight percent (98%). MANUFACTURER and TDC have an
objective of average on-line availability of nine-nine percent (99%).
4.03 Computer Services Fees. Computer Services are included in the
Base Fees. Any different or additional services shall result in
additional charges which shall be invoiced to MANUFACTURER.
4.04 Capacity. TDC agrees to provide central processing capacity
(CPU capacity) and storage capability (DASD) to meet the
MANUFACTURER's requirements defined in this Agreement. TDC represents
that the CPU capacity to which it has access pursuant to any agreement
between TDC and Litton Computer Services attached hereto as Schedule
4.04 is sufficient to meet its obligations under this Agreement. If
additional equipment is required as a result of an increase required
in storage capacity or annual gross sales volume in excess of Eighty
Million Dollars, MANUFACTURER shall be invoiced for the additional
cost.
4.05 Telecommunications. TDC will provide at its own expense
telecommunications to MANUFACTURER at the level existing as of the
date hereof. Any additional telecommunications capability shall
result in additional charges to be invoiced to MANUFACTURER.
SECTION 5. ACCOUNTING SERVICES.
5.01 General. In consideration of the Base Fees, TDC shall provide
MANUFACTURER with aftermarket Accounting Services as defined in this
Section 5.
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5.02 Cash Management. TDC and MANUFACTURER shall comply with the
cash management procedures set forth in Schedule 5.02 hereof to ensure
timely payment of all amounts due by MANUFACTURER.
5.03 Records. Accounting records of the MANUFACTURER aftermarket
operations shall remain the exclusive property of MANUFACTURER and
shall not be provided to any third party by TDC, without the prior
written permission of MANUFACTURER, except as may be required by final
order of a relevant court or otherwise authorized pursuant to this
Agreement. MANUFACTURER hereby authorizes TDC to provide TEREX and
TEREX's accountants, lawyers and other representatives with any
accounting information reasonably and customarily requested by those
parties and necessary to comply with applicable laws and financial
disclosure requirements or to ensure TDC's fulfillment of its
obligations under this Agreement.
5.04 General Ledger. TDC shall maintain general ledger account
records in accordance with generally accepted accounting practices
(GAAP) for MANUFACTURER's aftermarket operations for all activities
supported by TDC.
5.05 Accountant Services Fees. The Accounting Services described
in this Section 5 are included in the Base Fees. Upon request, TDC
shall quote prices for additional aftermarket accounting, forecasting
and budget records or services. The Base Fees do not provide for any
major change from current specifications or interface requirements for
the transmittal of accounts receivable date and provides for a maximum
of one hundred (100) ledger accounts.
5.06 Operations. TDC shall close each monthly accounting cycle by
5:00 p.m. on the fourth business day of the following month, and
provide MANUFACTURER with summary financial statements by the close of
business on the fifth working day of the following month. The parties
agree that in order
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for TDC to comply with the preceding requirement, certain month-end
accruals may contain estimates. In such event, TDC, with information
from MANUFACTURER if required, shall adjust estimated accruals to
actual amounts during the next accounting month. This Agreement
provides for a MANUFACTURER fiscal year ending each December 31st.
TDC shall reconcile all MANUFACTURER general ledger balance sheet
accounts to the appropriate ledger detail quarterly, except for
inventory accounts reconciled annually as part of the physical
inventory process. TDC shall review reconciliations with the
MANUFACTURER's Controller. In the event unreconciled differences are
encountered, TDC shall promptly investigate the cause and recommend
appropriate remedial steps for implementation following MANUFACTURER
approval.
5.07 Sales Transactions. TDC shall prepare invoices for shipments
to MANUFACTURER customers on behalf of, and in the name of,
MANUFACTURER, at prices specified by MANUFACTURER. Records of sales
transactions shall be entered directly into the MANUFACTURER accounts
maintained by TDC. MANUFACTURER shall provide TDC with current export
and domestic customer prices. TDC shall prepare invoices at said
amounts unless otherwise advised by MANUFACTURER. TDC shall invoice
shipments no later than the batch run on the day following shipment,
unless otherwise agreed. Shipments not invoiced by the close of
business on the last day of each month shall be accrued as sales
during the month when shipment was made. TDC shall transmit
MANUFACTURER's accounts receivable information to a location
designated by MANUFACTURER.
5.08 Invoices.
(a) MANUFACTURER is responsible for approving the issuance
by TDC of any required debit or credit memo to a MANUFACTURER
customer. MANUFACTURER shall adhere to established inventory
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accounting procedures acceptable to TDC, when processing such
memos. Any failures by MANUFACTURER to comply with the
established procedures shall void any TDC guarantees of
inventory shrinkage to the extent that such failure has a
direct impact on inventory shrinkage.
(b) MANUFACTURER may ship parts directly from a vendor to a
customer ("ship direct transactions"). TDC shall account for
ship direct transactions under procedures in effect as of the
date of this Agreement, or as otherwise agreed in writing.
(c) TDC shall maintain a current record of MANUFACTURER's
customers. Within this record will be kept all pertinent
accounting and billing information that the systems allow, as
of the date of this Agreement. MANUFACTURER is responsible
for promptly notifying TDC, in writing, of any customer record
modifications.
5.09 Accounts Payable.
(a) TDC shall promptly process payment of vendor invoices
for MANUFACTURER under mutually acceptable procedures, as
specified herein. MANUFACTURER shall instruct its vendors to
include the appropriate MANUFACTURER purchase order number and
MANUFACTURER part numbers on each invoice. TDC shall process
all invoices for Parts purchased by MANUFACTURER for inventory
when said invoices agree in price, quantity and terms of the
appropriate MANUFACTURER purchase order, and there is a
corresponding receiving record in the MANUFACTURER's inventory
accounts.
(b) Processing invoices meeting the conditions set forth
above under clause (a) does not require the prior review by
MANUFACTURER. The parties shall agree on a specific dollar
variance tolerance to the purchase
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order terms and receiving records, under which TDC my expedite
the processing of invoices, without prior authorization from
MANUFACTURER. In the event that MANUFACTURER does not provide
instructions to TDC for processing invoices not complying with
this Subsection within five (5) working days, TDC shall
process a net payment equal to the MANUFACTURER purchase order
price times the quantity received as per the MANUFACTURER's
receiving records. Invoices paid in variance to the current
MANUFACTURER standard cost shall be accounted for under the
procedures in effect at the date of this Agreement, or as
mutually agreed upon from time to time.
(c) TDC shall process payment to MANUFACTURER's vendors
within the terms and conditions defined in the MANUFACTURER
purchase orders by preparing checks drawn on an account held
and designated by MANUFACTURER. The checks will be mailed
promptly by TDC personnel through the US mail, or as otherwise
agreed by both parties. Checks delivered by other than US
mail may be subject to additional fees. MANUFACTURER shall
notify TDC in advance of its intent to modify or deviate from
its standard terms and conditions.
(d) TDC shall maintain the active vendor records in the
accounts payable system. MANUFACTURER is responsible for
promptly notifying TDC of vendor records modifications.
5.10 Invoice Inquiries. TDC shall receive initial inquiries from
MANUFACTURER vendors directed to TDC regarding requests for payments,
perform reasonable investigation, and promptly inform MANUFACTURER of
situations where TDC has insufficient basis for processing the payment
vendor invoices.
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5.11 Inventory Accounting. TDC shall account for all MANUFACTURER
inventories within the possession of TDC and within the possession of
mutually agreed upon prepackagers. TDC shall record in the
MANUFACTURER ledgers MANUFACTURER's estimates of the material
in-transit, as well as inventory reserves for obsolescence and
shrinkage.
5.12 Establishment of Standard Cost. MANUFACTURER shall establish
standard costs once per year. No change in any MANUFACTURER standard
cost can by made without the knowledge of the TDC controller. If
MANUFACTURER changes any standard cost without the written approval of
the TDC controller, any TDC guarantees concerning shrinkage shall
automatically be canceled for that inventory year. The procedures and
schedule for the annual standard cost change shall be finalized in a
timely manner, both parties agreeing to the terms and conditions
outlines therein; otherwise procedures utilized in the prior year
shall apply.
5.13 Inventory Shrinkage. TDC shall compensate MANUFACTURER for
inventory shrinkage in excess of reasonable and customary amounts, as
defined by the formula set forth in Part C of Exhibit 1; provided that
MANUFACTURER complies with the standard cost rules specified in this
Section 5 as well as other applicable provisions of this Agreement.
MANUFACTURER agrees to comply with TDC's established procedures and
practices in place as of the date of this Agreement, of inventory
related transactions, and to require their packagers to do the same.
MANUFACTURER agrees that any errors or omissions made by MANUFACTURER
personnel or MANUFACTURER's packagers are the responsibility of
MANUFACTURER and are not covered by this Subsection 5.13. TDC agrees
that any errors or omissions made by TDC personnel or agents of TDC
are the responsibility of TDC, except for appropriate correction for
prior entries under GAAP.
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5.14 Financial Reports. TDC shall provide accounting information
and reports similar to the reporting as of the date of this Agreement
to permit MANUFACTURER to monitor is aftermarket operations to the
extent they are accounted for by TDC services. TDC agrees to comply
with any reasonable modifications to existing reports, as may be
requested by MANUFACTURER. Any major modifications are subject to
negotiations.
SECTION 6. CONSIDERATION TO TDC.
6.01 Base Fees.
(a) For all services provided hereunder through December 31,
1996, MANUFACTURER shall pay TDC a monthly fee of Four Hundred
Sixty-Six Thousand Six Hundred Sixty-Seven Dollars (US)
($466,667)(the "1996 Monthly Fee"), which amounts shall be
payable on the first business day of each calendar month, in
arrears, by wire to an account designated by TDC. The 1996
Monthly Fee shall be payable on December 31, 1996. In the
event that this Agreement commences on a date other than the
first business day of a calendar month, the 1996 Monthly Fee
for the balance of the first full calendar month shall be
prorated based on the number of calendar days in such month
and payable on the first business day of the calendar month
immediately following the first full calendar month of the
Agreement.
(b) For all services provided hereunder from January 1,
1997, through expiration of the Term, MANUFACTURER shall pay
TDC a monthly fee of Four Hundred Ninety Thousand Dollars (US)
($490,000) (the "Monthly Fee"), subject to credit as a result
of Cost Savings (defined below) as provided for in Section
6.03, which amounts shall be payable in arrears by wire to an
account designated by TDC on the first business day of each
month for the immediate preceding month.
(c) The 1996 Monthly Fees and the Monthly Fees are
collectively referred to herein as the "Base Fees." The
parties acknowledge and agree that the Base
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Fees were computed based on a Capacity Value of $22,000,000, a
current annual gross sales volume of $79.3 million for CLARK
Parts as well as on the level of services currently provided
by TDC to CLARK as set forth in this Agreement. In the event
that the gross sales volumes for the Term exceeds $79.3
million, the Base Fees paid during the Term shall increase by
5.8% of the excess of the gross sales for the Term over $79.3
million. Such additional amount shall be payable within
forty-five (45) calendar days following expiration of the
Term.
(d) The Base Fees do not include any amounts for provision
of Customer Support Services, including, without limitation,
amounts due MANUFACTURER's vendors or to or as a result of or
incurred by CLARK Team members, or amounts for Part
transportation, including shipping, insurance or duty costs,
or the amounts due to MANUFACTURER's outside packagers, each
of which shall be paid directly by MANUFACTURER to the
applicable third party.
6.02 Other Costs. In the event that MANUFACTURER requires different
or additional services, MANUFACTURER shall be invoiced for such
services at the rates set forth in Exhibit 2.
6.03 Cost Improvements. TEREX, TDC and MANUFACTURER shall use
their commercially reasonable efforts in the ordinary course of
business to identify and implement productivity and other improvements
to reduce TDC's cost of distribution of the Parts, including all
Warehousing Services (as defined in Section 3 hereof), Computer
Services (as defined in Section 4 hereof), Accounting Services (as
defined in Section 5 hereof), and any additional services required by
MANUFACTURER as provided under Section 6.01. Commencing January 1,
1997, TDC and MANUFACTURER shall share on a pro rata basis in any
"Cost Savings" (as such term is defined below) achieved by TDC in the
distribution of the Parts, with TDC to retain forty-six percent (46%)
of the amount of the Cost Savings and fifty-four percent (54%) of the
Cost Savings to be passed on to MANUFACTURER by means of a credit to
the Base Fees payable by MANUFACTURER under Section 6.01. TDC shall
calculate the amount of the Cost
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Savings on a quarterly basis, with any credit due to MANUFACTURER to
be applied against the Base Fee due for the second month of the
following quarter. For purposes of this Agreement, the term "Cost
Savings" shall mean the net reduction to TDC in the full cost of
distribution of the Parts, including the costs of all Warehousing
Services, Computer Services, Accounting Services and any additional
services provided under Section 6.01, calculated utilizing a
consistent accounting procedure agreed upon by the parties. The
parties shall mutually agree upon a method for calculating Cost
Savings no later than ninety (90) days from the date hereof.
MANUFACTURER or its designee shall have the right to audit all of
TEREX's and TDC's books and records relating to the distribution of
the Parts at TDC, upon ten (10) days advance written notice, for the
purpose of confirming the extent of any Cost Savings achieved by TDC,
provided MANUFACTURER shall not have the right to conduct such an
audit more than twice in any 12-month period. In the event that
MANUFACTURER or its designee should find that TDC has not complied
with the terms of this Section 6.03, TDC shall promptly reimburse
MANUFACTURER for the amount of any Cost Savings due to MANUFACTURER,
with interest calculated at 10% per annum, from the date such Cost
Savings would have been credited to the Base Fee in accordance with
the terms of this Section 6.03. The auditing fees and expenses
incurred by MANUFACTURER or its designee shall be borne by
MANUFACTURER.
6.04 Transfer. In the event MANUFACTURER does not elect to renew
this Agreement, TDC shall upon request, without any additional expense
to MANUFACTURER, (i) extract all data and information in the format in
which such data and information exists on TDC's systems and provide
such data and information to MANUFACTURER, and (ii) pack all of
MANUFACTURER's Products in storage at TDC's facility and prepare such
Products for shipment to a location designated by MANUFACTURER,
including marking each package with the part number and quantity, and
(iii) load MANUFACTURER's Products onto truck or other vehicles
provided by MANUFACTURER for transport. The fees set forth in this
Section 6 are exclusive of any other transfer costs, including,
without limitation, the freight cost of transporting Products to
MANUFACTURER's facility. Upon request, TDC shall prepare a written
quotation for converting MANUFACTURER's data and information to
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a format compatible with MANUFACTURER's system at TDC's actual cost
and other transfer services excluded from the fees set forth in this
Section 6.
SECTION 7. CONTROL AND RIGHTS OF PARTIES.
7.01 Independent Contractor Status. Neither TDC nor its employees
shall be deemed to be agents or employees of MANUFACTURER. It is
understood and agreed that TDC is an independent contractor acting for
its own account. Other than as expressly set forth herein or as
approved in writing by MANUFACTURER, TDC is not granted any express
or implied right or authority to assume or create any obligation or
responsibility on behalf of or in the name of MANUFACTURER or to bind
MANUFACTURER in any manner whatsoever. MANUFACTURER is interested
only in the results obtained under this Agreement; the manner and
means of conducting the work are under the sole control of TDC. None
of the benefits provided by MANUFACTURER to his employees, including,
but not limited to, compensation insurance and unemployment insurance,
are available from MANUFACTURER to the employees, agents or servants
of TDC. TDC will be solely and entirely responsible for his acts and
for the acts of its agents, employees, servants and subcontractors
during the performance of this Agreement. MANUFACTURER shall be
solely responsible for its acts and for the acts of its agents,
employees, servants and subcontractors, including, without limitation,
the CLARK Team members, during the performance of this Agreement.
7.02 Employment of Workers by TDC. TDC shall furnish duly qualified
and trained personnel to carry out the services to be provided under
this Agreement, and shall, at all times, enforce strict discipline and
maintain good order among the workers performing the work, and shall
cause the workers to observe all reasonable fire prevention, safety
and health regulations in force at TDC's facility. MANUFACTURER shall
use best efforts to ensure that members of the CLARK Team observe all
such regulations in force at TDC's facility.
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SECTION 8. INSURANCE.
8.01 General. TDC shall obtain and maintain insurance during the
term of this Agreement with solvent and reputable insurance carriers
of such types and in such amounts as is customarily maintained by
prudent businesses, including, but not limited to, business
interruption, public liability, fire and extended coverage, automobile
and workers' compensation coverage and shall provide MANUFACTURER, at
least annually upon request, with a certificate of insurance issued by
the relevant carrier(s) as to the types and amounts of such insurance
which TDC then has in effect. TDC shall name CLARK as an additional
insured to TDC's business interruption insurance. The cost to TDC of
maintaining the insurance required by this Section 8.01 is included in
the Base Fees.
SECTION 9. DURATION AND TERMINATION.
9.01 Term. The "Term" of this Agreement shall be for thirty-six (36)
months commencing on the date hereof and expiring on November 30,
1999, unless earlier terminated for default in accordance with Section
9.02.
9.02 Early Termination. This Agreement shall terminate
automatically and without further action by either party upon the
occurrence of any of the following events:
(a) TDC or MANUFACTURER becomes insolvent or involved in
receivership, bankruptcy or other insolvency or debt relief
proceedings, whether voluntary or involuntary, or indicates
(or its accountants indicate) that a substantial doubt
exists as to its ability to continue as a going concern; or
(b) upon one hundred twenty (120) days' written notice to
the other party, if such other party (i) materially breaches
any material monetary term of this Agreement and such breach
or failure is not remedied within ten (10) calendar days
after notification thereof by the terminating party or (ii)
fails to fulfill any of its non-monetary
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obligations under this Agreement and such breach or failure
is not remedied within sixty (60) days after notification
thereof by the terminating party.
SECTION 10. INDEMNIFICATION.
10.01 Indemnity Provisions. MANUFACTURER shall defend, indemnify,
and hold harmless TDC from and against any and all claims, damages,
losses and expenses, including without limitation, attorneys' fees, that
may be asserted against TDC and related to the design, manufacture,
material content or use of any MANUFACTURER products. MANUFACTURER
further agrees to defend, indemnify, and hold harmless TDC from and
against any and all claims, damages, losses and expenses, including
without limitation, attorneys' fees related to the procurement or sale
of MANUFACTURER inventories, except where such liability results from
the gross negligence of TDC, in which case TDC agrees to hold
MANUFACTURER harmless from any such liability to third parties. In no
event shall TDC be liable for any loss of profit incurred by
MANUFACTURER or any other party as a result of the telecommunications
circuits or data processing, including data base information or
processing programs, except as specified in this Agreement. TDC shall
defend, indemnify and hold harmless MANUFACTURER from and against any
and all claims, damages, losses and expenses, including, without
limitation, attorneys' fees, that may be asserted against MANUFACTURER
by a third party, for any willful or grossly negligent acts or omissions
of TDC in the performance by TDC's officers, agents, employees or
subcontractors of TDC's obligations hereunder.
10.02 MANUFACTURER Responsibility. MANUFACTURER is solely
responsible for complying with state and federal product "right to know"
disclosures as it relates solely to MANUFACTURER inventory and agrees to
hold TDC harmless from any liability to third parties directly related
to the failure of
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MANUFACTURER to observe such laws or regulations in connection
therewith. MANUFACTURER shall provide TDC with the appropriate
information required by these laws or regulations.
10.03 Other Damages. In no event shall either party be liable to the
other party for any indirect damages including consequential, incidental
or special damages or loss of profit.
SECTION 11. TRADEMARKS AND TRADE NAMES. MANUFACTURER grants to TDC the
nonexclusive, personal, and nontransferable right to use MANUFACTURER's
trademarks and trade names solely to the extent necessary to enable TDC to
comply with its obligation hereunder but only in accordance with the terms of
this Agreement. TDC shall not use such marks or names or any other trademark
or trade name now or hereafter used by MANUFACTURER as part of any corporate
title, business identity or trade name or any similar mark or name without
MANUFACTURER's prior written consent nor make use thereof in any manner likely
to lead to confusion or in any way deceive the public or be injurious to
MANUFACTURER . TDC agrees that all such trademarks and trade names are and
shall remain the sole and exclusive property of MANUFACTURER and that upon
termination or expiration of this Agreement, TDC shall immediately cease any
use thereof and shall not thereafter, either directly or indirectly, use such
trademarks and trade names.
SECTION 12. CONFIDENTIALITY. TDC acknowledges that MANUFACTURER may make
available to TDC valuable know-how, technical or other proprietary information
with respect to the sale, distribution and servicing of Parts as well as
promotion and advertising know-how and sales and merchandising information.
TDC undertakes to ensure that its employees, if any, will keep such information
and know-how confidential during and after the term of this Agreement.
SECTION 13. FORCE MAJEURE. Neither party shall be responsible to the
other party for the performance of any obligation to be performed under this
Agreement due to any cause beyond the control of or occurring without fault of
such party, including, but not limited to, acts of God, fires, floods, storms,
riots, strikes, lockouts, other national calamities, wars, insurrections or any
other occurrence, including governmental action, which would act to delay or
interrupt
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implementation and continuation of the performance of this Agreement. If
there is a delay of more than six (6) months due to any cause beyond the
control of one party, then either party may by notice to the other terminate
this Agreement.
SECTION 14. NOTICES. Any notices or other communications required or
permitted hereunder shall be in writing and shall be sufficiently given if sent
by facsimile (confirmed in writing) or internationally recognized overnight
delivery service, prepaid, addressed as follows:
To MANUFACTURER:
CLARK MATERIAL HANDLING COMPANY
172 Trade Street
Lexington, Kentucky 40511
Attention: President
Fax: (606) 288-1813
with a copy to:
CITICORP VENTURE CAPITAL LTD.
399 Park Avenue
New York, NY 10043
Attention: Michael A. Delaney
Fax: (212) 888-2940
To TDC:
TEREX WORLDWIDE PARTS DISTRIBUTION CENTER
8800 Rostin Road
Southaven, Mississippi 38671
Attention: President
Fax: (601) 393-1700
with a copy to:
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TEREX CORPORATION
500 Post Road East, Suite 320
Westport, Connecticut 06880
Attention: Senior Vice President and General Counsel
Fax: (203) 227-1647
Other addresses as may from time to time apply shall be furnished by a like
notice by either party during the term of this Agreement. Any notice or
communication shall be deemed effective when actually delivered (or the next
business day if delivered after regular business hours or on a Saturday, Sunday
or holiday).
SECTION 15. NO WAIVER OF RIGHTS. The failure of either party to require
performance at any time by the other party of any obligation under this
Agreement shall not affect the right to require performance of that obligation
at any time thereafter. No waiver of any breach of any provision of this
Agreement shall be construed as a waiver of any continuing or succeeding breach
of such provision or a waiver or modification of any other rights or remedies
that such party may have under this Agreement.
SECTION 16. ASSIGNMENT. Neither this Agreement nor any of the rights,
interests, or obligations hereunder shall be assigned by either party hereto
(whether by operation of law or otherwise) without the prior written consent of
the other party, except that TDC may assign any and all of its rights and
obligations under this Agreement to any entity controlling, controlled by or
under common control with TEREX or to the purchaser of all or substantially all
of the assets or business of TDC without the consent of MANUFACTURER. This
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns. Notwithstanding anything
contained in this Agreement to the contrary, nothing in this Agreement, express
or implied, is intended to confer on any person other than the parties hereto
or their respective heirs, successors, executors, administrators and assigns
any rights, remedies, obligations or liabilities under or by reason of this
Agreement.
SECTION 17. INTEGRATION. This Agreement contains the entire understanding
of the parties hereto and supersedes all prior or contemporaneous agreements,
oral or in writing, with respect
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to the subject matter hereof. This Agreement may not be amended nor any
provision waived without a written agreement signed by the party against whom
such amendment or waiver is sought to be enforced.
SECTION 18. SEVERABILITY. If and to the extent that any court of competent
jurisdiction holds any provision of this Agreement or part thereof invalid or
unenforceable, such holding shall in no way affect the validity of the
remainder of this Agreement.
SECTION 19. GOVERNING LAW AND CHOICE OF FORUM. This Agreement shall be
governed by and interpreted in accordance with the laws of Mississippi
exclusive of its conflicts of law provisions. Any actions, suits or legal
proceedings of any nature arising out of or relating to this Agreement shall be
initiated in the courts of Mississippi.
IN WITNESS WHEREOF, this Agreement is executed, in counterparts, by
authorized representatives of MANUFACTURER and TDC.
TEREX DISTRIBUTION CENTER, a
division of TEREX CORPORATION
By: /s/
---------------------------
Title:
------------------------
CLARK MATERIAL HANDLING
COMPANY
By: /s/
---------------------------
Title:
------------------------
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EXHIBIT 1
TEREX DISTRIBUTION CENTER
PERFORMANCE OBJECTIVES
The performance levels listed in this Exhibit reflect MANUFACTURER's Parts
business service objectives and form the standards against which the TDC
performance is to be measured.
A. PUTAWAY AND UPDATE REQUIREMENTS
- Normal materials putaway = 5 workdays after TDC receipt.
- N.P.O. (No Purchase Order), N.P.N. (No Part Number) and N.S.C.
(No Standard Cost) shall be processed in accordance with
MANUFACTURER's instructions within 48 hours following
MANUFACTURER's notification of disposition to TDC.
NOTE: Attainment of the above objectives assumes unrestricted flow
of inbound material. TDC will advise MANUFACTURER of any
non-controllable event which might extend inbound performance
objectives.
B. OUTBOUND ORDER PROCESSING (Level of service is determined by the customer
per the purchase order.)
- Code I orders transmitted to the TDC facility between 7:00
a.m. and 7:00 p.m. (Central Time), Monday through Friday,
shall be shipped same day at the departure time of designated
or available carrier/transportation.
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- Code II orders transmitted to the TDC facility between 7:00
a.m. and 7:00 p.m. (Central Time) shall be shipped the day
following receipt of order transmittal by customer designated
carrier.
- Code III orders transmitted to the TDC facility between 7:00
a.m. and 7:00 p.m. (Central Time), Monday through Friday,
shall be shipped within three (3) working days of receipt of
the customer's release date.
C. CONTROL AND ACCOUNTING FOR INVENTORY ASSETS
TDC shall provide levels of control and security over inventory assets
under its care consistent with Clark accounting guidelines in effect as of the
date hereof. The parties agree that in a volume related aftermarket parts
business, a certain level of inventory shrinkage is normally accepted as a
"cost of doing business" for which appropriate financial reserves are
established.
MANUFACTURER shall be responsible for inventory gain or loss due to
shrinkage to the extent of one percent (1%) of the standard gross cost of goods
sold for the twelve (12) months prior to the annual inventory. TDC agrees to
be responsible for inventory variations in excess of one percent (1%) of the
standard gross cost of goods sold provided that and subject to the following:
a. For the purposes of applying the formula, the following
definitions will be used:
BASE = [1%] X [12-MONTH GROSS COST OF SALES]
- If physical inventory loss (Loss) exceeds the Base:
PENALTY = LOSS - BASE
- If physical inventory loss is less than Base, or if
there is a physical inventory gain (Gain):
CUSHION = BASE - LOSS OR BASE + GAIN
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b. A "cushion" can be carried forward up to two years to reduce
or offset "penalties" otherwise owed to MANUFACTURER.
c. A "penalty" paid to MANUFACTURER can be recovered by TDC for
up to two years for amounts up to subsequent "cushions."
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EXHIBIT 2
SCHEDULE OF SERVICE FEES
The fees set forth in this Exhibit 2 are for services not included in the Base
Fees. The Actual Hourly Cost shall be calculated by first, multiplying the
applicable employee's hourly rate ($9.60 through May 1997 and probably three to
four percent (3%-4%) higher for the balance of 1997) times 1.5 (the overtime
rate) and second, multiplying the total calculated in the first step by 1.33
(the fringe rate) and third, by multiplying the total by the actual time spent
performing the function. The Actual Hourly Cost does not include any
management supervision costs, which costs are included in the Base Fees.
SPECIAL CHARGES:
<TABLE>
<S> <C> <C>
Special Packing = Actual Hourly Cost plus material
Return to Stock
Canceled Order -- Not Invoices = Actual Hourly Cost
Canceled/Returned Order--Invoiced = $ 5.00/line plus freight
Rework = Actual Hourly Cost
Teardowns = Actual Hourly Cost
Kit Assembly = $ .10/piece in kit plus
($10 minimum per Kit run) = $ .25/pound
Detailed materials inspection = Quoted
Scrap destruction/defacing = Quoted
Misc. Office/Whse Supplies = Quoted
Priority Carriers = Per carrier invoice
Manual Shippers = Actual Hourly Cost
</TABLE>
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EXHIBIT 3
TDC SYSTEM SERVICES
DATA CENTER SERVICES
* PRODUCTION JOB SCHEDULING
* SPECIAL JOB REQUESTS
* TAPE PROCESSING/DISTRIBUTION
* FORMS MANAGEMENT
* REPORT DISTRIBUTION
* SYSTEM TABLE UPDATING
* COORDINATE PROBLEM RESOLUTION RELATED TO EQUIPMENT
(TERMINALS/PRINTERS), TELECOMMUNICATIONS AND HOST
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TDC SYSTEM SERVICES
SYSTEM SUPPORT AND DEVELOPMENT
* PROBLEM DETERMINATION AND RESOLUTION
* SYSTEM ANALYSIS, DESIGN & PROGRAMMING
* PROJECT MANAGEMENT/REPORTING
* EASYTRIEVE SUPPORT
* TECHNICAL CONSULTING
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TDC SYSTEM SERVICES
SYSTEM FEATURES
* INTEGRITY/RECOVERY
- RECOVERY OF DATA DUE TO HARDWARE/SOFTWARE FAILURE
- ROLLBACK FOR TRANSACTION/PROGRAM ABNORMAL TERMINATION
- RECOVERY OF DATA TO PREVIOUS DAY CLOSING IN MAJOR DISASTER
* DATABASE ACCESSIBILITY
- IDIMS
- ONLINE (CICS), BATCH
- SIMULTANEOUS BATCH AND ONLINE UPDATE WITH FULL INTEGRITY
- READ ONLY ACCESS USING EASYTRIEVE
* PRODUCTION DATABASE
* EASYTRIEVE COPY DATABASE (WEEKLY COPY)
- DATABASE MONITORING/TUNING
* ONLINE STORAGE (DASD) MANAGEMENT (CA-1)
* TAPE MANAGEMENT (CA-1)
* INTEGRATED SYSTEM NETWORK ARCHITECTURE
- ABILITY TO COMMUNICATE WITH OTHER TDC SYSTEMS
* PERFORMANCE MONITORING
* SYSTEM SOFTWARE/HARDWARE INSTALLATION/MAINTENANCE
* PROBLEM DETERMINATION/COORDINATION
* SALES COST ACCOUNTING
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TDC SYSTEM SERVICES
APPLICATION FUNCTIONALITY
SALES ORDER PROCESSING
SALES ORDER ENTRY
* INTERACTIVE
- CODE I-3
- EXPORT
- INTER/INTRA COMPANY
* BATCH
- FUTURE
- QUOTATIONS
* TABLE DRIVEN ORDER CODING VERIFICATION
* VARIABLE PRICING (DOMESTIC, CANADIAN, EXPORT)
- NET
- LIST
- OEM
- QUOTES
- TRANSFER
FACTOR PRICING IN FUTURE
* REALTIME INVENTORY REDUCTION
* EXPEDITING REPORT GENERATION
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TDC SYSTEM SERVICES
APPLICATION FUNCTIONALITY
SALES ORDER PROCESSING
* SHIPPING/PICK TICKET GENERATION
* SHIPPER ADJUSTMENTS
- SHORT SHIPMENTS
- EXPORT AND OEM PRICE REQUIREMENTS
- COMPLETE CANCELS
- SHIPPING INFORMATION
* SALE ORDER INQUIRY
* SALE ORDER CHANGES
- NON-RELEASED CANCELLATIONS (ORDER/PARTIAL QUANTITIES/LINES)
- DUE DATE CHANGES
- SET-UPS (NEW PARTS; ASSEMBLY/COMPONENTS)
- CONTROLLED RELEASES
* TABLE DRIVEN BACK ORDER TO RELEASE
* SALE ORDER COMBINATION FACILITY (STOCK/FUTURES)
* HISTORY BY SALE ORDER CODE/LINES DAILY/MONTH-TO-DATE
- ABC CLASSIFICATION
- BACK ORDERED
- BOOKINGS
- RELEASED, NOT SHIPPED
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TDC SYSTEM SERVICES
APPLICATION FUNCTIONALITY
SALES ORDER PROCESSING
* INVOICING
- DOMESTIC/CANADIAN/EXPORT/COST
- MISCELLANEOUS CHARGES
FREIGHT
SALES TAX
TRADE DISCOUNT
RUSH SURCHARGE
PACKING
HANDLING
- AUDIT TRAIL OF BILLING
- INTERACTIVE/BATCH
* REPORTS
- INVOICE REGISTER
- TRANSMISSION STATISTICS OF ACCOUNTS RECEIVABLE
- OPEN ORDERS
- RELEASES PENDING
- CANCELLATIONS
- MANAGEMENT INFORMATION
(COMPANY/DIVISION/SALES DEPARTMENT)
- PRICE/COST NOTIFICATIONS
- STOCK ROOM BACK ORDERS
- INVENTORY
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TDC SYSTEM SERVICES
APPLICATION FUNCTIONALITY
PRICING
* PRICING MAINTENANCE
- DOMESTIC/CANADIAN/OEM/EXPORT
- MARKET LEVEL
- COMPETITIVE PARTS
- PROPRIETARY
- ASSEMBLY/COMPONENTS
- MASS UPDATE (BATCH ONLY)
BY-PRODUCT IDENTIFICATION CODE
* PRICING FREE TEXT:MAINTENANCE
- MATERIAL
- SIZE
- WEIGHT
- MODEL
* PRICE/COST HISTORY
* PRIOR 48 MONTHS SHIPPED QUANTITIES
* PRODUCT LEVEL PRICING
* PRICE ACTIVATION/INACTIVATION
* COMPETITOR MAINTENANCE
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TDC SYSTEM SERVICES
APPLICATION FUNCTIONALITY
PRICING
* REPORTS
- SIMULATION OF PRICE CHANGES
- VALIDATION OF CHANGES PERFORMED
- PROJECTION/PROFITABILITY ANALYSIS
- PRICE BOOK PUBLICATIONS
- DOMESTIC
- CANADIAN
- EXPORT
- WEIGHTED AVERAGE OF NEW TO OLD PRICE CHANGES
- ESTIMATED PRICE AGING ANALYSIS
- COMPETITOR ANALYSIS
- PRICING FREE TEXT
* COMPLETE INQUIRY OF ABOVE FEATURES
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TDC SYSTEM SERVICES
APPLICATION FUNCTIONALITY
SALES FORECASTING (ASI)
* FORECASTING
- AUTO REGRESSION
- EXPONENTIAL SMOOTHING
- CYCLICAL VARIATION
- SEASONALITY
- DEVIATION ERROR TRACKING
* MODEL VARIATION
- SEASONAL
- PATTERNED IRREGULAR
- NON-PATTERNED IRREGULAR
* EIGHTEEN (18) FUTURE PERIODS OF FORECAST
* PARAMETER DRIVEN
- DEMAND FILTERING
- TREND SMOOTHING
- PERMANENT COMPONENT
- SEASONALITY SMOOTHING
- MEAN AND AVERAGE DEVIATION TRACKING
- TREND DAMPENING
- SYSTEM LEVEL FORCING
- FORECAST OVERRIDES
- TWENTY-SEVEN (27) ITERATIONS
- MODEL SWITCHING
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TDC SYSTEM SERVICES
APPLICATION FUNCTIONALITY
CREDIT ADMINISTRATION
* ONLINE INQUIRY
* CREDIT/DEBIT ENTRY (BATCH ONLY)
- DOMESTIC/CANADIAN/EXPORT
* DEALER YEARLY RETURNS
* PARTS DISCREPANCY
* REPORTS/FORMS
- RETURN AUTHORIZATION
- RETURN MATERIAL
- MOVE TAG
* TRANSMISSION OF ACCOUNTS RECEIVABLES
* AUDIT TRAIL (60 DAYS ONLINE)
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TDC SYSTEM SERVICES
APPLICATION FUNCTIONALITY
DISTRIBUTION REQUIREMENTS PLANNING (ASI)
* TIME PHASED REQUIREMENTS PLAN BASED ON INVENTORY TURN RATIOS AND
CUSTOMER SERVICE LEVELS BY STRATA
* RECOMMENDS EXPEDITE/DE-EXPEDITE ACTION WITHIN THE FREEZE PERIOD
* AUTOMATICALLY RESCHEDULES RELEASED OUTSIDE FREEZE PERIOD
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TDC SYSTEM SERVICES
APPLICATION FUNCTIONALITY
PURCHASING
* ONLINE VENDOR FILE MAINTENANCE
* ONLINE PURCHASE ORDER GENERATION/MAINTENANCE
- FIXED QUANTITY
- BLANKET
* DETERMINES BEST QUANTITY AND COST BASED ON EOQ AND VENDOR PRICE BREAKS
* PROHIBITS AUTOMATIC PURCHASE ORDER GENERATION BASED ON SPECIFIC
MANAGEMENT CRITERIA VIA SYSTEM TABLES AND PRODUCES PURCHASE ORDER
CHECKLIST FOR REVIEW AND ACTION
* ONLINE CHECKLIST MAINTENANCE
* AUTOMATIC PURCHASE ORDER GENERATION BASED ON CURRENT INVENTORY
POSITION AND MANAGEMENT CONTROL PARAMETERS
* RECOMMEND BUY HISTORY
* PURCHASE ORDER ACTIVITY AUDIT TRAIL
* EXPEDITE ANALYSIS REPORTING
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TDC SYSTEM SERVICES
APPLICATION FUNCTIONALITY
RECEIVING
* ONLINE RECEIVING AT PACKAGERS
* MOVE TAG AND RECEIVING LIST GENERATION
* ONLINE PUTAWAY FUNCTION
* INTERACTIVE UPDATES TO INVENTORY POSITION AND UNAUDITED DATA
* INTERACTIVE SALE ORDER ALLOCATION/RELEASE
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TDC SYSTEM SERVICES
APPLICATION FUNCTIONALITY
ACCOUNTS PAYABLE
* ACCOUNTS PAYABLE INVOICE PROCESSING - BATCH/ONLINE
- DOMESTIC
- FOREIGN
* MECHANICALLY CREATES PENDING INVOICE DATA BASE TRANSACTIONS FOR
UNMATCHED RECEIVINGS
* MATCHED INVOICE PAYMENT INFORMATION TRANSMITTED DAILY AND BATCH REPORT
PRODUCED
* ONLINE INVOICE AND VARIANCE INQUIRY/MAINTENANCE
* DAILY CONTROL REPORTING
- AUTOMATIC VENDOR DEBIT ON OVERBILL
- PASSED LIST
- EXCEPTIONS
* MONTHLY CONTROL REPORTING
- VARIANCES RECAP
- MATERIAL RECEIVED, NOT INVOICED
- MATERIAL IN TRANSIT
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TDC SYSTEM SERVICES
APPLICATION FUNCTIONALITY
INVENTORY CONTROL
* CALCULATES INVENTORY STANDARDS
- EOQ (right arrow) ECONOMIC ORDER QUANTITY
- SS (right arrow) SAFETY STOCK
* MANAGES INVENTORY THROUGH THE STRATIFICATION OF MATERIAL BASED ON
STANDARD COST EXTENDED, TIMES ORDERED, AND PIECES ORDERED
* INVENTORY BUILDUP PLAN THAT IS CONSISTENT WITH MANAGEMENT SPECIFIED
GOALS (I.E., SERVICE LEVELS AND TURN RATIOS)
* EVALUATION OF THE CALCULATED PLAN VS THE ACTUAL PLAN
44
<PAGE> 49
EXECUTION COPY
TDC SYSTEM SERVICES
APPLICATION FUNCTIONALITY
CYCLE INVENTORY
* RECOUNT SELECTION (TABLE DRIVEN - DOLLAR VALUE)
* INTERACTIVE POSTING
- COUNTS
- ADJUSTMENTS
* ONLINE INQUIRY
* POSTING CYCLE COUNTS
- AUTOMATIC RELEASE/BACK ORDER DEPENDENT ON INVENTORY STOCK POSITION
CHANGE (+ OR -)
* REPORTS
- INVENTORY EVALUATION/COUNTS
- STATISTICAL ANALYSIS
- ROW COUNTS
- LOCATION SUMMARY
- RECOUNT SELECTION
- PHYSICAL INVENTORY RECAP
- CYCLE ADJUSTMENT
* GENERATION OF DATA AND OTHER INFORMATION REQUESTED BY EXTERNAL
AUDITING FIRM
45
<PAGE> 50
EXECUTION COPY
TDC SYSTEM SERVICES
APPLICATION FUNCTIONALITY
STANDARD COSTS
* ABILITY TO REQUEST/ACCEPT STANDARDS FROM MANUFACTURING PLANTS
* LOAD AND ANALYZE NEW STANDARDS RECEIVED
* NEW STANDARDS-VENDOR (NON-TDC MANUFACTURING) SOURCED MATERIAL
- PURCHASE ORDER COST
- INVOICE COST
- VENDOR PRICE BREAKS
* ONLINE MAINTENANCE AND EDIT CHECKS FOR EXCEPTION CONDITIONS STANDARDS
ANALYSIS
- INCREASES/DECREASES
- DOLLARS
- PERCENTAGES
* NEW STANDARD APPLICATION
- COST HISTORY
- PREVIOUS COST
- YEAR COST SET
* INVENTORY, COMMITMENT AND OPEN SALE ORDER RECONCILIATIONS
* REPORTS
- INVENTORY COUNTS/EXCEPTIONS
- STANDARDS ANALYSIS
- ASSEMBLY/COMPONENT BUILDUP
- UNAUDITED LIST
- AREA COUNTS
46
<PAGE> 51
EXECUTION COPY
SCHEDULE 2.01
CLARK TEAM MEMBER COSTS
<TABLE>
<CAPTION>
1ST SIX MON
CLARK TEAM COSTS 1995 ACTUAL 1996
---------------- ----------- ----
<S> <C> <C>
Salaried Labor Costs $942,434 $488,228
Fringe Benefits 212,836 119,280
Outside Training 1,420 3,338
Rentals 1,250 0
Office Supplies 6,894 5,979
Travel and Entertainment 41,743 7,677
Gating and Tooling 5,141 660
Postage and Office Freight 7,597 3,865
Scrap and Rework 16,003 1,999
Other Sundry Expense 1,593 (1,301)
---------- --------
TOTAL $1,236,911 $629,725
</TABLE>
47
<PAGE> 52
EXECUTION COPY
SCHEDULE 2.02
CLARK TEAM MEMBERS EMPLOYED BY TDC AS OF _NOVEMBER ___, 1996
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
DOH NAME DEPT 1996 EARNED BUT UNUSED ANNUAL
ANNUAL VACATION BENEFIT
SALARY AS OF 11/19/96 COST
(EST)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1/16/95 Barroso, Luis 253 30,000.00 E 461.54 9,036.60
1/10/94 Bragg, Charlotte 253 16,640.00 NE 64.00 9,036.60
1/27/93 Bruce, Linda 253 23,600.00 E 0.00 9,036.60
1/9/95 Cole, Patricia 253 24,675.00 E 0.00 9,036.60
1/9/95 Curtright, Randy 253 30,000.00 E 0.00 9,036.60
6/26/95 DeMarco, Ron 253 30,000.00 E 346.15 9,036.60
1/3/94 Difillippo, Anthony 253 29,580.00 E 227.54 9,036.60
2/28/95 Gurley, Barry 253 32,500.00 E 1,250.00 9,036.60
11/4/96 Hammonds, Janice 253 23,600.00 E 0.00 9,036.60
1/4/65 Hartmann, Gerald 253 45,103.00 E 886.60 9,036.60
4/10/95 Henderson, Mark 253 23,600.00 E 0.00 9,036.60
9/19/88 Joyner, Tina 253 20,738.00 E 239.28 9,036.60
11/22/93 LaChance, Julie 253 23,600.00 E 816.92 9,036.60
12/9/68 Marshall, Celine 253 35,995.00 E 0.00 9,036.60
1/3/94 Monteith, Tina 253 23,600.00 E 363.08 9,036.60
10/3/88 Pakis, Greg 253 35,304.00 E 678.92 9,036.60
12/27/93 Pough, Cheryl 253 33,660.00 E 1,035.69 9,036.60
9/30/96 Pvillalto, Humberto 253 23,600.00 E 0.00 9,036.60
10/16/89 Roberts, Kevin 253 42,000.00 E 1,615.38 9,036.60
1/6/92 Stanley, Mike 253 76,900.00 E 1,478.85 9,036.60
4/10/89 Story, Ralph 253 36,240.00 E 0.00 9,036.60
7/5/94 Taylor, Florence 253 16,640.00 NE 0.00 9,036.60
11/22/93 Terrell, LaJuanda 253 23,600.00 E 453.85 9,036.60
11/15/93 Todd, Hunter 253 23,600.00 E 816.92 9,036.60
12/7/93 Williams, James 253 33,990.00 E 0.00 9,036.60
-------- -------- --------
TOTALS 759,765.00 10,734.72 225,915.00
========== ========= ============
</TABLE>
<TABLE>
<CAPTION>
PART TIME/ TEMP
----- ------ ----
<S> <C> <C> <C>
11/19/96 Davis, Angela 19,760.00 NE
</TABLE>
48
<PAGE> 53
EXECUTION COPY
SCHEDULE 3.03
TDC'S INVENTORY DISPOSITION PROCEDURES
1. A problem with a Part is reported (typically from receiving, the warehouse
help desk, the customer support team, or other warehouse personnel).
2. The inspection department investigates the problem. Full sets of drawings
and inspection equipment and gauges are available to verify that a part
conforms to specifications.
3. Non-conforming material is placed on hold and is unavailable for shipping.
4. An inspection report is written outlining the problem with the Part.
5. The inspection report is reviewed by the Incoming Materials Manager.
6. The Manager determines if the problem can be easily resolved by the
inspection department without further input from other areas (incorrectly
labeled Parts, etc.).
7. The inspection report is forwarded to the CLARK Team for review.
8. The CLARK Team (typically a buyer) reviews the rejection and determines
what action should be taken (scrap, return to vendor, rework, etc.).
9. The CLARK Team records the action to be taken on the inspection report and
forwards the report to the inspection department.
10. The inspection department executes the action requested on the inspection
report.
49
<PAGE> 54
EXECUTION COPY
SCHEDULE 3.05
TDC'S PICKING PROCEDURES
1. Customer orders are downloaded from the mainframe computer (Litton) to
TDC's warehouse computer (AS/400).
2. The orders are grouped by the AS/400 into batch picking waves, typically
eight orders per wave.
3. The AS/400 assigns picking locations to the part and schedules any internal
material moves that may be required for the order.
4. Pick tickets are printed for each wave in the picking sequence and grouped
by the warehouse zone.
5. The tickets are dispatched to a picker for a specific warehouse zone.
6. The picker informs the AS/400 when the picking process for a batch begins.
7. The picker processes all of the pick tickets.
8. The picker records any picking discrepancies on a form.
9. Picking discrepancies (if any) are updated on the AS/400.
10. The picker informs the AS/400 that the batch has been completed.
11. Inventory is disbursed from the picking locations and is transferred from
the "perpetual inventory bucket" to the "staged inventory bucket".
12. The picked material is transported to the consolidation area via forklift
or conveyor.
13. Each pick ticket on the picket parts has a bar-code which is scanned as the
material enters the consolidation area.
14. A packing list is generated when all of the parts for an order have been
scanned in the consolidation area.
15. Packers use the packing list to verify that all of the parts have been
picked.
16. The parts are packed into proper shipping containers.
17. A copy of the packing list is attached to the shipping container, the
remainder of the packing list is forwarded to the shipping office.
18. The shipping office completes the appropriate transportation paperwork
(bills of lading, etc.).
19. The shipping office posts the order on the mainframe for invoicing.
50
<PAGE> 55
EXECUTION COPY
SCHEDULE 4.04
COMPUTER CONTRACT WITH LITTON COMPUTER SERVICES
[COPY ATTACHED]
51
<PAGE> 56
EXECUTION COPY
SCHEDULE 5.02
TDC'S CASH MANAGEMENT PROCEDURES
1. The TDC Accounts Payable Supervisor generates a cash requirements report
for all vendors with invoices that are due within a specified time period.
2. The cash requirements report is forwarded to the CLARK Cash Manager.
3. The CLARK Cash Manager communicates the cash availability to the TDC A/P
Supervisor.
4. The TDC A/P Supervisor coordinates vendor payments with the CLARK Cash
Manager and the CLARK Team (typically Buyers).
5. Checks are issued on a CLARK bank account.
6. A check register is printed for the checks generated in a specific day.
The exact cash usage is forwarded to the CLARK Cash Manager on a daily
basis.
7. The TDC General Accountant reconciles the A/P bank account on a monthly
basis.
52
<PAGE> 1
EXHIBIT 10.5
INDEMNITY AS TO LETTERS OF CREDIT,
PERFORMANCE BONDS, APPEAL BONDS, GUARANTIES, ETC.
THIS INDEMNITY, dated November 27, 1996, by CLARK MATERIAL HANDLING
COMPANY (f/k/a CMHC ACQUISITION CORPORATION), a Delaware corporation (the
"Indemnitor"), in favor of TEREX CORPORATION, a Delaware corporation ("Terex"),
for itself and an successor to CMH ACQUISITION CORP., a Delaware corporation
("CMH Acquisition") and CMH ACQUISITION INTERNATIONAL CORP., a Delaware
corporation ("CMH International"), CLARK MATERIAL HANDLING COMPANY, a Kentucky
corporation ("CMHC") and CLARK MATERIAL HANDLING INTERNATIONAL, INC., a Michigan
corporation ("Clark Michigan"; CMH Acquisition, CMH International, CMHC and
Clark Michigan collectively, "Sellers" and individually, "Sellers"). All
capitalized terms not defined herein shall have the respective meaning ascribed
thereto in the Agreement (as defined below).
W I T N E S S E T H:
WHEREAS, Terex, Sellers and Indemnitor have entered into that certain
Stock and Asset Purchase and Sale Agreement, dated as of November 9, 1996 (the
"Agreement"), whereby Terex and Sellers have agreed to sell, and Indemnitor has
agreed to purchase, the Shares and the CMHC Assets; and
WHEREAS, Section 6.20 of the Agreement provides that Indemnitor shall
cause the release of Terex and all Sellers from all of their liabilities and
obligations with respect to guaranties, letters of credit, performance bonds and
appeal bonds (collectively, the "Guaranties") relating to the business of any of
the Companies or Subsidiaries; and
WHEREAS, Section 6.20 of the Agreement also provides that if Indemnitor
is unable to obtain a release of any guaranty after use of commercially
reasonable efforts, Indemnitor shall deliver to Terex and Sellers, as the case
may be, a guaranty in favor of Terex or Sellers, as the case may be, of any
liability or obligation of Terex and Sellers with respect to any remaining
Guaranties.
NOW, THEREFORE, in consideration of TEN ($10) DOLLARS and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Indemnitor hereby agrees as follows;
<PAGE> 2
1. The Indemnitor hereby irrevocably and without restriction as to
time, minimum or maximum, shall indemnify, defend, save and hold harmless Terex
and sellers to the fullest extent from and against any and all losses, claims,
damages and liabilities, joint or several, and costs and expenses (including
reasonable attorneys' tees and expenses), of any kind or nature whatsoever which
Terex or any Seller may suffer or incur (a) to Foothill Capital Corporation for
any and all losses, costs, damages or expenses related to the letters of credit
itemized on Schedule A annexed hereto (the "Clark L/Cs') and (b) to MBNA for any
and all losses, costs, damages or expenses related to the guaranties and letter
of credit in favor of MBNA in the amount of up to $80,000.
2. The Indemnitor's obligations hereunder shall be binding upon its
successors and assigns and shall inure to Terex's and Sellers' benefit and to
the benefit of any assign(s) and successor(s) in interest no Terex and Sellers.
3. This Indemnity shall be construed under the laws of the State of New
York without regard to principles of conflicts of laws.
4. All notices and other communications under this Guaranty shall be in
writing and shall be deemed given (i) when delivered if by hand or overnight
courier, (ii) three days after mailing by first-class registered mail, return
receipt requested, postage prepaid, or (iii) when telecopied, provided that
concurrently therewith a copy is mailed by first-class registered mail, return
receipt requested, postage prepaid, to the parties at the following addresses
(or to such address as a party may have specified by notice given to the other
party pursuant to this provision):
If to any Seller or to Terex to:
Terex Corporation
500 Post Road East
Westport, Connecticut 06880
Attn: Marvin B. Rosenberg, Esq.
Senior Vice President, Secretary
and General Counsel
Fax No.: (203) 227-1647
With a copy to:
Robinson Silverman Pearce
Aronsohn & Berman LLP
1290 Avenue of the Americas
New York, New York 10104
Attn: Stuart A. Gordon, Esq.
Fax No.: (212) 541-1360
-2-
<PAGE> 3
If to Indemnitor, to:
CLARK Material Handling Company
172 Trade Street
Lexington, Kentucky 40508
Attn: Dr. Martin Dorio
Fax No.: (606) 288-1813
With a copy to;
Dechert Price & Rhoads
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, Pennsylvania 19102
Attn: G. Daniel O'Donnell, Esq.
Fax No.: (215) 994-3197
IN WITNESS WHEREOF, Indemnitor has executed this Indemnity this 27th
day of November, 1996.
CLARK MATERIAL HANDLING COMPANY
(formerly known as CMHC ACQUISITION
CORPORATION), a Delaware corporation
By: /s/
----------------------------------
Name:
Title:
-3-
<PAGE> 4
SCHEDULE A
<TABLE>
<CAPTION>
Expiration
Issuing bank L/C Number Beneficiary Amount Date
- ------------ ---------- ----------- ------ ----------
<S> <C> <C> <C> <C>
Norwest Bank S750100 Dealer Commercial 3/10/97
Import $ 250,000.00
Norwest Bank S750172 National Union
Fire Ins. $ 650,000.00 9/24/97
Norwest Bank S750168 Amwest Surety
Insurance $ 286,580.59 9/18/97
Norwest Bank S750173 Amwest Surety
Insurance $ 250,000.00 11/18/97
Norwest Bank S750216 Unibanco $ 200,000.00 11/30/97
TOTAL: $1,636,580.59
</TABLE>
<PAGE> 1
Exhibit 10.6
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of November 27, 1996, between CMH
Holdings Corporation, a Delaware corporation (the "Company"), and Dr. Martin M.
Dorio ("Employee").
BACKGROUND
The Company wishes to retain the services of Employee to assist in the
management of the Company and its subsidiaries.
TERMS
In consideration of the premises and of the mutual covenants herein
contained, the parties agree as follows:
1. Position. During the term of his employment with the Company
hereunder, Employee shall serve as President and Chief Executive Officer of the
Company and Clark Material Handling Company, a Delaware corporation wholly owned
by the Company.
Employee shall diligently devote his entire business skill, time and
effort to his employment hereunder; provided, however, that he shall be entitled
annually to vacation and sick leave pursuant to policies adopted by the Company
from time to time for senior executive officers of the Company. Notwithstanding
the foregoing, and provided that such activities do not interfere with the
fulfillment of Employee's obligations hereunder, Employee may (a) serve as a
director or trustee of any charitable or non-profit entity and of not more than
two for profit business corporations so long as such entities are not, directly
or indirectly in competition with the Company or any entity directly or
indirectly controlling, controlled by or under common control with the Company
(an "Affiliate"); and (b) acquire solely as an investment any securities so long
as (i) he remains a passive investor in such entity and (ii) such entity is not,
directly or indirectly, in competition with the Company or any Affiliate.
2. Term of Employment. Employee's term of employment by the Company
under this Agreement shall begin on the date hereof and shall continue for a
period of 36 months (the "Employment Term") (the termination date being
hereafter referred to as the "Normal Termination Date") and shall continue for
successive additional 12 month periods thereafter (each continued term, the
"Extended Employment Term") unless written notice to the contrary is given by
either party to the other at least one hundred eighty (180) days prior to the
then current termination date, unless sooner terminated as hereinafter provided.
3. Compensation. As compensation for the services contemplated hereby,
Employee shall receive during the Employment Term and each Extended Employment
Term a base salary equal to
<PAGE> 2
$225,000 per annum to be paid monthly in equal installments. The Board of
Directors shall promptly undertake a study of the compensation of chief
executive officers similarly situated to Employee with a view toward making, no
later than June 30, 1997, any upward adjustments in Employee's base salary that
are determined to be appropriate on the basis of such study. Such salary rate
shall be subject to annual merit increase reviews by the Board of Directors
(such salary as adjusted from time to time being the "Base Salary").
4. Other Payment; Bonus. In addition to the compensation provided to
Employee in Section 3 hereof, Employee shall receive, during the Employment Term
and each Extended Employment Term, at the discretion of the Board of Directors,
and subject to annual review, an annual performance bonus based on individual
criteria and/or executive incentive programs to be determined from time to time
by the Board of Directors (the "Performance Bonus").
5. Employee Benefits. Employee shall be entitled to participate, during
the Employment Term and each Extended Employment Term, in all medical benefit
plans, hospitalization plans, group life insurance, long term disability or
other employee welfare benefit plans (collectively, the "Group Insurance Plans")
and any pension plans (including any supplemental executive retirement plans)
that may be provided by the Company or its subsidiaries to senior executive
officers from time to time during the Employment Term or Extended Employment
Term, as the case may be.
6. Expenses. The Company shall pay or reimburse Employee for any
expenses reasonably incurred by him in furtherance of his duties hereunder,
including, but not limited to, reasonable expenses for traveling, meals and
hotel accommodations, and business related entertainment upon submission by him
of appropriate documentation thereof, all so prepared in compliance with such
policies and procedures relating thereto as the Company may from time to time
adopt.
7. Termination.
(a) Termination by Company for Cause or Without Cause. The Company may
terminate this Agreement and (except as provided below) all of the Company's
obligations hereunder, either for "Cause" or "Without Cause." Such termination
shall be effected by notice thereof delivered by the Company to Employee, and
shall be effective as of the date of such notice. In the event that Employee is
terminated by the Company for Cause, Employee shall be entitled to receive all
Base Salary earned and accrued to the date of termination, but all other rights
of Employee hereunder shall terminate as of the effective date of Employee's
termination, except as otherwise provided by law.
-2-
<PAGE> 3
In the event that Employee is terminated by the Company Without Cause,
and provided that Employee complies with the provisions of Sections 8 and 9,
Employee shall be entitled (i) to receive all payments due as Base Salary during
the 24 months following the date of termination of employment, as and when the
same would have otherwise been payable had Employee not been terminated, (such
term, the "Continuation Period"), (ii) to receive a pro rata portion of any
Performance Bonus for the year in which Employee is terminated which shall be
payable at the time such bonus would have otherwise been payable had Employee
not been terminated, and (iii) to continue to participate in the Group Insurance
Plans during the Continuation Period.
As used herein, (i) "Cause" means (A) the Employee's conviction of a
felony which constitutes a crime involving moral turpitude and results in harm
to the Company or any 6f its Affiliates; or (B) a judicial determination that
Employee has committed fraud, misappropriation or embezzlement against any
person; or (C) the Employee's failure to comply with the terms of this Agreement
and/or the Employee's willful or gross and repeated neglect of duties hereunder,
or willful or gross and repeated misconduct in the performance of such duties,
in each instance so as to cause material harm to the Company or any of its
Affiliates, determined in good faith by its Board of Directors and after written
notice to Employee by the Board of Directors specifying the manner in which the
Board of Directors believes that such failure, neglect or misconduct has
occurred; and the failure by the Employee to cure such failure, neglect or
misconduct within thirty (30) days after written notice from the Board of
Directors and, if requested by Employee within such 30-day period, after
Employee has had the opportunity to meet and discuss such failure with such
Board of Directors, and (ii) "Without Cause" means any termination of Employee
other than for Cause, resignation, Total Disability or death, and shall include
material and substantial diminution of Employee's duties and authorities
hereunder, as compared with his duties and authorities as of the date hereof or
a demotion from the office of President (individually or collectively, a
"Demotion").
(b) Resignation of Employee. In the event that Employee resigns (except
in the case of resignation due to Total Disability or following a Demotion)
during the Employment Term or any Extended Employment Term, Employee shall be
entitled to receive all Base Salary earned and accrued to the date of
resignation, but all other rights of Employee hereunder shall terminate as of
the date of Employee's resignation, except as otherwise provided by law.
(c) Employee's Total Disability. In the event that Employee is
terminated by the Company or Employee resigns due to Employee's Total
Disability, Employee shall be entitled to receive all Base Salary earned and
accrued to the date of termination or resignation plus Base Salary for a period
of 12 months following the date of termination or resignation as and when the
same would
-3-
<PAGE> 4
otherwise have been payable had Employee not been terminated or not resigned,
less amounts received by Employee under disability insurance or any other
similar program maintained by the Company, and a pro rata portion of any
Performance Bonus for the year in which Employee is terminated which shall be
payable at the time such bonus would have otherwise been payable had Employee
not been terminated or not resigned, and shall be entitled to continue to
participate in the Group Insurance Plans for a period of 12 months following the
date of termination or resignation, but all other rights of Employee hereunder
shall terminate as of the date of Employee's termination or resignation, except
as otherwise provided by law.
As used herein, "Total Disability" shall mean any physical or mental
ailment or incapacity as determined by a licensed physician agreed to by the
Company and Employee (or, in the event that Employee and the Company cannot so
agree, by a licensed physician agreed upon by a physician selected by Employee
and a physician selected by the Company), which prevents the Employee from
performing the duties incident to the Employee's employment hereunder which has
continued for a period of either (i) ninety (90) consecutive days in any
12-month period or (ii) one hundred eighty (180) total days in any 12-month
period, and which is expected to be of permanent duration. Employee shall permit
such physician to examine Employee from time to time prior to Employee's being
determined to be Totally Disabled, as reasonably requested by the Company, to
determine whether Employee has suffered a Total Disability hereunder.
(d) Death. In the event that Employee dies during the Employment Term,
Employee's estate shall be entitled to receive all Base Salary earned and
accrued to the date of death, and a pro rata portion of any Performance Bonus
for the year in which Employee dies which shall be payable at the time such
bonus would have otherwise been payable had Employee not died, but all other
rights of Employee hereunder shall terminate, except as otherwise provided by
law.
8. Protection of Confidential Information.
(a) Covenant. Employee acknowledges that his employment by the Company
will, throughout the term of this Agreement, bring him into close contact with
many confidential affairs of the Company and its Affiliates, including
information concerning the Company's finances and operating results, its
markets, key personnel, operational methods and other business affairs and
methods, technical data, computer software and other proprietary intellectual
property, other information not readily available to the public, and plans for
future developments relating thereto. Employee further acknowledges that the
services to be performed under this Agreement are of a special, unique, unusual,
-4-
<PAGE> 5
extraordinary and intellectual character. In recognition of the foregoing, the
Employee covenants and agrees that he will:
(i) keep secret all confidential matters of the Company and
its Affiliates known to him which are not otherwise in the public
domain and will not intentionally disclose them to anyone outside of
the Company and its Affiliates, wherever located, either during or
after the term of this Agreement except with the Company's prior
written consent.
(ii) promptly disclose to the Company, and that the Company
will own all right, title and interest in, all inventions, computer
software and other intellectual property (the "Intellectual Property")
which he conceives or develops during the course of his employment
(excluding that which he conceives or develops without the use of the
time, resources or facilities of the Company or its Affiliates and
which does not relate to the past, present or prospective activities of
the Company or its Affiliates), will affix appropriate legends and
copyright notices indicating the Company's ownership of all
Intellectual Property and all underlying documentation, and will
execute such further assignments and other documents as the Company
considers necessary to vest, perfect, patent, maintain or defend the
Company's right, title and interest in the Intellectual Property; and
(iii) deliver promptly to the Company on termination of his
employment by the Company, or at any other time the Company may so
request, all memoranda, notes, records, reports, computer discs and
other documents (and all copies thereof) relating to the business of
the Company or its Affiliates which he obtained or developed while
employed by, or otherwise serving or acting on behalf of, the Company
or its Affiliates and which he may then possess or have under his
control or relating to the Intellectual Property.
(b) Specific Remedy. If Employee commits a breach of any of the
provisions of paragraph 8(a), the Company and its Affiliates shall have the
right and remedy to have such provisions specifically enforced by any court
having equity jurisdiction, it being acknowledged and agreed that any such
breach or threatened breach will cause irreparable injury to the Company and its
Affiliates and that money damages will not provide an adequate remedy to the
Company and its Affiliates.
9. Covenant Not to Compete.
(a) Covenant. Upon termination of the Employment Term or
Extended Employment Term, as the case may be, during the Restriction Period,
Employee will not (i) directly or indirectly, engage in, represent in any way,
be connected with, become employed by or have any interest in any business or
activity in the United
-5-
<PAGE> 6
States competing in any manner with any businesses carried on by the Company or
its Affiliates at the time of such termination, or (ii) solicit, employ, retain
as a consultant, interfere with or attempt to entice away from the Company or
its Affiliates any individual who is, has agreed to be or within one year of
such solicitation, employment, retention, interference or enticement has been,
employed or retained by the Company or any of its Affiliates in a senior
executive capacity. As used herein, "Restriction Period" means two years
following the date of termination of the Employment Term or Extended Employment
Term, as the case may be.
(b) Specific Remedy. If Employee commits a breach of the provisions of
paragraph 9 (a) , the Company and its Affiliates shall have the right and remedy
to have such provisions specifically enforced by any court having equity
jurisdiction, it being acknowledged and agreed that any such breach or
threatened breach will cause irreparable injury to the Company and its
Affiliates and that money damages will not provide an adequate remedy to the
Company and its Affiliates.
10. Independence, Severability and Non-Exclusivity. Each of the rights
and remedies enumerated in paragraphs 8(b) and 9(b) shall be independent of the
others and shall be severally enforceable and all of such rights and remedies
shall be in addition to and not in lieu of any other rights and remedies
available to the Company or its Affiliates under the law or in equity. If any of
the provisions contained in paragraph 8(a) or 9(a) or if any of the rights or
remedies enumerated in paragraph 8 (b) or 9 (b) is hereafter construed to be
invalid or unenforceable, the same shall not affect the remainder of the
covenant or covenants, or rights or remedies, which shall be given full effect
without regard to the invalid portions. If the courts of any one or more
jurisdictions shall hold all or any part of such provisions wholly unenforceable
by reason of the breadth of such scope or otherwise, it is the intention of the
parties that such determination shall not bar or in any way affect the Company's
or its Affiliates' right to relief in the court of any other jurisdiction as to
failures to observe such provisions in such other jurisdictions, the above
provisions as they relate to each jurisdiction, being, for this purpose,
severable into diverse and independent provisions. If any of the provisions
contained in paragraph B(a) or 9(a) is held to be unenforceable because of the
duration of such provision or the area covered thereby, the parties agree that
the court making such determination shall have the power to reduce the duration
and/or area of such provision and in its reduced form such provision shall then
be enforceable.
11. Assignment of Employee Benefits; Successors and Assigns. Absent
the prior written consent of the Company, and subject to the laws of descent
and distribution, Employee shall have no right to exchange, convert, encumber or
dispose of the rights of Employee to receive benefits and payments under this
Agreement, which payments,
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<PAGE> 7
benefits and rights thereto are non-assignable and non-transferable. This
Agreement shall inure to the benefit of and shall be binding upon the Company
and Employee and, subject to the preceding sentence, their respective heirs,
executors, personal representatives, successors and assigns. Nothing in this
Section 11, however, shall prevent Employee from making assignments or transfers
for purposes of personal estate planning.
12. Notices. All notices hereunder shall be given in writing by
personal delivery or by registered or certified mail addressed to the Company at
its principal place of business and to Employee at his residence address as then
listed in the Company's records.
13. Arbitration. Any controversy or claim arising out of or relating to
this Agreement, or any breach thereof, shall be settled by arbitration in
accordance with the rules of the American Arbitration Association and judgment
upon such award rendered by the arbitrators(s) may be entered in any court
having jurisdiction thereof. The arbitration shall be held in Cincinnati, Ohio
unless another location shall be mutually agreed to by the parties at the time
of arbitration. In any dispute between the parties as to which Employee is
sustained on the claim(s) by or against him, the Company shall pay all legal
fees and other related expenses incurred by Employee in connection with the
dispute over such claim(s). If more than one claim is involved in any dispute
and if Employee is sustained as to one or more of such claims but not as to all
of such claims, there shall be a reasonable allocation of applicable expenses.
The Company will reimburse Employee for those legal expenses and other related
expenses determined by the arbitrator(s) or by the consent of the parties to be
allocable to the claim or claims as to which the Employee is upheld.
14. General.
(a) Governing Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the Commonwealth of
Kentucky, without giving effect to conflicts of laws principles thereof which
might refer such interpretations to the laws of a different state or
jurisdiction.
(b) Captions. The section headings contained herein are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.
(c) Entire Agreement. This Agreement sets forth the entire agreement
and understanding of the parties relating to the subject matter hereof, and
supersedes all prior agreements, arrangements and understandings, written or
oral, between the parties.
(d) No Other Representations. No representation, promise or inducement
has been made by any party hereto that is not
-7-
<PAGE> 8
embodied in this Agreement, and no party shall be bound by or liable for any
alleged representation, promise or inducement not so set forth.
(e) Amendments; Waivers. This Agreement may be amended, modified,
superseded, cancelled, renewed or extended, and the terms or covenants hereof
may be waived, only by a written instrument executed by all of the parties
hereto, or in the case of a waiver, by the party waiving compliance. The failure
of any party at any time or times to require performance of any provision hereof
shall in no manner affect the right of such party at a later time to enforce the
same. No waiver by any party of the breach of any term or covenant contained in
this Agreement, whether by conduct or otherwise, in any one or more instances,
shall be deemed to be, or construed as, a further or continuing waiver of any
such breach, or a waiver of the breach of any other term or covenant contained
in this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the date first set forth above.
CMH HOLDINGS CORPORATION
By: /s/ Michael J. Grossman
-------------------------------------
Michael J. Grossman
Vice President, General
Counsel and Secretary
/s/ Martin M. Dorio
----------------------------------------
Dr. Martin M. Dorio
-8-
<PAGE> 1
Exhibit 10.7
TAX SHARING AGREEMENT
AGREEMENT made as of November 27, 1996, between CMH Holdings
Corporation, a Delaware corporation ("Holdings"), and CLARK Material Handling
Company, a Delaware corporation ("CMHC").
WHEREAS, Holdings and CMHC join in the filing of a consolidated
Federal income tax return for a group of affiliated companies of which Holdings
is the common parent (the "Consolidated Group"); and
WHEREAS, Holdings and CMHC wish to establish a policy as to the
sharing of Consolidated Federal Income Tax (as defined in paragraph V.A.1
below); and
WHEREAS, Holdings and CMHC wish to establish procedures for
making payments or remitting funds of Consolidated Federal Income Tax;
NOW, THEREFORE, in consideration of the mutual covenants
contained herein and intending to be legally bound, Holdings and CMHC agree as
follows:
I. SHARING OF CONSOLIDATED FEDERAL INCOME TAX
A. Taxable Income. CMHC agrees to pay to Holdings, for each taxable
year during the term of this Agreement, an amount equal to the
result of the following equation:
(i) the Separate Taxable Income of CMHC (but not less
than 0) divided by
(ii) the sum of the Separate Taxable Incomes of each
member of the Consolidated Group that has positive
Separate Taxable Income for the year, the resulting
quotient multiplied by
(iii) the Federal income tax liability of the
Consolidated Group, prior to the application of
foreign tax credits, for the year, the resulting
product reduced by
<PAGE> 2
(iv) the foreign tax credits of CMHC that are credited
against the Federal income tax liability of the
Consolidated Group for the year, applying the
principles of Treas. Reg. Section 1.1502-4.
B. Separate Taxable Income. For purposes of this Agreement, the
Separate Taxable Income of each member of the Consolidated Group
shall be determined under Treas. Reg. Section 1.1502-12 with the
adjustments provided in Treas. Reg. Section 1.1552-1(a)(1)(ii).
C. Subsequent Adjustments. In the event that the Separate Taxable
Income of any member of the Consolidated Group is adjusted by
reason of an amended return, claim for refund, or examination by
the Internal Revenue Service, the amount due from CMHC under
paragraph I.A. shall be recomputed using the adjusted Separate
Taxable Income. CMHC agrees to pay to Holdings any additional
amount owed (with full credit given for any prior payments for
the year), and Holdings agrees to pay to CMHC any overpayment
made by CMHC.
D. Refunds. In the event that CMHC's Separate Taxable Income is
negative (determined without reference to the adjustments
provided in Treas. Reg. Section 1.1552-1(a)(1)(ii)) and CMHC
would be entitled to receive a refund for the year if CMHC
were not a member of the Consolidated Group, Holdings shall pay
to CMHC an amount equal to such refund. In no event, however,
shall the amount payable by Holdings pursuant to this paragraph
I.D. exceed the amount previously paid by CMHC to Holdings during
the relevant carryback period under section 172 of the Internal
Revenue Code of 1986, as amended, or any successor provision.
II. PAYMENT PROCEDURE
A. Current Year Tax Liability of CMHC. Payments to be made by CMHC
to Holdings pursuant to paragraph I.A. with respect to any year
shall be made in installments, as set forth in this paragraph.
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<PAGE> 3
1. Quarterly Installments. Within 30 days after the close of
each calendar quarter, CMHC will pay to Holdings an amount
equal to the product of CMHC's estimated Separate Taxable
Income for the quarter (but not less than 0) multiplied by
the highest marginal corporate tax rate provided in
section 11 of the Internal Revenue Code of 1986, as
amended (or any successor provision).
2. Final Installment. Within 30 days after CMHC has received
from Holdings a copy of its separate company federal
income tax return for the relevant tax year, CMHC will pay
to Holdings the excess, if any, of CMHC's liability
pursuant to paragraph I.A. over the sum of all payments
with respect to such year made by CMHC pursuant to
paragraph II.A.1. If the sum of the payments with respect
to such year made by CMHC pursuant to paragraph II.A.1.
exceeds CMHC's liability pursuant to paragraph I.A., then
Holdings shall refund the difference within 30 days to
CMHC.
B. Payment of Subsequent Adjustments. Payments to be made by CMHC
to Holdings pursuant to paragraph I.C. shall be made within 30
days after CMHC has received from Holdings a copy of the filed
amended return or an agreement in writing with the Internal
Revenue Service on proposed adjustments. Payments made by
Holdings to CMHC pursuant to paragraph I.C. or paragraph I.D.
shall be made within 30 days after receipt by Holdings of a
refund, or offset against adjustments of the Consolidated Group,
resulting from the filing of a return, an amended return, Form
1139 Corporation Application for Tentative Refund, claim for
refund, or agreement in writing with the Internal Revenue Service
on proposed adjustments.
III. STATE TAXES
A. To the extent appropriate, rules similar to the provisions
of Sections I and II of this Agreement shall be applied to
the payment of state franchise or income tax liabilities
to which CMHC and Holdings are
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<PAGE> 4
subject and which are required to be determined on a
unitary, combined or consolidated basis.
IV. TERM AND CONDITIONS
A. This Agreement shall be effective as of November 27, 1996
and shall continue thereafter until the parties hereto
terminate this Agreement by mutual consent.
V. OTHER MATTERS
A. Definitions. For purposes of this Agreement, the terms
listed below have the following meanings:
1. Consolidated Federal Income Tax. The regular
Federal income tax (not including any Alternative
Minimum Tax) shown on the consolidated Federal
income tax return of the Consolidated Group,
including interest and penalties, if any, as last
determined reflecting any adjustments made by an
amended return, claim for refund, carryback claim,
or examination by the Internal Revenue Service.
2. Separate Taxable Income shall have the meaning
given in section I.B.
B. Method of Allocation. This Agreement shall have no effect
on, and shall not be affected by, the method of allocation
of tax liability between members of the Consolidated Group
selected by the Consolidated Group pursuant to Section
1552 of the Internal Revenue Code.
C. Notices. All notices and other communications required or
permitted hereunder shall be in writing and shall be given
by hand delivery,
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<PAGE> 5
telecopier, commercial courier service with guaranteed
one-day delivery, or prepaid first class mail to the
following addresses:
If to Holdings, to:
CMH Holdings Corporation
172 Trade Street
Lexington, KY 40508
Attention: Michael Grossman, Esq.
Fax No.: (606) 288-1355
With a Copy to:
Dechert Price & Rhoads
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, PA 19103
Attention: G. Daniel O'Donnell, Esq.
Fax No.: (215) 994-3197
If to CMHC, to:
CLARK Material Handling Company
172 Trade Street
Lexington, KY 40508
Attention: Michael Grossman, Esq.
Fax No.: (606) 288-1355
With a Copy to:
Dechert Price & Rhoads
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, PA 19103
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<PAGE> 6
Attention: G. Daniel O'Donnell, Esq.
Fax No.: (215) 994-3197
D. Succession. This Agreement shall be binding on and inure
to the benefit of any successor, by merger, acquisition of
assets or otherwise, to any of the parties hereto
(including but not limited to any successor of Holding or
CMHC succeeding to the tax attributes of either under
Section 381 of the Internal Revenue Code), to the same
extent as if the successor had been an original party to
this Agreement.
E. Amendments. This Agreement shall not be modified, amended
or supplemented except in writing executed by both parties
hereto.
F. Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of
Delaware.
CMH Holdings Corporation
By: /s/ Martin Dorio
------------------------------------
Mr. Martin Dorio
President and Chief Executive Officer
CLARK Material Handling Company
By: /s/ Martin Dorio
-----------------------------------
Mr. Martin Dorio
President and Chief Executive Officer
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<PAGE> 1
EXHIBIT 10.8
================================================================================
STOCK PURCHASE AGREEMENT
DATED AS OF MAY 27, 1992
BY AND BETWEEN
CLARK EQUIPMENT COMPANY
AND
TEREX CORPORATION
================================================================================
<PAGE> 2
TABLE OF CONTENTS
PAGE
----
ARTICLE I DEFINITIONS 1
SECTION 1.01. Certain Defined Terms .................. 1
ARTICLE II PURCHASE AND SALE .................................... 9
SECTION 2.01. Purchase and Sale of Group Stock;
Effectiveness .......................... 9
SECTION 2.02. Purchase Price; Payment ................ 10
SECTION 2.03. Closing ................................ 11
SECTION 2.04. Allocation of Purchase Price ........... 12
ARTICLE III REPRESENTATIONS OF CEC ............................... 12
SECTION 3.01. Authority of CEC ....................... 12
SECTION 3.02. Organization of the Specified
Transferred Affiliates ................. 12
SECTION 3.03. Capitalization; Ownership of Group
Stock .................................. 13
SECTION 3.04. No Conflicts ........................... 13
SECTION 3.05. Litigation ............................. 14
SECTION 3.06. Compliance with Laws ................... 14
SECTION 3.07. Financial Information .................. 14
SECTION 3.08. Material Contracts ..................... 15
SECTION 3.09. Real Properties ........................ 16
SECTION 3.10. Tangible Personal Property ............. 16
SECTION 3.11. Employee Benefit Matters ............... 17
SECTION 3.12. Environmental Compliance ............... 18
SECTION 3.13. Intellectual Property .................. 19
SECTION 3.14. Accounts Receivable .................... 20
SECTION 3.15. Condition of Assets .................... 20
SECTION 3.16. Broker's or Finder's Fees .............. 20
SECTION 3.17. Assets Necessary to the Business ....... 21
ARTICLE IV REPRESENTATIONS OF THE PURCHASER ..................... 21
SECTION 4.01. Organization and Authority of the
Purchaser .............................. 21
SECTION 4.02. No Conflicts ........................... 22
SECTION 4.03. Financing .............................. 22
(i)
<PAGE> 3
PAGE
----
SECTION 4.04. Investment .................................. 22
SECTION 4.05. Broker's or Finder's Fees ................... 22
ARTICLE V ADDITIONAL AGREEMENTS ..................................... 23
SECTION 5.01. Conduct of Business Prior to the
Closing ................................... 23
SECTION 5.02. Investigation ............................... 25
SECTION 5.03. Access to Information ....................... 26
SECTION 5.04. Books and Records ........................... 28
SECTION 5.05. Confidentiality ............................. 28
SECTION 5.06. Reasonable Efforts .......................... 28
SECTION 5.07. Amendment of Disclosure Schedule ............ 29
SECTION 5.08. Existing Insurance Coverage ................. 30
SECTION 5.09. Continuing Insurance Coverage ............... 31
SECTION 5.10. Disclaimer of Warranties .................... 33
SECTION 5.11. Contingent Payments ......................... 34
SECTION 5.12. Further Assurances .......................... 34
ARTICLE VI EMPLOYMENT AND EMPLOYEE BENEFIT ARRANGEMENTS .............. 34
SECTION 6.01. Definitions ................................. 34
SECTION 6.02. Employment .................................. 35
SECTION 6.03. Pension and Other Plans ..................... 36
SECTION 6.04. Other Benefit Plans ......................... 36
SECTION 6.05. Severance ................................... 37
SECTION 6.06. Required Contributions ...................... 38
ARTICLE VII CONDITIONS TO THE PURCHASER'S OBLIGATIONS ................. 38
SECTION 7.01. Truth of Representations and
Warranties ................................ 38
SECTION 7.02. Performance of Agreements ................... 39
SECTION 7.03. Opinions of CEC's Counsel ................... 39
SECTION 7.04. No Material Adverse Change .................. 39
SECTION 7.05. No Injunction; HSR .......................... 39
SECTION 7.06. Agreements, Etc. ............................ 39
ARTICLE VIII CONDITIONS TO CEC'S OBLIGATIONS ........................... 40
SECTION 8.01. Truth of Representations and
Warranties ................................ 40
(ii)
<PAGE> 4
PAGE
----
SECTION 8.02. Performance of Agreements .................. 40
SECTION 8.03. Opinion of Purchaser's Counsel ............. 41
SECTION 8.04. No Injunction; HSR ......................... 41
SECTION 8.05. Agreements ................................. 41
SECTION 8.06. Receipt of Mortgages ....................... 41
ARTICLE IX INDEMNIFICATION ......................................... 41
SECTION 9.01. Survival of Representations and
Warranties ............................... 41
SECTION 9.02. Indemnification by the Purchaser ........... 41
SECTION 9.03. Indemnification by CEC ..................... 43
SECTION 9.04. Limitation on Indemnification .............. 44
SECTION 9.05. Notice of Claim ............................ 45
SECTION 9.06. Defense of Third Party Claim;
Remediation Actions ...................... 46
ARTICLE X SPECIFIC AGREEMENTS ..................................... 47
SECTION 10.01. Transfer of Certain Stock .................. 47
SECTION 10.02. Transfer of Clark GmbH ..................... 48
SECTION 10.03. Certain Notices ............................ 49
SECTION 10.04. Settlement or Compromise of Certain
Claims ................................... 50
SECTION 10.05. Certain Undertakings ....................... 50
SECTION 10.06. Additional Undertakings .................... 51
SECTION 10.07. Use of Name ................................ 52
ARTICLE XI TERMINATION ............................................. 53
SECTION 11.01. Events or Termination ...................... 53
SECTION 11.02. Effect of Termination ...................... 53
ARTICLE XII MISCELLANEOUS ........................................... 53
SECTION 12.01. Knowledge of CEC ........................... 53
SECTION 12.02. Expenses ................................... 54
SECTION 12.03. Governing Law .............................. 54
SECTION 12.04. Captions ................................... 54
SECTION 12.05. Publicity .................................. 54
SECTION 12.06. Disclaimer of Projections, Etc. ............ 54
SECTION 12.07. Notices .................................... 55
(iii)
<PAGE> 5
PAGE
----
SECTION 12.08. Parties in Interest .......................... 56
SECTION 12.09. Counterparts ................................. 56
SECTION 12.10. Entire Agreement ............................. 56
SECTION 12.11. Disclosure Schedule .......................... 57
SECTION 12.12. Transfer, Etc., Taxes ........................ 57
SECTION 12.13. Construction of Certain Provisions ........... 57
SECTION 12.14. Amendments; No Waivers ....................... 58
SECTION 12.15. Severability ................................. 58
SECTION 12.16. Third Party Beneficiaries .................... 58
SECTION 12.17. References to Subsidiaries and
Affiliates ................................. 58
DISCLOSURE SCHEDULES
Section 1.01 Permitted Exceptions
Section 3.03 Group Stock
Section 3.04 Consents, Approvals, Filings, Etc.
Section 3.05 Litigation
Section 3.06 Compliance with Laws
Section 3.08 Material Contracts
Section 3.09(a) Owned Real Property
Section 3.09(b) Leased Real Property
Section 3.10 Personal Property
Section 3.11 Employee Benefit Plans
Section 3.12(a) Environmental Compliance
Section 3.12(b) Environmental Claims
Section 3.13(a) Intellectual Property
Section 3.13(b) Infringements
Section 5.01(c) Intercompany Arrangements
Section 6.01 Employees
EXHIBITS
EXHIBIT 1.01(a) Form of Tax Agreement
EXHIBIT 1.01(b) Form of Trademark Assignment Agreement
EXHIBIT 2.02(c) Form of Note
EXHIBIT 2.02(d) Statement of Working Capital
EXHIBIT 2.04 Allocation of Purchase Price
EXHIBIT 3.07 Combined Balance Sheet
EXHIBIT 5.06(b) Obligations to be Released
EXHIBIT 5.09 Insurance Policies
EXHIBIT 7.03(a) Form of Opinion of Bernard D. Henely, Esq.
EXHIBIT 7.03(b) Form of Opinion of White & Case
EXHIBIT 8.03(a) Form of Opinion of Marvin Rosenberg, Esq.
EXHIBIT 8.03(b) Form of Opinion of Skadden, Arps, Slate,
Meagher & Flom
(iv)
<PAGE> 6
STOCK PURCHASE AGREEMENT dated as of May 27, 1992, by and between CLARK
EQUIPMENT COMPANY, a Delaware corporation ("CEC"), and TEREX CORPORATION, a
Delaware corporation (the "Purchaser").
STATEMENT OF PURPOSE
A. The Business (as defined below) is currently conducted through the
operations of various members of the CMH Group (as defined below).
B. CEC, either directly or through the Other Sellers (as defined
below), owns all of the issued and outstanding shares of capital stock of each
member of the CMH Group (other than the Clarklift/Samsung Entities) and owns a
portion of the issued and outstanding shares of capital stock of the
Clarklift/Samsung Entities (as more Particularly specified in the definition of
"Group Stock" below).
C. It is the purpose of this Agreement to set forth the terms and
conditions pursuant to which CEC will sell, and will cause the Other Sellers to
sell, the Group Stock (as defined below) to the Purchaser.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements and covenants hereinafter set forth, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings:
"Adjustment Amount" shall have the meaning assigned to such
term in Section 2.02(d) hereof.
"Ancillary Agreements" shall mean, Collectively, the Tax
Agreement, the Trademark Assignment Agreement, the Escrow Agreement,
the Note, the German Mortgage and the Korean Mortgage.
"Assigned Marks" shall have the meaning assigned to such term
in the Trademark Assignment Agreement.
"Balance Sheet Date" shall have the meaning assigned to such
term in Section 3.07 hereof.
<PAGE> 7
"Benefit Arrangement" and "Benefit Arrangements" shall have
the respective meanings assigned to such terms in Section 6.01(c)
hereof.
"Business" shall mean the operations, business and activities
now, heretofore or hereafter conducted by or on behalf of CMHC, Clark
Equipment GmbH, Drexel Industries, Inc., any other member of the CMH
Group, or any of their respective direct or indirect subsidiaries,
or any or their respective predecessors, successors or assigns
(including, without limitation, any predecessor entity, division or
business unit which formerly conducted the business of any of the
foregoing), including but not limited to the design, testing,
manufacture, assembly, construction, marketing, sale, lease, rental,
service, repair or distribution of forklift trucks, industrial trucks,
tow tractors, automated storage and retrieval Systems, high rise and
other automated systems, tugger, powered hand truck, walkies and other
types of material handling equipment and products, as well as parts,
accessories and attachments relating to any of the foregoing, together
with all services and activities incidental to the foregoing, but
excluding specifically the business conducted by the other division.
and business units of CEC and its affiliates (other than the members of
the CMH Group); provided that for purposes of Article III hereof (and
Article IX hereof to the extent such Article relates to the
representation. and warranties made by CEC in Article III hereof), the
term "Business" shall not include any of the businesses or activities
conducted by the Clarklift/Samsung Entities, Clark Components Korea,
Inc., Clark France Manutention S.A., Clark Maquinaria S.A., Golf Cars,
Inc. or Engineering Components Inc.
"Business Day" shall mean a day of the year on which banks
located in New York, New York are not required or authorized by law to
be closed.
"CEC/CMHC Agreement" shall have the meaning assigned to such
term in Section 10.03(a) hereof.
"CEC Indemnitee" shall have the meaning assigned to such term
in Section 9.02(a) hereof.
"Clark Canada" shall mean Clark Material Handling of Canada
Ltd., a Canadian corporation and an indirect wholly-owned subsidiary of
CEC.
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<PAGE> 8
"Clarklift/Samsung Entities" shall mean, collectively,
Clarklift of El Paso Inc., Clarklift of Washington/Alaska, Inc.,
Samsung-Clark Co., Ltd., Normandie Manutention S.A., and Flandres
Manutention S.A.
"Closing" shall mean the consummation of the transactions
contemplated by Article II hereof in accordance with the terms and upon
the conditions set forth in this Agreement.
"Closing Date" shall mean July 31, 1992 or such earlier date
as the parties hereto may agree.
"CMH Group" shall mean, collectively, the Transferred
Affiliates; Clark France Manutention S.A., a French corporation;
Normandie Manutention S.A., a French corporation; Flandres Manutention
S.A., a French corporation; Clark Maquinaria S.A., a Spanish
corporation; Golf Cars, Inc., a Pennsylvania corporation; Engineering
Components Inc., a Pennsylvania corporation; and Clark Components
Korea, Inc., a Korean corporation.
"CMHC" shall mean Clark Material Handling Company, a Kentucky
Corporation (formerly known as Clark Material Systems company).
"Code" shall mean the Internal Revenue Code of 1996, as
amended.
"Combined Balance Sheet" shall have the meaning assigned to
such term in Section 3.07 hereof.
"Confidentiality Agreement" shall have the meaning assigned to
such term in Section 5.05 hereof.
"Designated Benefit Arrangements" shall have the meaning
assigned to such term in Section 3.11 hereof.
"Designated Plans" shall have the meaning assigned to such
term in Section 3.11 hereof.
"Disclosure Schedule" shall mean the Disclosure Schedule,
dated as of the date hereof, delivered by CEC to the Purchaser, as the
same may be amended, supplemented or modified pursuant to the
provisions of Section 5.07 hereof.
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<PAGE> 9
"Eligible Retirees" shall have the meaning assigned to such
term in Section 5.01(a) hereof.
"Employee" and "Employees" shall have the respective meanings
assigned to such terms in Section 6.01(a) hereof.
"Environmental Claim" shall mean any claim or notice in
writing received by CEC, any of the Other Sellers or any Specified
Transferred Affiliate from, or any investigation by, any person or
entity alleging potential liability (including, without limitation,
potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resources damages, property
damages, personal injuries, or penalties) arising out of, based on or
resulting from (a) the presence, or release into the environment, of
any Hazardous Materials at any location, whether or not owned or
operated by CEC or (b) any violation, or alleged violation, of any
Environmental Law.
"Environmental Laws" shall mean any applicable foreign,
federal, state or local statutes, laws, rules, codes or regulations
relating to pollution or the protection of the environment (including,
without limitation, ambient air, surface water, ground water, land
surface or subsurface strata), including, without limitation, the
Comprehensive Environmental Response, Compensation, and Liability Act
of 1980, 42 U.S.C. Section 9601 et seq.; the ReSource Conservation and
Recovery Act, 42 U.S.C. Section 6901 et seq.; the Federal Water
Pollution Control Act, 33 U.S.C. Section 1251 et seq.; the Toxic
Substances Control Act, 15 U.S.C. Section 2601 et seq.; the Clean Air
Act, 42 U.S.C. Section 7401 et seq.; and their foreign, state or local
equivalents.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"Escrow Agent" shall mean The Chase Manhattan Bank, N.A., as
escrow agent under the Escrow Agreement.
"Escrow Agreement" shall mean the Escrow Agreement dated as of
the date hereof among CEC, the Purchaser and the Escrow Agent.
"German Mortgage" shall have the meaning assigned to such term
in Section 8.08(b) hereof.
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<PAGE> 10
"Group Stock" shall mean (a) all of the issued and outstanding
shares of capital stock of each Specified Transferred Affiliate and (b)
all of the issued and outstanding shares of capital stack of the
clarklift/Samsung Entities (Other than Normandie Manutention S.A. and
Flandres Manutention S.A.) owned directly or indirectly by CEC, to wit:
33,627 shares of common stock, par value $.10 per share, of Clarklift
of El Paso, Inc.; 88 shares of common stock, par value $100.00 per
share, of clarklift of Washington/Alaska, Inc.; and 80,000 shares of
common stock, par value 10,000 Won per share, of Samsung-Clark Co.,
Ltd.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
"Hazardous Materials" shall mean materials defined as
"hazardous substances", "hazardous wastes", "solid wastes" or words of
similar import in any Environmental Laws now existing or hereafter in
effect, and in addition shall include petroleum and petroleum products,
radioactive materials, asbestos in any form that is or could become
friable, and transformers and other equipment that contain dielectric
fluid containing levels of polychlorinated biphenyls.
"Issuer" shall mean any entity comprising the CMH Group or any
substantial portion thereof.
"Korean Mortgage" shall have the meaning assigned to such term
in Section 8.08(a) hereof.
"Loss" and "Losses" shall have the respective meanings
assigned to such terms in Section 9.02(a) hereof.
"Material Adverse Effect" shall mean a material adverse effect
on the business, financial condition or results of operations of the
Business taken as a whole; provided that for purposes of this Agreement
and the Ancillary Agreements, a "Material Adverse Effect" shall not be
deemed to have occurred as & result of (i) the actual or anticipated
termination, expiration or non-renewal by any party thereto, for any
reason, of any dealer, distributorship or agency agreements relating to
the CMH Group or the Business, (ii) the actual or anticipated
cancellation by any party thereto, for any reason, of any purchase
orders, purchase contracts, leases or rental agreements for products,
parts, acces-
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<PAGE> 11
sories or attachments relating to the CMH Group or the
Business, (iii) the institution, prosecution or resolution
(whether by settlement, judgment or otherwise) of any Product
Liability and warranty Claims, (iv) operating losses incurred
by or associated with the CMH Group or the Business or (v) the
retirement of any or all or the Eligible Retirees.
"Note" shall have the meaning assigned to such term in Section
2.02(c) (ii) hereof
"Old Clark Canada" shall mean Clark Equipment of Canada Ltd.,
a Canadian corporation and an indirect wholly-owned subsidiary of CEC.
"Operating Losses" shall mean, for any period, the combined
net Operating losses of the CMH Group (other than the Clarklift/Samsung
Entities) for such period, before interest expense and provision for
income taxes.
"Other Sellers" shall mean, collectively, (a) Clark Business
Services Corporation, a Michigan corporation and an indirect
wholly-owned subsidiary of CEC, and (b) Old Clark Canada.
"Permitted Exceptions" shall mean, collectively, the
following:
(i) liens, security interests and other charges and
encumbrances consisting of zoning or planning restrictions, easements,
permits and other restrictions or limitations on the use of real or
personal property or irregularities or imperfections in title thereto
which do not materially detract from the value of, or materially impair
the use of, such property in the operation of the Business taken am a
whole as presently conducted;
(ii) liens, security interests and other charges and
encumbrances arising by operation of law in the ordinary course of
business and relating to obligations as to which there is no default on
the part of the obligor;
(iii) liens for current taxes, assessments or governmental
charges or levies on property not yet due or delinquent or which are
being contested in good faith;
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<PAGE> 12
(iv) mortgages, liens, pledges, security interests and other
charges, encumbrances and restrictions which secure debt that is
reflected as a liability on the Combined Balance Sheet;
(v) Mortgages, liens, pledges, security interests and other
charges, encumbrances and restrictions securing all or any portion of
the purchase price of property used in the Business and acquired after
the Balance Sheet Date; and
(vi) such defects in title and such mortgages, liens, pledges,
security interests and other charges, encumbrances and restrictions as
are set forth in Section 1.01 of the Disclosure Schedule.
"Person" and "Persons" shall mean and include an individual, a
partnership, a joint venture, a corporation, a trust, an unincorporated
organization and a government or a department or agency thereof.
"Plan" and "Plans" shall have the respective meanings assigned
to such terms in Section 6.01(b) hereof.
"Product Liability and Warranty Claims" shall mean all
liabilities, obligations, claims and expenses with respect to any
actions, suits, proceedings, arbitrations and investigations relating
to or arising out of (a) tort or product liability matters or other
tortious acts or failures to act (whether actual or alleged), (b)
exposure (whether actual or alleged) to asbestos or similar materials,
including all asbestosis and similar claims, (a) death, disease, injury
(whether actual or alleged) to persons, damage (whether actual or
alleged) to property, economic loss or any other loss or damage in
respect of any products, parts, accessories or attachments or any
maintenance, repair, rental or other services in respect thereof or (d)
breach of warranty or breach of contract claims in respect of any
products, parts, accessories or attachments or any maintenance, repair,
rental or other services in respect thereof.
"Proportionate Net Gain Proceeds" shall mean, for any Public
Offering, an amount calculated as follows:
PNGP = 10% x [A - (B x C)]
Where:
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<PAGE> 13
PNGP = Proportionate Net Gain Proceeds
A = the aggregate proceeds received by the Selling
Entities in such Public Offering (net or customary
underwriting fees and expenses)
B = a fraction (expressed as a percentage), the
numerator of which shall be the total number of
shares of common stock of the Issuer being sold by
the Selling Entities in such Public Offering and the
denominator of which shall be the total number of
outstanding shares of common stock of the Issuer
(after giving effect to such Public offering)
C = $90,000,000 plus the Adjustment Amount (if any)
provided, that if, in any Public Offering, A - (B x C) shall equal an amount
which is less than zero, then such amount shall, for purposes of such Public
Offering, be deemed to be zero.
"Public Offering" shall mean the sale of any shares of common stock of
the Issuer (whether by the Issuer or by one or more selling shareholders of the
Issuer, or a combination thereof) (a) pursuant to a registration statement filed
under the Securities Act of 1933, as amended, or pursuant to Rule 144A of the
Securities Act of 1933, as amended, or pursuant to any comparable statement or
rule under the laws of any other jurisdiction or (b) to more than 35 Persons.
"Purchase Price" shall have the meaning assigned to such term in
Section 2.02(a) hereof.
"Selling Entities" shall mean (a) the Purchaser or any of its direct or
indirect subsidiaries or affiliates and/or (b) the Issuer.
"Specified Stock" shall have the meaning assigned to such term in
Section 10.01 hereof.
"Specified Transferred Affiliates" shall mean, collectively, the
following: Clark Equipment GmbH, a "Gesellschaft mit beschrankter Haftung"
(limited liability company) formed under the laws of Germany;
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<PAGE> 14
Drexel Industries, Inc., a Pennsylvania corporation; Clark Components
International Inc., a Michigan corporation; Clark Material Handling Company, a
Kentucky corporation; Clark Material Handling of Canada Ltd., a Canadian
corporation; and Clarklift of Western Michigan, Inc., a Michigan corporation.
"Tax Agreement" shall mean the agreement to be entered into
between CEC and the Purchaser in the form attached hereto as Exhibit 1.01(a).
"Trademark Assignment Agreement" shall mean the agreement to
be entered into between CEC and CMHC in the form attached hereto as Exhibit
1.01(b).
"Transferred Affiliates" shall mean, collectively, the
following: the Specified Transferred Affiliates; Clarklift of El Paso, Inc., a
Texas corporation; Clarklift of Washington/Alaska, Inc., a Washington
corporation; and Samsung-Clark Co., Ltd., a Korean corporation.
"Working Capital" shall mean all cash, accounts receivable,
inventory, accounts payable and other current assets and current liabilities
(exclusive of prepaid taxes, tax accruals, indebtedness for borrowed money of
any member of the CMH Group to any third party which has been paid on or prior
to the Closing Date, intercompany indebtedness and receivables identified in
Part A of Section 5.01(c) of the Disclosure Schedule, any accrual in respect of
any liability or expense of any member of the CMH Group of the type referred to
in Section 6.06 hereof and the current portion of liabilities relating to
product liability claims).
ARTICLE II
PURCHASE AND SALE
SECTION 2.01. Purchase and Sale of Group Stock; Effectiveness. Subject
to the terms and conditions set forth in this Agreement, CEC agrees to, and
shall cause the Other Sellers to, sell, assign, transfer and deliver to the
Purchaser on the Closing Date, and the Purchaser agrees to purchase from CEC and
the Other Sellers on the Closing Date, the Group Stock. The certificates
representing the Group Stock shall be duly endorsed in blank, or accompanied by
stock powers duly executed in blank, by CEC or one of the
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<PAGE> 15
Other Sellers, as applicable, with all necessary transfer tax and other revenue
stamps affixed thereto and cancelled. The purchase and sale of the Group Stock
contemplated by this Agreement shall be deemed effective as of the opening of
CEC's business on the closing Date.
SECTION 2.02. Purchase Price; Payment. (a) The purchase price for the
Group Stock shall be the sum of (i) Eighty Five Million U.S. Dollars
(U.S.$85,000,000), plus (ii) the principal amount of the Note equal to the sum
of Five Million U.S. Dollars (U.S.$5,000,000) plus the Adjustment Amount (as
calculated below), plus (iii) the aggregate amount, if any, of contingent
payments required to be paid by the Purchaser to CEC pursuant to Section 5.11
hereof (collectively, the "Purchase Price").
(b) On the date of execution of this Agreement, the Purchaser shall
deliver to the Escrow Agent, as the Initial Escrow Amount (as defined in the
Escrow Agreement), the cash and negotiable instruments identified on Annex A to
the Escrow Agreement arid the Transfer Documents referred to therein, which
Escrow Amount shall be held and applied by the Escrow Agent in accordance with
the provisions of the Escrow Agreement.
(c) At the closing, the Purchaser shall pay the Purchase Price to CEC
by delivery to CEC of the following:
(i) either a certified or bank cashier's check payable to the
order of CEC, or a wire transfer to a United States ban)c account designated by
CEC, at CEC's option, in either case for the account of CEC and the Other
Sellers, in the amount of $85,000,000 in immediately available funds; and
(ii) a promissory note having the terms contained in, and in
the form of, Exhibit 2.02(c) attached hereto (the "Note"), in the principal
amount of $5,000,000 plus or minus the Adjustment Amount.
(d) The Adjustment Amount shall equal the sum of (i) the
difference in Working Capital of the CMH Group (other than the Clarklift/Samsung
Entities) as of the opening of business on the Closing Date (the "Closing Date
Working capital") and as of March 31, 1992 (the "March 31 Working capital"), in
each case as reflected an the Statement of Adjustments (as defined below), using
the translation rates used by CEC in its normal closing practices as of March
31, 1992, and shall be a positive number if the Closing Date
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<PAGE> 16
Working Capital exceeds March 31 Working Capital and a negative number it the
March 31 Working Capital exceeds the Closing Date Working Capital plus (ii) the
amount (expressed as a positive number) of any Operating Losses incurred by the
CMH Group (other than the Clarklift/Samsung Entities) between July 1, 1992 and
the Closing Date, which Operating Losses shall be calculated on a basis
consistent with the current practices of CEC in preparing the combined income
statements of the CMH Group. Closing Date Working Capital and March 31 Working
Capital shall be calculated in all respects on a consistent basis, including in
the application of all accounting principles, policies and practices.
(e) Within 20 days following the Closing Date, CEC shall deliver a
statement of adjustments (the "Statement of Adjustments") which shall contain a
list of all separate journal accounts (and the specific amount therefrom)
included in current assets and current liabilities in both March 31 Working
Capital and Closing Date Working Capital and the calculations, set forth in
reasonable detail, necessary to compute the Adjustment Amount. The Statement of
Adjustments shall be binding upon the Purchaser and CEC unless the Purchaser
shall have given written notice to CEC of any disagreement with respect to the
calculation of March 31 Working Capital, Closing Date Working Capital or any
other aspect of the calculation of the Adjustment Amount within 20 day.
following its receipt of the Statement of Adjustments specifying in reasonable
detail the nature and extent or such disagreements. If the Purchaser and CEC are
unable to resolve any such disagreements within 20 days after written notice
thereof from the Purchaser, such remaining disagreements shall be referred for
determination to Arthur Andersen & Co. or much other firm of independent
accOuntants of nationally recognized standing as may be agreed between the
Purchaser and CEC (the "Accounting Firm"). The Purchaser and CEC may submit to
the Accounting Firm any fact which they deem relevant to such determination, and
the determination of the Accounting Firm, which shall be made within 30 days
after the referral thereof, shall be conclusive, non-appealable and binding upon
the Purchaser and CEC for all purposes. The fees and expenses of the Accounting
Firm shall be borne equally by the Purchaser and CEC.
SECTION 2.03. Closing. Subject to the terms and conditions of
this Agreement and the Ancillary Agreements, the Closing shall take place at
10:00 a.m., New York time, at the offices of White & Case, 1155 Avenue of the
Americas, New York. New York, on the Closing Date (or at such other place or
time or both as the parties may agree).
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<PAGE> 17
SECTION 2.04. Allocation of Purchase Price. CEC and the Purchaser
hereby agree that the Purchase Price (excluding the portion thereof referred to
in Section 2.02(a) (iii) hereof) shall be allocated among the respective shares
of Group Stack as set forth in Exhibit 2.04 hereto. Neither CEC nor the
Purchaser shall knowingly file any tax return or other document or otherwise
take any position which is inconsistent with the allocation of the Purchase
Price determined pursuant to the provisions of this Section 2.04, except as
modified pursuant to any tax audit or related legal proceeding.
ARTICLE III
REPRESENTATIONS OF CEC
CEC hereby represents and warrants to the Purchaser as follows:
SECTION 3.01. Authority of CEC. CEC has all requisite corporate power
and authority to enter into this Agreement and the Ancillary Agreements to which
it is a party and to consUmmate the transactions contemplated hereby and
thereby. The execution and delivery by CEC of this Agreement and the Ancillary
Agreements to which it is a party and the consummation by it of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action on the part of CEC Each of this Agreement and the Ancillary
Agreements to which CEC is a party has been (or, in the case of such Ancillary
Agreements, upon execution thereof by CEC, will be) duly executed and delivered
by CEC and, assuming the due authorization, execution and delivery by the
Purchaser, constitutes (or, in the case of such Ancillary Agreements, upon
execution thereof by CEC, will constitute) a legal, valid and binding obligation
of CEC enforceable against CEC in accordance with its terms, except as the
enforceability hereof and thereof may be limited by applicable bankruptcy,
insolvency, reorganization or other similar laws affecting creditors' rights
generally and by general equitable principles (regardless of whether the issue
of enforceability is considered in a proceeding in equity or at law).
SECTION 3.02. Organization of the Specified Transferred Affiliates.
Each of the Specified Transferred Affiliates is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization and each has all requisite corporate power
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<PAGE> 18
and authority to own, lease and operate its properties and to carry on its
businesses as now being conducted.
SECTION 3.03. Capitalization; Ownership of Group Stock. Set forth in
Section 3.03 of the Disclosure Schedule is the authorized capitalization of each
member of the CMH Group (other than the Clarklift/Samsung Entities), identifying
in each case the number and class of capital stock outstanding and the
beneficial and record owner of each thereof. Also set forth in Section 3.03 of
the Disclosure Schedule is the number and class of capital stock of the
Clarklift/Samsung Entities owned directly or indirectly by CEC. All of the Group
Stock has been duly authorized and validly issued and is fully paid and
non-assessable. Except as set forth in Section 3.03 of the Disclosure Schedule,
there are no outstanding options, warrants, rights, calls, commitments,
conversion rights, rights of exchange, plans or other agreements providing for
the purchase, issuance or sale of any shares of the capital stock of any members
of the CMH Group (other than the Clarklift/Samsung Entities) or of any shares of
capital stock of the Clarklift/Samsung Entities owned directly or indirectly by
CEC, other than as contemplated by this Agreement. Except for the encumbrance
created by this Agreement and except as otherwise set forth in Section 3.03 of
the Disclosure Schedule, either CEC or one or more of the other Sellers owns,
beneficially and of record, the Group Stock, free of all liens, claims, pledges,
encumbrances or rights or interests of others of any kind. The transfer of the
Group Stock to the Purchaser pursuant to this Agreement will pass good and valid
title thereto to the Purchaser, free and clear of all liens, claims, pledges,
encumbrances or rights or interests of others of any kind, except for those
created by the Purchaser and except, with respect to the Specified Stock, for
the required Consents and approvals referred to in Section 10.01 hereof.
SECTION 3.04. No Conflicts. Assuming all consents, approvals,
authorizations and other actions described in Section 3.04 of the Disclosure
Schedule have been obtained and all filings and notifications listed in Section
3.04 of the Disclosure Schedule have been made, and assuming the waiting period
under the HSR Act has been terminated or has expired, except as may result from
any facts or circumstances relating solely to the Purchaser, the execution and
delivery by CEC of this Agreement and the Ancillary Agreements to which it is a
party and the consummation by CEC of the transactions contemplated hereby and
thereby (a) will not violate any provision of the certificate or incorporation
or by-laws of CEC, any of the Other Sellers or any Specified
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<PAGE> 19
Transferred Affiliate, (b) except as will not have a Material Adverse Effect,
will not violate any statute, rule, regulation, order or decree of any public
body or authority (United States or foreign) applicable to CEC, any of the Other
Sellers or any Specified Transferred Affiliate and (c) except as will not have a
Material Adverse Effect, will not result in a violation or breach of, or
constitute a default under, any license, franchise, permit, indenture, agreement
or other instrument to which CEC, any of the Other Sellers or any Specified
Transferred Affiliate is a party or by which any of their respective assets are
bound.
SECTION 3.05. Litigation. Except as to environmental matters, which are
addressed in Section 3.12 hereof, and except as set forth in Section 3.05 of the
Disclosure Schedule, there are no actions, suits or proceedings at law or in
equity by any Person or any arbitration or any administrative or other
proceedings by or before any governmental instrumentality or agency pending or,
to the knowledge of CEC or any of the Other Sellers, threatened in writing
against any of the Specified Transferred Affiliates or (to the extent it relates
to the Business) CEC or any of the Other Sellers, which are reasonably likely to
have a Material Adverse Effect.
SECTION 3.06. Compliance with Laws. Except as to environmental matters,
which are addressed in Section 3.12 hereof, and except as set forth in Section
3.06 of the Disclosure Schedule, each Specified Transferred Affiliate is in
compliance with all applicable laws, regulations, orders, judgments and decrees,
except where the failure to be in such compliance is not reasonably likely to
have a Material Adverse Effect. Except as to environmental matters, which are
addressed in Section 3.12 hereof, all licenses, franchises, permits and other
governmental authorizations held by the Specified Transferred Affiliates are
valid and sufficient to conduct the businesses presently conducted by the
Specified Transferred Affiliates, other than those licenses, franchises, permits
and other governmental authorizations the invalidity or insufficiency of which
would not, individually or in the aggregate, have a Material Adverse Effect.
SECTION 3.07. Financial Information. Subject to the qualifications set
forth in the following sentences of this Section 3.07, the combined balance
sheet of the CMH Group as of March 31, 1992 (the "Balance Sheet Date"), attached
hereto as Exhibit 3.07 (the "Combined Balance Sheet"), has been prepared in
accordance with generally
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accepted accounting principles (except as stated below) and the normal practices
used by CEC in closing its monthly accounts relating to the Business. Normal
monthly closing practices used by CEC in closing its monthly accounts relating
to the Business include the use of routine cutoff periods with respect to
accounts payable, sales invoicing, and the issuance of credit memoranda. Monthly
closings also rely on the existing system of internal accounting controls to
determine inventory balances and do not entail use of perpetual or physical
counts. Accrual accounts, such as product liability, warranty reserves and other
liabilities and reserves, are determined based on expected annual provision
levels and payments incurred and have not been subjected to year-end type
adjustment or analysis on a monthly basis. Certain clarifications of, and the
only material exceptions to, generally accepted accounting principles in respect
of the Combined Balance Sheet are as follows: (i) the Combined Balance Sheet has
been prepared without footnote disclosures, (ii) the Combined Balance Sheet
includes prepaid taxes in accordance with Financial Accounting Standards 109,
using maximum applicable tax rates, and assumes that it is more likely than not
that all temporary differences and net operating losses will be realized, (iii)
accounting is on the cash basis with respect to CMHC's parts return policy
relating to the Business and with respect to payment of interest free periods
relating to dealer inventory financing programs, (iv) product liability reserves
are discounted to reflect the expected present value of the future cash
requirements, (v) inventory obsolescence reserves are included giving
consideration to the aggregate method, (vi) all leases under which a member of
the CMH Group is the lessee are treated as operating leases, (vii) units either
in "dealer pools" or which are invoiced and awaiting shipment on a consolidated
load basis are considered to be sold and (viii) ownership interests in
dealerships (other than in the branch operations of Clark Equipment GmbH) are
accounted for on the equity method. Based on the above-referenced practices and
subject to the above-referenced exceptions and clarifications, the Combined
Balance Sheet fairly presents in all material respects the financial position of
the CMH Group as of the Balance Sheet Date.
SECTION 3.08. Material Contracts. Section 3.08 of the Disclosure
Schedule lists or describes all contracts, licenses, leases and other binding
agreements of the Specified Transferred Affiliates which involve an executory
obligation of more than $250,000 per annum, except any of the foregoing which
are terminable by the respective Specified Transferred Affiliate without penalty
on no more than thirty
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<PAGE> 21
(30) days' notice. Complete and correct copies or all contracts, licenses,
leases and other binding agreements listed in Section 3.08 of the Disclosure
Schedule have been delivered to or have been made available for inspection by
the Purchaser. Except as set forth in Section 3.08 of the Disclosure Schedule,
there is not, under any of the foregoing obligations, any existing default or
event of default which, with or without due notice or lapse of time or both,
would constitute a default or event of default on the part of any Specified
Transferred Affiliate or, to the knowledge of CEC, any of the other parties
thereto, except such defaults and events of default which would not,
individually or in the aggregate, have a Material Adverse Effect.
SECTION 3.09. Real Properties. (a) Section 3.09(a) of the Disclosure
Schedule contains a list of all real property owned in fee by a Specified
Transferred Affiliate and includes the name of the record title holder thereof
(each Person identified as an owner of such real property is herein referred to
as an "Owner"). Each Owner has good and marketable title to the real property
specified as owned by it in Section 3.09(a) of the Disclosure Schedule, free and
clear of any liens, security interests and other charges and encumbrances,
except for Permitted Exceptions.
(b) Each Specified Transferred Affiliate has valid leases with respect
to all or the real property purported to be leased by it, except as set forth in
Section 3.09(b) of the Disclosure Schedule.
SECTION 3.10. Tangible Personal Property. Each Specified Transferred
Affiliate has good title to all of the material tangible personal property
purported to be owned by it and has valid leases with respect to all of the
material tangible personal property purported to be leased by it, and all such
owned tangible personal property is owned free and clear of any liens, security
interests and other charges and encumbrances, except in each case for (a) the
liens, security
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interests and other charges and encumbrances set forth in Section 3.10 of the
Disclosure Schedule, (b) Permitted Exceptions and (c) such leases the invalidity
of which would not, individually or in the aggregate, have a Material
Adverse Effect.
SECTION 3.11. Employee Benefit Matters. Section 3.11 of the Disclosure
Schedule lists all non-statutorily required Plans and Benefit Arrangements which
cover or otherwise provide employee or executive compensation or benefits to the
Employees (the "Designated Plans" and the "Designated Benefit Arrangements", as
applicable). CEC has made available to the Purchaser a copy of each Designated
Plan and Designated Benefit Arrangement (including all amendments) that
Purchaser has an obligation with respect to under this Agreement, and any trust
or other funding arrangement related thereto (including amendments), the latest
Form 5500 filed with the U.S. Department of Labor with respect to such
Designated Plan or Designated Benefit Arrangement (if any), the latest actuarial
report tiled with respect to such Designated Plan or Designated Benefit
Arrangement (if any), and the latest determination letter received from the
Internal Revenue Service with respect to such Designated Plan or Designated
Benefit Arrangement (if any). Except as disclosed in Section 3.11 of Disclosure
Schedule: (a) each Designated Plan and Designated Benefit Arrangement is in
substantial compliance with applicable U.S. or foreign law and has been
administered and operated in all material respects in accordance with its terms;
(b) each Designated Plan which is intended to be "qualified" within the meaning
of Section 401(a) of the Code or is intended to meet the requirements of Section
501(c) (9) of the Code has received a favorable determination letter from the
Internal Revenue Service, and no event has occurred and no condition exists
which is reasonably likely to result in the revocation of any such
determination; (c) no event which constitutes a "reportable event" (as defined
in Section 4043(b) of ERISA) for which the 30-day notice requirement has not
been waived by the Pension Benefit Guaranty Corporation ("PBGC") has occurred
with respect to any Designated Plan; (d) no Designated Plan, or any other
employee benefit plan maintained or contributed to by any trade or business that
together with any company within the CMH Group (other than the Clarklift/Samsung
Entities) would be deemed a single employer under Section 4001(b)(l) of ERISA
(an "ERISA Affiliate"), that is subject to Title IV of ERISA has been terminated
or is or has been the subject of termination proceedings pursuant to Title IV of
ERISA; (e) neither CEC nor any of the Specified Transferred Affiliates nor, to
the
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knowledge of CEC, any other "disqualified person" or "party in interest" (as
defined in Section 4975(e)(2) of the Code and Section 3(14) of ERISA,
respectively) has engaged in any transactions in connection with any Designated
Plan that is reasonably likely to result in the imposition of a material penalty
pursuant to Section 502(i) of ERISA, damages pursuant to Section 409 of ERISA or
a tax pursuant to Section 4975(a) of the Code; (f) no material liability, claim,
action or litigation has been incurred, made, commenced or, to the knowledge of
CEC, threatened with respect to any Designated Plan or Designated Benefit
Arrangement (other than for benefits payable in the ordinary course and PBGC
insurance premiums); (q) no Designated Plan is a "multiemployer plan" (as
defined in Section 4001(a) (3) of ERISA) and none of CEC, the CMH Group (other
than the Clarklift/Samsung Entitles) or any ERISA Affiliate has incurred any
withdrawal liability (as defined in Section 4203 or 4205 of ERISA) to a
multiemployer plan that has not been satisfied in full; (h) full payment has
been made as of the date hereof of all amounts which CEC, the CMH Group (other
than the Clarklift/Samsung Entities) or any ERISA Affiliate is required to pay
under the terms of any Designated Plan or Designated Benefit Arrangement and the
Code, and none of the Designated Plans, or any other plan maintained by an ERISA
Affiliate, has incurred any "accumulated funding deficiency" (as defined in
Section 302 of ERISA and Section 412 of the Code), whether or not waived; (i)
none of the Designated Plans is a defined benefit pension plan other than those
that are a "Clark Plan" (as defined in Section 6.02 hereof) or those for which
an appropriate provision for reserves (in accordance with the accounting
practices of the country in which the plan is maintained) has been established
on the books of the sponsoring company to meet the accrued liabilities under
such plan; and (j) the only Designated Plan or Benefit Arrangement that provides
for health care or life insurance benefits during retirement to currently active
employees of the CMH Group (other than the Clarklift/Samsung Entities) is the
Clark FlexPlan and CEC has provided the Purchaser with copies of all currently
applicable written communications to Employees with respect to retiree health
and life insurance benefits provided under the Clark Flexplan.
SECTION 3.12. Environmental Compliance.(a) Except as set forth
in Section 3.12(a) of the Disclosure Schedule, each Specified Transferred
Affiliate currently holds all permits, licenses and approvals of governmental
authorities and agencies required to be obtained by it under Environmental Laws,
as presently in effect, for the current use, occupancy or operation of its
property, except for such
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<PAGE> 24
permits, licenses and approvals the absence of which are not reasonably likely
to have a Material Adverse Effect. Except as set forth in Section 3.12(a) of the
Disclosure Schedule, to the knowledge of CEC each Specified Transferred
Affiliate is in compliance with each such permit, license, and approval held by
it, except for such violations which are not reasonably likely to have a
Material Adverse Effect. Except as set forth in Section 3.12(a) of the
Disclosure Schedule, to the knowledge of CEC each Specified Transferred
Affiliate is in compliance with all Environmental Laws as presently in effect
which are applicable to its property or its business, except for such violations
which are not reasonably likely to have a Material Adverse Effect.
(b) Except as set forth in Section 3.12(b) of the Disclosure Schedule,
to the knowledge of CEC there is no Environmental Claim in connection with the
Business pending or threatened against CEC, any of the Other Sellers or any of
the Specified Transferred Affiliates, except for such Environmental Claims which
are not reasonably likely to have a Material Adverse Effect.
SECTION 3.13. Intellectual Property. (a) Section 3.13(a) of the
Disclosure Schedule sets forth a list of all of the domestic and foreign letters
patent, patents, patent applications, patent licenses, trademark licenses,
software licenses and know-how licenses, trade names, trademarks, copyrights,
service marks, trademark registrations and applications, service mark
registrations and applications and copyright registrations and applications
currently used in the operation of the Business (collectively herein referred to
as the "Intellectual Property"), other than such Intellectual Property the
absence of which is not reasonably likely to have a Material Adverse Effect.
Section 3.13(a) of the Disclosure Schedule also sets forth the owner or licensor
and licensee of the Intellectual Property. CEC is the owner of the Assigned
Marks being assigned pursuant to the Trademark Assignment Agreement, free and
clear of all liens, security interests and other charges and encumbrances,
except for Permitted Exceptions. Upon consummation of the transactions
contemplated hereby, the Transferred Affiliates will collectively own, free and
clear of all liens, security interests and other charges and encumbrances (other
than Permitted Exceptions), or have a valid right to use, the Intellectual
Property.
(b) Except as set forth in Section 3.13(b) of the Disclosure Schedule,
(i) no Intellectual Property or Assigned Mark infringes on the rights owned or
held by any other
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Person, other than such infringements which are not reasonably likely to have a
Material Adverse Effect, (ii) there is no claim or litigation pending or, to the
knowledge of CEC, threatened in writing against CEC, any of the Other Sellers or
any of the Specified Transferred Affiliates contesting the right of such entity
to sell or use any such Intellectual Property or Assigned Mark, other than such
claims or litigation which are not reasonably likely to have a Material Adverse
Effect, and (iii) to the knowledge of CEC, no product, license, patent, process,
method, substance, part or other material presently being sold or employed by
any Person infringes any rights of CEC, any of the Other Sellers or any of the
Specified Transferred Affiliates with respect to any of the Intellectual
Property or the Assigned Marks, other than such infringements which are not
reasonably likely to have a Material Adverse Effect. None of the Intellectual
Property or Assigned Marks has been declared unenforceable or otherwise invalid.
To the best knowledge of CEC, all of the Intellectual Property and the Assigned
Marks are valid and subsisting.
SECTION 3.14. Accounts Receivable. The notes and accounts receivable of
the Specified Transferred Affiliates arose in the ordinary course of the conduct
of the Business, are genuine and represent the legal, valid and binding
obligations of the respective obligors thereon, enforceable in accordance with
their respective terms, except as the enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization or other similar laws
affecting creditors' rights generally.
SECTION 3.15. Condition of Assets. The tangible assets owned, operated
or leased by the Specified Transferred Affiliates and used in their respective
businesses are maintained in a state of repair and operating condition
consistent with good business practices (subject to reasonable wear and tear)
and, to the knowledge of CEC, are suitable for the uses for which they are being
employed. Each of the buildings owned or leased by a Specified Transferred
Affiliate and all leasehold improvements and equipment owned or leased by a
Specified Transferred Affiliate are in good operating condition and in good
repair (subject to reasonable wear and tear).
SECTION 3.16. Broker's or Finder's Fees. No broker, finder or
investment banker acting on behalf of CEC or any Specified Transferred Affiliate
is, or will be, entitled to any commission or broker's or finder's fee. from any
of the parties hereto, or from any Person controlling, con-
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trolled by or under common control with any of the parties hereto, in connection
with any of the transactions contemplated hereby, except for The First Boston
Corporation, whose fees and expenses will be paid by CEC.
SECTION 3.17. Assets Necessary to the Business. Upon consummation of
the transactions contemplated hereby, either the Purchaser or one of the
Transferred Affiliates will own or have the right to use the assets and
properties utilized to carry on the Business as presently conducted.
SECTION 3.18. Clarklift/Samsung Entities. Except for the obligations
and duties arising out of or in connection with the agreements listed in Section
3.18 of the Disclosure Schedule, and except for any obligations and duties
arising (under contract or otherwise) out of the supplier/dealer relationship
(and the related financing relationship) between CEC, the Other Sellers and the
members of the CMH Group (other than the Clarklift/Samsung Entities), on the one
hand, and the Clarklift/Samsung Entities, on the other hand, and except for any
obligations or duties arising under applicable law, none of CEC, any of the
Other Sellers or any member of the CMH Group (other than the Clarklift/Samsung
Entities) has entered into any agreement with any of the Clarklift/Samsung
Entities pursuant to which such Person has agreed to provide capital to the
Clarklift/Samsung Entities or to otherwise maintain the net worth of the
Clarklift/Samsung Entities.
ARTICLE IV
REPRESENTATIONS OF THE PURCHASER
The Purchaser hereby represents and warrants to CEC as follows:
SECTION 4.01. Organization and Authority of the Purchaser. The
Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has all requisite corporate power
and authority to enter into this Agreement and the Ancillary Agreements to which
it is a party and to consummate the transactions contemplated hereby and
thereby. The execution and delivery by the Purchaser or this Agreement and the
Ancillary Agreements to which it is a party and the consummation by it of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action on the part of the Purchaser. Each of this Agreement
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and the Ancillary Agreements to which the Purchaser is a party has been (or, in
the case of such Ancillary Agreements, upon execution thereof by the Purchaser,
will be) duly executed and delivered by the Purchaser and, assuming the due
authorization, execution and delivery by CEC, constitutes (or, in the case of
such Ancillary Agreements, upon execution thereof by the Purchaser, will
constitute) a legal, valid and binding obligation of the Purchaser enforceable
against the Purchaser in accordance with its terms, except as the enforceability
hereof and thereof may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws affecting creditors' rights generally and
by general equitable principles (regardless of whether the issue of
enforceability is considered in a proceeding in equity or at law).
SECTION 4.02. No Conflicts. Assuming all filings required by the HSR
Act are duly made and the waiting period thereunder has been terminated or has
expired, the execution and delivery by the Purchaser of this Agreement and the
Ancillary Agreements to which it is a party and the consummation by it of the
transactions contemplated hereby and thereby (a) will not violate any provision
of the certificate of incorporation or by-laws of the Purchaser, (b) will not
violate any statute, rule, regulation, order or decree of any public body or
authority applicable to the Purchaser or any of its subsidiaries and (c) will
not result in a violation or breach of, or constitute a default under, any
material license, franchise, permit, indenture, agreement or other instrument to
which Purchaser or any of its subsidiaries is a party or by which any of them or
their assets are bound.
SECTION 4.03. Financing. The Purchaser has sufficient funds available
to it to purchase the Group Stock pursuant to this Agreement and to otherwise
satisfy its obligations under this Agreement and the Ancillary Agreements to
which it is a party.
SECTION 4.04. Investment. The Purchaser will acquire the Group Stock
for investment and not with a view toward any resale or distribution thereof.
SECTION 4.05. Broker's or Finder's Fees. No broker, finder or
investment banker acting on behalf of the Purchaser is, or will be, entitled to
any commission or broker's or finder's fees from any of the parties hereto, or
from any Person controlling, controlled by or under common control with any of
the parties hereto, in connection with any of the transactions contemplated
hereby.
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ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. Conduct of Business Prior to the Closing. (a) CEC
covenants and agrees that, between the date hereof and the Closing Date, except
as otherwise contemplated by this Agreement or any of the Ancillary Agreements,
and except as otherwise consented to by the Purchaser (such consent not to be
unreasonably withheld), CEC shall cause the members of the CMH Group (other than
the Clarklift/Samsung Entities) (i) to conduct their respective operations only
in the ordinary course of business, (ii) to preserve substantially intact their
respective business organizations, (iii) to keep available the services of their
respective employees who are required for the ongoing operation of the Business,
and (iv) to preserve their current relationships with the customers, suppliers
and other Persons with which they have significant business relations.
Notwithstanding the foregoing, the Purchaser acknowledges that approximately 57
persons employed in the Business are presently eligible for retirement, and
between the date hereof and the Closing Date additional persons employed in the
Business may become eligible for retirement, pursuant to the terms of their
employment (such employees, the "Eligible Retirees"), and none of CEC, any of
the Other Sellers or any member of the CMH Group shall be under any obligation
or duty to persuade or induce such Eligible Retirees to remain employed in the
Business or to take any other action with regard to such Eligible Employees.
(b) Except as contemplated by this Agreement or the Ancillary
Agreements, between the date hereof and the Closing Date, CEC shall cause the
members of the CMH Group (Other than the Clarklift/Samsung Entities) not to, in
any case without the consent of the Purchaser (such consent not to be
unreasonably withheld):
(i) sell, pledge, dispose of or encumber any of their
respective assets or properties, other than such sales, pledges,
dispositions and encumbrances in the ordinary course of business; or
(ii) increase the compensation payable or to become payable by
them to their respective employees except for increases in salary or
wages of or benefits to such employees in accordance with past practice
or pursuant to existing arrangements, or grant any severance or
termination pay to any of their respective
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management level employees except in accordance with past practice or
as may be required by existing arrangements, or enter into any
employment or severance agreement with any of their respective
management level employees, or establish, adopt or enter into any
collective bargaining agreement with respect to any of their respective
employees, or amend any Plan or Benefit Arrangement other than to the
extent required to comply with applicable law or in a manner which
would not adversely affect the Purchaser or increase the Purchaser's
liabilities thereunder (it being understood that in each case CEC shall
notify the Purchaser prior to effecting any such amendment); or
(iii) cancel or waive any claims or rights of substantial
value; or
(iv) declare or pay any dividend or distribution; or
(v) (1) create, incur or assume any indebtedness for borrowed
money with a maturity of one year or more from the date of borrowing,
except for rental equipment obligations incurred in the ordinary course
of business; (2) except in the ordinary course of business, create,
incur or assume any leases required to be capitalized in accordance
with generally accepted accounting principles or any indebtedness for
borrowed money with a maturity of less than one year from the date of
borrowing; (3) except in the ordinary course of business, assume,
guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations of any other
person; or (4) except in the ordinary course or business, make any
loans, advances or capital contributions to, or investments in, any
other Person; or
(vi) permit any of its current insurance (or reinsurance)
policies to be cancelled or terminated or any of the coverage
thereunder to lapse, unless simultaneously with such termination,
cancellation or lapse, replacement policies providing coverage equal to
or greater than the coverage remaining under those cancelled,
terminated or lapsed policies are in full force and effect; or
(vii) enter into any material agreements, commitments or
contracts, except agreements, commitments or contracts made in the
ordinary course of business; or
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(viii) make any capital expenditures other than pursuant to
the current Capital expenditure plan of the Business;
provided, that nothing contained shall prohibit CEC or any member of the CMH
Group from (x) continuing the cash management system presently in effect with
respect to such Persons or (y) finalizing the unwind of the Samsung-Clark Co.,
Ltd. joint venture and related arrangement.
(c) The Purchaser acknowledges that, at or prior to the Closing, the
intercompany service and supply arrangements and subleases identified in Part A
of Section 5.01(c) of the Disclosure Schedule shall be cancelled, and the
inter-company indebtedness and receivables identified in Part A of Section
5.01(c) of the Disclosure Schedule shall be settled without payment, and such
cancellations and Settlements will not result in a Material Adverse Effect or a
breach by CEC of any provision of this Agreement; provided that the settlement
and cancellation provided herein shall not diminish or otherwise affect the
Purchaser's obligations pursuant to Section 6.06 hereof. The arrangements
described in Part B of Section 5.01(c) or the Disclosure Schedule shall not,
however, be cancelled. Such arrangements described in Part B Of Section 5.01(c)
of the Disclosure Schedule shall survive the closing and shall not be terminable
by CEC or any of its subsidiaries, on the one hand, or the Purchaser or any
member of the CMH Group, on the other hand, except in accordance with the terms
of such arrangements.
SECTION 5.02. Investigation. The Purchaser acknowledge. and agrees that
(i) it has made its own inquiry and investigation into, and based thereon ha.
formed an independent judgment concerning, the Business (and the organization
and reorganization thereof) and the members of the CMH Group and their
respective assets, properties, employee., liabilities and businesses, (ii) it
has been furnished with or given adequate access to such information about the
Business (and the organization and reorganization thereof) and the members of
the CMH Group and their respective assets, properties, employees, liabilities
and businesses as it has requested and (iii) from and after the Closing Date, it
will not (and will cause its subsidiaries and affiliates not to) assert any
claim against CEC or any member of the CMH Group or any of their respective
officer., employees, agents, stockholders, affiliates, consultants, investment
bankers or representatives, or hold CEC or any of its subsidiaries or affiliates
or any member of the CMH Group or any such other Persons liable, for any
inaccuracies, misstatements or
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omissions with respect to any information furnished by CEC or any of its
subsidiaries or affiliates or any member or the CMH Group or any such other
Persons concerning the Business (or the organization or reorganization thereof)
or any matter relating to the members of the CMH Group, other than, with respect
to CEC and subject to the limitations sat forth in Article IX hereof, the
representations and warranties of CEC contained in this Agreement, provided that
nothing in this Section 5.02 shall prevent the Purchaser from asserting any
claim for fraud against CEC (other than any claim based on any estimates,
projections, forecasts, plans or budgets referred to in Section 12.06 hereof).
SECTION 5.03. Access to Information. (a) Subject to Section 5.05 hereof
and to the terms of the Confidentiality Agreement referred to therein, from the
date hereof to and including the Closing Date, upon reasonable notice, CEC
shall, and shall cause each of the members of the CMH Group (other than the
Clarklift/Samsung Entities) and its and their respective officers, directors,
employees and agents to, and shall use its commercially reasonable efforts to
cause the Clarklift/Samsung Entities to, (i) afford the officers, employees and
authorized agents and representatives of the Purchaser reasonable access, during
normal business hours, to the offices, properties, books and records of the
Business and such members of the CMH Group and (ii) furnish to the officers,
employees and authorized agents and representatives of the Purchaser such
additional financial and operating data and other information regarding the
assets, properties, goodwill and operations of such members of the CMH Group as
the Purchaser may from time to time reasonably request; provided, however, that
such investigation shall not unreasonably interfere with the business or
operations of CEC or any of its subsidiaries or affiliates or any member of the
CMH Group; and provided further that nothing contained herein shall be construed
as an express or implied waiver or forfeiture by CEC or any of its subsidiaries
or affiliates or any member of the CMH Group of any attorney-client privilege,
accountant-client privilege, work product privilege or any other privilege
belonging to or accruing to the benefit of any of the foregoing. If, in the
course of any investigation pursuant to this Section 5.03 or otherwise in
connection with the Purchaser's evaluation of the transactions contemplated by
this Agreement, the Purchaser discovers any breach of any representation or
warranty contained in this Agreement or any circumstance or condition that upon
Closing would constitute such a breach, the Purchaser covenants that it will
promptly so inform CEC of such breach or incipient breach.
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(b) In order to facilitate the resolution of various claims that may
from time to time be asserted by or against or incurred by CEC or any of its
subsidiaries or affiliates prior to or after the Closing Date, and in order to
facilitate the preparation of any financial statements, tax returns or any
documents required to be filed with governmental authorities by CEC or any of
its subsidiaries or affiliates, upon reasonable notice, the Purchaser shall, and
shall cause each member of the CMH Group (other than the Clarklift/Samsung
Entities) to, and shall use its commercially reasonable efforts to cause the
Clarklift/Samsung Entities to, from and after the Closing, (i) afford the
officers, employees and authorized agents and representatives of CEC and its
subsidiaries and affiliates reasonable access, during normal business hours, to
the offices, properties, books and records of the Business and such members of
the CMH Group (including the accountants, attorneys or other agents or
representatives of any of the foregoing) with respect to the assets, properties,
liabilities, employees and/or business (former and present) of the Business and
such members of the CMH Group, (ii) furnish to the officers, employees and
authorized agents and representatives of CEC and its subsidiaries and affiliates
such additional financial and other information regarding the assets,
properties, liabilities, employees and/or business (former and present) at the
Business and such members of the CMH Group as CEC may from time to time
reasonably request and (iii) make available to CEC and its subsidiaries and
affiliates the employees of such members of the CMH Croup whose assistance,
testimony or presence is necessary or desirable to assist CEC or any of its
subsidiaries or affiliates in evaluating any such claims and in defending such
claims, including the presence of such persons as witnesses in hearings or
trials for such purposes; provided, however, that the foregoing shall not
unreasonably interfere with the operations of the Purchaser or the members of
the CMH Group and that CEC shall promptly reimburse the Purchaser for all
out-of-pocket expenses reasonably incurred by the Purchaser in performing its
obligations pursuant to this Section 5.03(b), other than any such expenses
incurred in connection with any Covered Liability (as defined in Section 5.08
hereof); and provided, further that nothing contained herein shall be Construed
as an express or implied waiver or forfeiture by the Purchaser or any of its
subsidiaries or affiliates or any member of the CMH Group of any attorney-client
privilege, accountant-client privilege, work product privilege or any other
privilege belonging to or accruing to the benefit of any of the foregoing.
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(c) After the Closing, CEC will hold, and will cause its officers,
directors, employees, affiliates, representatives, consultants and advisors to
hold, in strict Confidence, unless required to disclose by judicial process or
by applicable law, regulation or rule of a national securities exchange, all
confidential information concerning the Business and the CMH Group in CEC's
possession (whether acquired prior to or after the closing), except to the
extent that such information can be shown to have been generally available to
the public (other than as a result of a disclosure by CEC or its officers,
directors, employees, affiliates, representatives, consultants or advisors or by
a person known by CEC or any other such Person to be bound by a confidentiality
agreement), and will not release or disclose such information to any other
Person except to the Purchaser and its authorized representatives.
SECTION 5.04. Books and Records. The Purchaser agrees that it shall
cause the members of the CMH Group (other than the Clarklift/Samsung Entities)
to preserve and keep all of their books and records relating to the Business in
accordance with applicable law and their respective normal document retention
policies.
SECTION 5.05. Confidentiality. The terms of the letter agreement dated
as of November 22, 1991 (the "Confidentiality Agreement"), between The First
Boston Corporation, on behalf of CEC, and the Purchaser are herewith
incorporated by reference and shall continue in full force and effect until the
Closing, at which time such Confidentiality Agreement (other than the provisions
of Sections 6 (with respect to employees of CEC and its subsidiaries and
divisions), 7, 8, 10, 11 and 12, which provisions shall continue in full force
and effect) and the obligations of the Purchaser under this Section 5.05 shall
terminate. If this Agreement is, for any reason, terminated prior to the
closing, the Confidentiality Agreement shall continue in full force and effect.
SECTION 5.06. Reasonable Efforts. (a) Subject to the terms and
conditions herein provided, each of CEC and the Purchaser agrees to use its
commercially reasonable efforts to take, or cause to be taken, all action and to
do, or cause to be done, all things necessary, proper or advisable to consummate
and make effective as promptly as practicable the transactions contemplated by
this Agreement and the Ancillary Agreements and to cooperate with the other
party in connection with the foregoing, including using its commercially
reasonable efforts (i) to obtain all consents,
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approvals and authorizations that are required to be obtained under any federal,
state, local or foreign law or regulation in order to consummate the
transactions contemplated hereby and by the Ancillary Agreements, (ii) to lift
or rescind any injunction or restraining order or other order adversely
affecting the ability of the parties hereto to consummate the transactions
contemplated hereby and by the Ancillary Agreements, (iii) to effect all
necessary registrations and filings including, but not limited to, submissions
of information requested by governmental authorities, and (iv) to fulfill all
conditions to this Agreement and the Ancillary Agreements. Each of CEC and the
Purchaser further covenants and agrees, with respect to a threatened or pending
preliminary or permanent injunction or other order, decree or ruling or statute,
rule, regulation or executive order that would adversely affect the ability of
the parties hereto to consummate the transactions contemplated hereby and by the
Ancillary Agreements, to use its commercially reasonable efforts to prevent the
entry, enactment or promulgation thereof, as the case may be.
(b) Without limiting the generality of paragraph (a) above, each of the
Purchaser and CEC shall, and after the Closing Date the Purchaser shall cause
each member of the CMH Group (other than the Clarklift/Samsung Entities) to, use
its commercially reasonable efforts to enable CEC and each of its subsidiaries
and affiliates to be released from their respective obligations under the
contracts, agreements and arrangements set forth in Exhibit 5.06(b) attached
hereto (including substituting the Purchaser for CEC in such contracts,
agreements and arrangements). With respect to any of the foregoing from which
CEC or any of its subsidiaries or affiliates shall not have been released as
contemplated above, each of the Purchaser and CEC shall, and after the Closing
Date the Purchaser shall cause each member of the CMH Group (other than the
Clarklift/Samsung Entities) to, take all reasonable steps as may be necessary to
limit CEC's and its subsidiaries' and affiliates' obligations under such
contracts, agreements and arrangements to an amount not exceeding the amount
outstanding thereunder on the Closing Date.
SECTION 5.07. Amendment of Disclosure Schedule. From time to time after
the date of this Agreement and prior to the Closing, CEC will, promptly upon
obtaining knowledge thereof, supplement or amend the Disclosure Schedule with
respect to any matter hereafter arising which, if existing or occurring at or
prior to the date of this Agreement, would have been required to be set forth or
described in the
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Disclosure Schedule or which is necessary to correct any information in the
Disclosure Schedule or in any representation and warranty of CEC, provided,
however, that the aggregate of such amendments, supplements and/or deletions
submitted by CEC shall not result in a Material Adverse Effect.
SECTION 5.08. Existing Insurance Coverage. (a) With respect to any
actions, suits and proceedings against, and any losses, damages and liabilities
of, CEC (with respect to the Business) or any members of the CMH Group arising
out of events or circumstance. occurring or existing prior to the Closing Date
which are covered by existing insurance policies of CEC and as to which the
insurance coverage has not been assigned to the Purchaser (each a "Covered
Liability"), CEC shall indemnify the Purchaser and CMHC for any such Covered
Liability at the time and to the extent (and only to the extent) CEC shall
actually receive any proceeds of such insurance policies in respect or such
Covered Liability (it being understood that any proceeds of such insurance
policies applied directly by the insurance carrier(s) to such Covered Liability
shall be deemed to be a payment made by CEC in respect of such Covered Liability
in full satisfaction of its obligations under this sentence). The Purchaser and
CMHC shall be fully liable, jointly and severally, for all deductibles,
self-insured retentions, exclusions and other amounts, losses and expenses to
the full extent not paid, for whatever reason, by such insurance carrier(s).
CMHC and the Purchaser jointly and severally agree to prosecute and defend each
such Covered Liability in a timely and prudent fashion, consulting with CEC on a
regular and frequent basis. CEC and the Purchaser shall mutually agree on an
acceptable arrangement for the submission of claims for such Covered Liabilities
to the appropriate insurer. Subject to receipt by CEC of retrospective premium
increases (if any) as met forth below, CEC further agrees to continue as the
named insured under such existing insurance policies with respect to such
Covered Liabilities. The Purchaser and CNHC agree that they will not settle or
compromise any such Covered Liabilities without CEC's prior written consent
(such consent not to be unreasonably withheld), unless such settlement or
compromise is in accordance with parameters previously agreed to in writing by
CEC and the Purchaser. All out-of-pocket costs of prosecuting, defending and
administering such Covered Liabilities and all costs incurred in settlement or
by judgment or order or otherwise in respect thereof, including but not limited
to amounts necessary to maintain claim funds, and the allocable share of all
increased retrospective premiums payable under such insurance policies,
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shall be the joint and several responsibility of the Purchaser and CMHC, and the
Purchaser and CMHC shall promptly reimburse CEC for any amounts which are
advanced by CEC for these purposes, it being understood that CEC shall be under
no obligation to make any such advance.
(b) The parties hereto agree that the amount of any Covered Liability
referred to in paragraph (a) above which is not payable or paid under any
insurance policy referred to in paragraph (a) above because it is part of the
deductible or self-insured retention, or because it exceeds the maximum coverage
under any such policy, or because of the inability or refusal of the insurance
carrier(s) to pay such Covered Liability, or for any other reason, shall be the
joint and several obligation and responsibility of the Purchaser and CMHC In
addition, the amount of any such Covered Liability which is payable under such
insurance policies but which is not paid by the insurer for whatever reason
shall be the joint and several obligation and responsibility of the Purchaser
and CMHC.
(c) Each of the Purchaser and CMHC, on the one hand, and CEC, on the
other hand, agree to provide to the other and their respective representatives
such data and information, and to make available to the other and their
respective representatives such of their respective books and records and
personnel, as shall be reasonably requested by the other or their respective
representatives in respect of any Covered Liability.
(d) The Purchaser and CMHC, jointly and severally, hereby agree to
indemnify, defend and hold harmless each CEC Indemnitee from and against all
Losses suffered, incurred or paid, directly or indirectly, by any CEC Indemnitee
as a result of or arising out of the submission or prosecution of (or the
failure to submit or prosecute) any Covered Liability or the taking of (or the
failure to take) any other action contemplated by this Section 5.08.
SECTION 5.09. Continuing Insurance Coverage. (a) From and after the
Closing Date, the Purchaser and CMHC shall jointly and severally procure at
their own expense and shall maintain in full force and effect (with reputable
and financially sound U.S. domestic insurance companies having a rating of A or
better by A.K. Best & Company as of their respective latest evaluation dates and
otherwise acceptable to CEC, or with such other insurance companies acceptable
to CEC) the insurance coverage in the amounts, of the types and with the
characteristics set forth in this Section 5.09 and
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Exhibit 5.09 attached hereto (each an "Insurance Policy", and collectively, the
"Insurance Policies").
(b) The Purchaser and CMHC shall deliver to CEC, on the Closing Date
and at least 45 days prior to each anniversary of the Closing Date, a
certificate of authorized officers of each of the Purchaser and CMHC (i)
confirming that all of the Insurance Policies are in full force and effect on
and as of such date and, with respect to such certificates being delivered in
respect of an anniversary date, that all of such Insurance Policies will be in
full force and effect on and as of much anniversary date, (ii) confirming the
names of the companies issuing such Insurance Policies, (iii) confirming the
amounts, the effective dates and the expiration dates of such Insurance
Policies, (iv) confirming that all premiums in respect of such Insurance
Policies have been paid in full and (v) certifying that such Insurance Policies
fully comply with the requirements of this Section 5.09. Such certificate shall
be accompanied by a certificate of a licensed insurance agent, broker or insurer
approved by CEC (which approval shall not be unreasonably withheld) confirming
the matters specified in the preceding sentence. In the event the Purchaser or
CMHC shall at any time fail to procure or maintain any of the Insurance Policies
required hereby, CEC or any of its subsidiaries or affiliates may (but shall not
be obligated to) procure and maintain such Insurance Policies in its own name or
in the name of the Purchaser or CMHC, as CEC shall elect, and the Purchaser and
CMHC jointly and severally agree to reimburse CEC and its subsidiaries and
affiliates for all costs and expenses (including, without limitation, all
premiums) incurred or paid by CEC or any of its subsidiaries or affiliates in
respect of such Insurance Policies.
(c) Promptly upon receipt thereof and in any event within 30 days after
the Closing Date, the Purchaser or CMHC shall deliver to CEC a duplicate copy,
certified by a licensed insurance agent, broker or insurer approved by CEC
(which approval shall not be unreasonably withheld), of each Insurance Policy,
each bearing a notation evidencing payment in full of the premium therefor. Not
less than 45 days prior to the expiration date of any Insurance Policy, the
Purchaser or CMHC shall deliver to CEC a certificate of insurance or binder of
insurance with respect to each renewal policy in respect thereof, certified in
each case by a licensed insurance agent, broker or insurer approved by CEC
(which approval shall not be unreasonably withheld). Promptly after receipt
thereof and in any event within 30 days after the effective date of any much
renewal policy, the Purchaser or
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CMHC shall deliver to CEC a duplicate copy, certified by a nationally recognized
insurance broker approved by CEC, of each such renewal policy, each bearing a
notation evidencing payment in full of the premium therefor.
(d) All of the Insurance Policies shall be written on an "occurrence"
basis, unless otherwise agreed in writing by CEC, and shall (i) name CEC and its
past, present and future subsidiaries and affiliates and members of the CMH
Group as additional insureds, (ii) insure the interests of CEC and its
subsidiaries and affiliates regardless of any change in ownership of all or any
portion of the Group Stock or any of the businesses or assets of the members of
the CMH Group, (iii) waive any right of subrogation of the insurer(s) against
CEC and its subsidiaries and affiliates, (iv) waive any right of the insurer(s)
to any set-off or counterclaim or any other deduction, and (v) include a
severability of interest and cross liability clause.
(e) The Purchaser and CMHC shall promptly notify CEC on a
monthly basis of (i) any loss covered by any Insurance Policy and (ii) any
material change in coverage under any of the Insurance Policies including, but
not limited to, any reduction in coverage or amount, any increase in deductibles
or self-insured retentions, or any change of insurer(s); provided that no
alteration of any of the terms or conditions of any Insurance Policy which
adversely affects CEC's or any of its subsidiaries' and affiliates' (or any of
their respective past, present or future directors', officers', employees', or
agents') coverage thereunder (including, without limitation, any reduction in
the scope or limit of coverage or any increase in deductibles or self-insured
retentions) may be made to any of the Insurance Policies without the prior
written consent of CEC.
SECTION 5.10. Disclaimer of Warranties. EXCEPT WITH RESPECT TO
THE REPRESENTATIONS AND WARRANTIES SPECIFICALLY SET FORTH IN THIS AGREEMENT OR
ANY ANCILLARY AGREEMENT TO WHICH CEC IS A PARTY OR ANY CLOSING CERTIFICATE
DELIVERED BY CEC PURSUANT TO ARTICLE VII HEREOF, NEITHER CEC NOR ANY OF ITS
SUBSIDIARIES, AFFILIATES, AGENTS OR REPRESENTATIVES MAKES ANY REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, WHETHER OF MERCHANTABILITY, QUALITY, OR
SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE, AS TO THE ASSETS, PROPERTIES,
RIGHTS, LIABILITIES, EMPLOYEES OR BUSINESS (FORMER OR PRESENT), OR ANY PART
THEREOF, OF CEC OR ANY MEMBER OF THE CMH GROUP (OR THE ORGANIZATION OR
REORGANIZATION THEREOF), OR AS TO THE CONDITION OR WORKMANSHIP OF ANY SUCH
ASSETS, OR THE ABSENCE OF ANY DEFECTS THEREIN, WHETHER LATENT OR PATENT.
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SECTION 5.11. Contingent Payments. With respect to each Public Offering
by one or more Selling Entities which is consummated on or prior to December 31,
1993, the Purchaser shall, promptly after consummation of such Public Offering
and receipt of the net proceeds thereof, pay to CEC an amount equal to the
Proportionate Net Gain Proceeds of such Public Offering. Any payment required to
be made by the Purchaser pursuant to this Section 5.11 shall be made by
certified or bank cashier's check payable to the order of CEC, far the account
of CEC and the Other Sellers, in immediately available funds.
SECTION 5.12. Further Assurances. Each party hereto agrees that from
and after the Closing Date, if reasonably requested by the other party, it will
execute and deliver to the other party such further instruments and documents as
may be reasonably necessary to carry out the provisions of this Agreement,
including, in the case of CEC, executing such instruments and documents as may
be reasonably necessary to record the Trademark Assignment Agreement in the
countries set forth in Schedule 1.7 of the Trademark Assignment Agreement.
ARTICLE VI
EMPLOYMENT AND EMPLOYEE BENEFIT ARRANGEMENTS
SECTION 6.01. Definitions. (a) The term "Employees" shall mean all
current employees (including those on layoff, disability or leave of absence,
whether paid or unpaid), former employees and retired employees of CEC or any
member of the CMH Group (other than the Clarklift/Samsung Entities) who are, or
were at the time of their termination, employed primarily in connection with the
Business, including but not limited to those set forth in Section 6.01 of the
Disclosure Schedule, and their dependents and beneficiaries, and the term
"Employee" shall mean any of the Employees.
(b) The term "Plans" shall mean each and all "employee benefit plans"
as defined in Section 3(3) of ERISA, maintained or contributed to by CEC or any
member of the CMH Group (other than the Clarklift/Samsung Entities) or in which
CEC or any member of the CMH Group (other than the Clarklift/Samsung Entities)
participates and which provides benefits to Employees, and the term "Plan" shall
mean any of the Plans.
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(c) The term "Benefit Arrangements" shall mean each and all pension,
supplemental pension, transition and bridge, accidental death and dismemberment,
life and health insurance benefits (including medical, dental, vision, hearing,
prescription drugs and hospitalization), savings, bonus, deferred compensation,
incentive compensation, holiday, vacation, severance pay, salary continuation,
sick pay, sick leave, short and long term disability, fringe benefit and other
employee benefit arrangements, plans, contracts (other than individual
employment, consulting or severance contracts), policies or practices of CEC or
any member of the CMH Group (other than the clarklift/Samsung Entities)
providing employee or executive compensation or benefits to Employees, other
than the Plans, and the term "Benefit Arrangement" shall mean any of the Benefit
Arrangements.
SECTION 6.02. Employment. On the Closing Date, the Purchaser agrees
that it shall, or shall cause an affiliate or subsidiary or the Purchaser to,
employ all currently employed Employees (including those on layoff, disability
or leave of absence, whether paid or unpaid) at a rate of pay at least equal to
the rate of pay applicable to such Employees on the day immediately preceding
the Closing Date; provided, however, that nothing contained in this Section 6.02
shall require the Purchaser or any such subsidiary or affiliate to continue to
employ such Employees for any specific period of time after the Closing Date.
The Purchaser shall, or shall cause such subsidiary or affiliate to, honor and
continue to perform all obligations of CEC and the members of the CMH Group
(other than the Clarklift/Samsung Entities) under all agreements (including, but
not limited to, collective bargaining, plant closing, employment and consulting
and severance agreements), Plans and Benefit Arrangements with or with respect
to any Employee or Employees which relate to their current or past employment,
retirement compensation or benefits (except with respect to the following
obligations (other than obligations pursuant to section 6.06 hereof):
obligations to Employees under the Clark Saving. and Investment Plan (the "Clark
Investment Plan"), the Clark Equipment Company Retirement Program for Salaried
Employees, the Clark Equipment Company General Non-Salaried Employee Pension
Plan and the Clark Equipment Company Retirement Program for Former Employee.
(collectively, the "Clark Plans"), the Clark Equipment Company Leveraged
Employee Stock Ownership Plan (the "Clark LESOP"), and any liabilities with
respect to retiree health care and life insurance benefits with respect to
Employees who have retired prior to the closing Date from employment
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with CEC (or a subsidiary of CEC)); provided, however, that nothing contained
herein shall preclude the Purchaser or any affiliate or subsidiary of the
Purchaser from amending or terminating any such agreements, Plans or Benefit
Arrangements in accordance with the provisions thereof. To the extent the
obligations assumed by the Purchaser pursuant to the preceding sentence arise
under a Plan or Benefit Arrangement maintained by CEC or on. of its affiliates
that is not a company within the CMH Group, the Purchaser shall satisfy such
obligation under a plan or benefit arrangement established by the Purchaser,
which new plan or benefit arrangement shall be deemed to be a "Plan" or "Benefit
Arrangement" for purposes of this Article VI. The Purchaser and its affiliates
(including the members of the CMH Group other than the Clarklift/Samsung
Entities) shall be solely responsible for and shall jointly and severally
indemnify and hold harmless each CEC Indemnitee from and against any Losses
resulting from, arising out of, or paid, suffered or incurred with respect to
any claims that may be asserted against such CEC Indemnitee because of the
failure of the Purchaser or such subsidiaries or affiliates to comply with the
preceding provisions Of this Section 6.02.
SECTION 6.03. Pension and Other Plans. Effective as of the Closing
Date, the Employees shall cease to be eligible "employees" as defined in the
Clark Investment Plan and the Clark LESOP and CEC shall take, or cause to be
taken, all such action as may be necessary to effect such change in their
Status. In addition, as Of the Closing Date, the Employees shall cease to be
employed by CEC or by a "designated affiliate" (as defined in the Clark Plans)
and to accrue a benefit, or be eligible to retire, under the Clark Plans, and
CEC shall take, or cause to be taken, all such action as may be necessary to
effect such cessation of participation.
SECTION 6.04. Other Benefit Plans. The Purchaser agrees that it shall,
or shall cause an affiliate Or subsidiary of the Purchaser to, assume all
liabilities and obligations of CEC and its subsidiaries and affiliates
(including the members of the CMH Group other than the Clarklift/Samsung
Entities) to or in respect of Employees under the Plans and Benefit Arrangements
(other than (except to the extent set forth in Section 6.06 hereof) the Clark
LESOP, the Clark Investment Plan, the Clark Plans and any liabilities with
respect to retiree health care and life insurance benefits with respect to
Employee. who have retired prior to the Closing Date from employment with CEC
(or a subsidiary of CEC)) and workers' compensation arrangements
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and employment and withholding taxes with respect to the Employees and their
dependents and beneficiaries, including, but not limited to, (x) liabilities and
obligations for benefits, compensation, contributions, insurance and health
maintenance organization premiums, reserves and administrative expenses whether
incurred or accrued before, on or after the Closing Date and whether or not
reported as of the Closing Date and (y) liabilities and obligations arising
under the continuation of coverage requirements of Section 49805 of the Code and
Section 601 of ERISA with respect to all Employees (or any beneficiary or
dependent of any Employee) who, as of the Closing Date, have exercised or are
eligible to exercise their right to such continuation coverage, and the
Purchaser and its affiliates (including the members of the CMH Group other than
the Clarklift/Samsung Entities) shall solely be responsible for and shall
jointly and severally indemnify and hold harmless each CEC Indemnitee from and
against any Losses (including, without limitation, benefit claims) which such
CEC lndemnitee may incur, suffer or pay in respect of any of the foregoing
liabilities and obligations. To the extent the obligations assumed by the
Purchaser pursuant to the preceding sentence arise under a Plan or Benefit
Arrangement maintained by CEC or one of its affiliates that is not a company
within the CMH Group, the Purchaser shall satisfy such obligation under a plan
or benefit arrangement established by the Purchaser, which new plan or benefit
arrangement shall be deemed to be a "Plan" or "Benefit Arrangement" for purposes
of this Article VI.
SECTION 6.05. Severance. Without limiting the generality of the
provisions of Section 6.04 hereof, the Purchaser agrees to provide, or cause an
affiliate or subsidiary of the Purchaser to provide, severance pay and other
benefit entitlements which may be owing to any Employee whose employment is
terminated by the Purchaser or an affiliate or subsidiary of the Purchaser
(including a member of the CMH Group Other than the Clarklift/Samsung Entities)
on or after the Closing Date. The Purchaser and its affiliates (including the
members of the CMH Group other than the Clarklift/Samsung Entities) shall solely
be responsible for and shall jointly and severally indemnify and hold harmless
each CEC Indemnitee from and against any Losses which may be incurred, suffered
or paid by such CEC Indemnitee under the Worker Adjustment and Retraining
Notification Act ("WARN"), or by reason of any failure by the Purchaser or an
affiliate thereof (including a member of the CMH Group but excluding the
Clarklift/Samsung Entities) to establish and/or continue to maintain any Plan or
Benefit Arrangement (other than the Clark LESOP, the Clark Investment
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Plan, the Clark Plans and any liabilities with respect to retiree health care
and life insurance benefits with respect to Employees who have retired prior to
the Closing Date from employment with CEC (or a subsidiary of CEC) Pursuant to
the early, normal or disability retirement provisions of the Clark Plans (or any
predecessor plan that has been merged into a Clark Plan)), or as a result of a
claim for severance pay by an Employee whose employment is not continued by the
Purchaser or an affiliate or subsidiary of the Purchaser (including a member of
the CMH Group but excluding the Clarklift/Samsung Entities) on or after the
Closing Date as required by Section 6.02 hereof, or otherwise by reason of the
Purchaser's failure to comply with either the provisions of this Section 6.05 or
WARN.
SECTION 6.06. Required Contributions. The Purchaser shall, or shall
cause an affiliate or subsidiary of the Purchaser to, discharge (by payment to
CEC or, if directed by CEC, to the trustee of the applicable Plan or Benefit
Arrangement) any liabilities and expenses of the CMH Group which have accrued to
or in respect of Employees under any of the Plans and Benefit Arrangements for
any period up to and including the Closing Date and have not been actually paid
prior to the Closing Date. The amount of expense or liability hereunder shall be
determined by CEC in accordance with CEC's existing method for determining such
expenses and liabilities (including the method of allocating such expense and
liability among participating employers) and such allocation and method of
allocation shall be disclosed to the Purchaser. Any amounts required to be paid
hereunder shall be paid on or prior to the due date of such contributions for
the period or periods covered under the terms of the applicable Plan or Benefit
Arrangement.
ARTICLE VII
CONDITIONS TO THE PURCHASER'S OBLIGATIONS
The purchase of the Croup Stock by the Purchaser on the Closing Date is
conditioned, which condition may be waived in writing by the Purchaser, upon
satisfaction of the following:
SECTION 7.01. Truth of Representations and Warranties. The
representation. and warranties of CEC contained in this Agreement shall be true
and correct in all material respects (except for any representation or warranty
which contains a materiality exception therein, which shall be true
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and correct as written) on and as of the Closing Date with the same effect as
though such representations and warranties had been made on and as of such date
(or, with respect to any such representations and warranties which speak as of
an earlier date, on and as of such earlier date), and the Purchaser shall have
received a certificate, dated the Closing Date and signed by a duly authorized
officer of CEC, to that effect.
SECTION 7.02. Performance of Agreements. CEC shall, in all material
respects, have performed and complied with each of the agreements contained in
this Agreement required to be performed or complied with by CEC prior to the
Closing, and the Purchaser shall have received a certificate, dated the Closing
Date and signed by a duly authorized officer of CEC, to that effect.
SECTION 7.03. Opinions of CEC'S Counsel. The Purchaser shall have
received opinions, each dated the Closing Date, of (a) Bernard D. Henely, Esq.,
Vice President and General Counsel of CEC, to the effect set forth in Exhibit
7.03(a) attached hereto, and (b) White & Case, counsel to CEC, to the effect set
forth in Exhibit 7.03(b) attached hereto.
SECTION 7.04. No Material Adverse Change. From the date of this
Agreement to the Closing Date, no change in the business, operations or
financial condition of the Specified Transferred Affiliates, taken as a whole,
shall have occurred which has had a Material Adverse Effect.
SECTION 7.05. No Injunction; HSR. No Court or other government body or
public authority shall have issued an order, stay, judgment or decree which
shall then be in effect restraining or prohibiting the completion of the
transactions contemplated hereby. All waiting period. under the HSR Act
applicable to the transactions contemplated hereby shall have expired or been
terminated.
SECTION 7.06. Agreements, Etc. CEC shall have (a) executed and
delivered to the Purchaser the Ancillary Agreements to which it is a party, (b)
caused CMHC to execute and deliver to CEC and the Purchaser this Agreement and
the Trademark Assignment Agreement, (c) caused the lien created under that
certain Mortgage and Security Agreement dated December 22, 1988 between CEC and
Kentucky Central Life Insurance Company to be satisfied and discharged in full,
(d) caused to be delivered to the Purchaser the written resignation of each
officer and director of the CMH Group (other
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than the Clarklift/Samsung Entities) who will remain an employee of CEC
immediately following the Closing, and (e) delivered to the Purchaser standard
form Kentucky owner policies of title insurance issued by a title insurance
company reasonably acceptable to CEC and the Purchaser with respect to the land,
buildings and improvements at the real property owned by CMHC as specified in
items A(1) and A(2) in Section 3.09(a) of the Disclosure Schedule, insuring
CMHC's title thereto, which title policies shall be in an amount equal to
$4,000,000 (in the case of the real property described in the foregoing item
A(1)) and in an amount equal to $4,000,000 (in the case of the real property
described in the foregoing item A(2)), and which title Policies shall be
obtained at the Purchaser's sole expense.
ARTICLE VIII
CONDITIONS TO CEC's OBLIGATIONS
The sale by CEC of the Group Stock owned by it on the Closing Date, and
the obligation of CEC to cause each of the Other Sellers to sell the Group Stock
owned by them on the Closing Date, is conditioned, which condition may be waived
in writing by CEC, upon satisfaction of the following:
SECTION 8.01. Truth of Representations and Warranties. The
representations and warranties of the Purchaser contained in this Agreement
shall be true and correct in all material respects (except for any
representation or warranty which contains a materiality exception therein and
except for the representation and warranty contained in Section 4.03 hereof, in
each case which shall be true and correct as written) on and as of the Closing
Date with the same effect as though such representations and warranties had been
made on and as of such date (or, with respect to any such representations and
warranties which speak as of an earlier date, on and as of such earlier date),
and CEC shall have received a certificate, dated the closing Date and signed by
a duly authorized officer of the Purchaser, to that effect.
SECTION 8.02. Performance of Agreements. The Purchaser shall, in all
material respects, have performed and complied with each Of the agreements
contained in this Agreement required to be performed or complied with by the
Purchaser prior to the Closing, and CEC shall have received a certificate, dated
the Closing Date and signed by a duly authorized officer of the Purchaser, to
that effect.
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SECTION 8.03. Opinion of Purchaser's Counsel. CEC shall have received
opinions, each dated the Closing Date, of (a) Marvin Rosenberg, Esq., General
Counsel of the Purchaser. to the effect set forth in Exhibit 8.03(a) attached
hereto and (b) Skadden, Arps, Slate, Meagher & Flom, counsel to the Purchaser,
to the effect set forth in Exhibit 8.03(b) attached hereto.
SECTION 8.04. No Injunction; HSR. No court or other government body or
public authority shall have issued an order, stay, judgment or decree which
shall then be in effect restraining or prohibiting the completion of the
transactions contemplated hereby. All waiting periods under the HSR Act
applicable to the transactions contemplated hereby shall have expired or been
terminated.
SECTION 8.05. Agreements. The Purchaser shall have executed and
delivered to CEC the Ancillary Agreements to which it is a party.
SECTION 8.06. Receipt of Mortgages. CEC shall have received (a) from
Clark Components Korea, Inc., a mortgage creating a valid mortgage lien on all
of the real property (including all buildings and improvements thereon) owned by
Clark Components Korea, Inc. (the "Korean Mortgage") and (b) from Clark
Equipment GmbH, a mortgage creating a valid mortgage lien on all of the real
property (including all buildings and improvements thereon) owned by Clark
Equipment GmbH in Saarn, Germany (the "German Mortgage", and together with the
Korean Mortgage, the "Mortgages"), which Mortgages shall secure all of the
Purchaser's obligations under the Note and shall be in form and substance
reasonably satisfactory to CEC.
ARTICLE IX
INDEMNIFICATION
SECTION 9.01. Survival of Representations and Warranties. Subject to
the limitations contained in this Article IX and in the other provisions of this
Agreement, the respective representations and warranties of the parties hereto
contained herein shall survive the closing and shall remain in full force and
effect for one year following the Closing Date.
SECTION 9.02. Indemnification by the Purchaser.
(a) The Purchaser agrees, subject to the terms and
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conditions of this Agreement, to indemnity CEC and its subsidiaries and
affiliates and their respective directors, officers, employees and agents (each
a "CEC Indemnitee") against and hold each of them harmless from all damages,
losses, claims, obligations, liabilities, costs (including reasonable attorneys'
fees and expenses) and expenses (each a "Loss", and collectively the "Losses")
in excess of $2,500,000 in the aggregate, suffered, incurred or paid by the CEC
Indemnitees as a result of or arising out of the failure of any representation
or warranty made by the Purchaser in this Agreement or in any of the Ancillary
Agreements to be true and correct in all material respects (or, in the case of
any such representation or warranty which contains a materiality exception
therein, the failure of such representation or warranty to be true and correct
as written) on and as of the Closing Date (or, with respect to any such
representations or warranties which speak as of an earlier date, on and as of
such earlier date). Anything in Section 9.01 hereof, or elsewhere in this
Agreement, to the contrary notwithstanding, no claim may be asserted nor may any
action be commenced against the Purchaser for indemnification pursuant to this
Section 9.02 unless written notice of such claim or action is received by the
Purchaser describing in reasonable detail the facts and circumstances with
respect to the subject matter of such claim or action on or prior to the date an
which the representation or warranty on which such claim or action is based
ceases to survive as set forth in such Section 9.01.
(b) Notwithstanding the foregoing, the aggregate Losses for which the
CEC Indemnitees shall be entitled to indemnification pursuant to this Section
9.02 shall not exceed $32,500,000.
(c) Payments by the Purchaser pursuant to this Section 9.02 shall be
limited to the amount of any Loss that remains after deducting therefrom (i) any
tax benefit to CEC and (ii) any insurance proceeds and any indemnity,
contribution or other similar payment actually paid to CEC from any third party
with respect thereto; provided that the amount of such deductions with respect
to any particular Loss shall be reduced by the amount at any taxes or other
levies imposed upon CEC's receipt of payment from the Purchaser in respect of
such Loss. Tax benefits will be considered to be realized by CEC for purposes of
this Section 9.02 in the year in which a payment occurs under this Section 9.02,
and the amount of the tax benefits shall be determined by assuming CEC is in the
maximum applicable foreign, federal, state and local income tax bracket. With
respect to any insurance proceeds
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and any indemnity, contribution or other similar payment referred to in clause
(ii) above, CEC agrees to take such action as may be reasonably necessary to
make a claim for, and to diligently seek to collect, such insurance proceeds,
indemnity, contribution or other similar payment.
(d) Except as set forth in this Agreement and in the Ancillary
Agreements to which the Purchaser is a party, the Purchaser is not making any
representation, warranty, covenant or agreement with respect to the matters
contained herein or contemplated hereby. Anything herein or in any or the
Ancillary Agreements to the contrary notwithstanding, no breach of any
representation, warranty, covenant or agreement contained herein shall give rise
to any right on the part of CEC, after the consummation of the purchase and sale
of the Group Stock on the Closing Date as contemplated hereby, to rescind this
Agreement or any of the Ancillary Agreements or any of the transactions
contemplated hereby or thereby.
SECTION 9.03. Indemnification by CEC. (a) CEC agrees, subject to the
terms and conditions of this Agreement, to indemnify the Purchaser and its
subsidiaries and affiliates and their respective directors, officers, employees
and agents (each a "Purchaser Indemnitee") against and hold each of them
harmless from all Losses in excess of $2,500,000 in the aggregate, suffered,
incurred or paid by the Purchaser Indemnitees as a result of or arising out of
the failure of any representation or warranty made by CEC in this Agreement or
in any of the Ancillary Agreements to be true and correct in all material
respects (or, in the case of any such representation or warranty which contains
a materiality exception therein, the failure of such representation or warranty
to be true and correct as written) on and as of the Closing Date (or, with
respect to any such representations or warranties which speak as of an earlier
date, on and as of such earlier date). Anything in Section 9.01 hereof, or
elsewhere in this Agreement, to the contrary notwithstanding, no claim may be
asserted nor may any action be commenced against CEC for indemnification
pursuant to this Section 9.03 unless written notice of such claim or action is
received by CEC describing in reasonable detail the facts and circumstances with
respect to the subject matter of such claim or action on or prior to the date on
which the representation or warranty on which such claim or action is based
ceases to survive as set forth in such Section 9.01.
(b) Notwithstanding the foregoing and the pro- visions of Section 4.1
of the Tax Agreement, the sum of the aggregate of the Louses and Taxes (as
defined in the Tax
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Agreement) far which the Purchaser Indemnitees shall be entitled to
indemnification pursuant to this Section 9.03 and Section 4.1 of the Tax
Agreement, respectively, shall not exceed $32,500,000.
(c) Payments by CEC pursuant to this Section 9.03 shall be limited to
the amount or any Loss that remains after deducting therefrom (i) any tax
benefit to the Purchaser or any member of the CMH Group resulting from the
payment or incurrence of such Loss and (ii) any insurance proceeds and any
indemnity, contribution or other similar payment actually paid to the Purchaser
or any member of the CMH Group from any third party with respect thereto;
provided that the amount of such deductions with respect to any particular Loss
shall be reduced by the amount of any taxes or other levies imposed Upon the
receipt of payment from CEC in respect of such Loss by any of the Purchaser
Indemnitees Tax benefits will be considered to be realized by the Purchaser for
purposes of this Section 9.03 in the year in which a payment occurs under this
Section 9.03, and the amount of the tax benefits shall be determined by assuming
the Purchaser is in the maximum applicable foreign, federal, state and local
income tax bracket. With respect to any insurance proceeds and any indemnity,
contribution or other similar payment referred to in clause (ii) above, the
Purchaser agrees to take such action as may be reasonably necessary to make a
claim for, and to diligently seek to collect, such insurance proceeds,
indemnity, contribution or other similar payment.
(d) Except as set forth in this Agreement and in the Ancillary
Agreements to which CEC i& a party, neither CEC nor any of its subsidiaries,
affiliates, officers, directors, employees or agents is making any
representation, warranty, covenant or agreement with respect to the matters
contained herein or in any of the Ancillary Agreements or as to any matters
contemplated hereby or thereby. Anything herein or in the Ancillary Agreements
to the contrary notwithstanding, no breach of any representation, warranty,
covenant or agreement contained herein shall give rise to any right on the part
of the Purchaser, after the consummation of the purchase and sale of the Group
Stock on the Closing Date as contemplated hereby, to rescind this Agreement or
any of the Ancillary Agreements or any of the transactions contemplated hereby
or thereby.
SECTION 9.04. Limitation on Indemnification. (a) Notwithstanding
anything in this Agreement to the contrary, CEC shall not have any liability
under any provision of this Agreement for any increase in Losses to the extent
such
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increase results from actions taken or not taken by the Purchaser or any of its
Subsidiaries or affiliates after the Closing. In no event shall any party hereto
be liable for consequential damages arising out of a breach of any
representation or warranty. The parties hereto shall take reasonable steps to
mitigate all Losses upon and after becoming aware of any event or circumstance
which could reasonably be expected to give rise to such Losses.
(b) Notwithstanding anything in this Agreement to the contrary, in
respect of any breach of the representations contained in Section 3.12 hereof,
CEC shall not be obligated to indemnify the Purchaser for any Losses that (i)
exceed the amount necessary to remediate the item in question to meet the
requirements of the applicable governmental or regulatory authority or agency
exercising jurisdiction over the subject matter of the item in question, (ii)
result from the Purchaser's or any of its subsidiaries' or affiliates' actions
or inactions that cause or result in an increase in such Losses or (iii) arise
from the enactment of any laws, rules, statutes or regulations not in effect on
the Closing Date or from changes in requirements or interpretations of any laws,
rules, statutes or regulations existing on the closing Date.
SECTION 9.05. Notice of Claim. If any CEC Indemnitee or Purchaser
Indemnitee (each an "Indemnified Party") has suffered or incurred any Loss, or
any third party claim, whether pursuant to an administrative Proceeding, action
at law, suit in equity, or otherwise (a "Third Party Claim"), is instituted
which, if decided adversely to such Indemnified Party, would result in such
Indemnified Party suffering or incurring any Loss, such Indemnified Party (or
CEC or the Purchaser, as applicable, on behalf of such Indemnified Party) shall
give prompt written notice to the party against which a claim for
indemnification may be made pursuant to this Agreement (the "Indemnifying
Party"), setting forth: (i) the facts or events, in reasonable detail, which
indicate that such Indemnified Party ha. suffered or incurred, or is threatened
with suffering or incurring, such Loss, (ii) the amount of such Loss (estimated,
if necessary) or, in the case of a Third Party Claim, such Indemnified Party's
then good faith estimate of the reasonably foreseeable estimated amount of its
claim for indemnification for much Loss, and (iii) the method of computation of
the amount of such Loss, any of which information shall be promptly amended by
such Indemnified Party when its knowledge of the facts or events and resulting
liability so warrant; provided that any failure by an Indemnified Party to
comply with the provisions of this
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Section 9.05 shall in no way impair its rights to be indemnified in accordance
with this Article IX and shall not affect any claim hereunder, except to the
extent that such failure to so comply with this Section 9.05 has materially
prejudiced the Indemnifying Party with respect to the claim in question.
SECTION 9.06. Defense of Third Party Claim; Remediation Actions. (a)
The Indemnifying Party shall have the right to conduct and control, at its
expense and through counsel of its own choosing, the defense of any Third Party
Claim, but the Indemnified Party may, at its election, participate in the
defense of such Third Party Claim at its sole cost and expense; provided that if
(i) the Indemnifying Party shell fail to promptly and diligently defend any such
Third Party Claim, (ii) the Indemnifying Party and the Indemnified Party
mutually agree or (iii) the named parties to such Third Party Claim (including
any impleaded parties) include both the Indemnifying Party and the Indemnified
Party and representation of both parties by the same counsel would, in the
written opinion of independent counsel satisfactory to both such parties, be
inappropriate due to actual or potential differing interests between them, then
the Indemnified Party or Indemnified Parties so affected may defend, through one
counsel of its or their own choosing, and settle such Third Party Claim and may
recover from the Indemnifying Party the amount of any settlement to which the
Indemnifying Party consents or of any final and non-appealable judgment rendered
in respect thereof, together with the reasonable costs and expenses (including
the reasonable attorneys' fees of such counsel) of such defense, provided that
the Indemnified Party shall not compromise or settle any Third Party Claim
without the prior written consent of the Indemnifying Party (which consent shall
not be unreasonably withheld).
(b) Without limiting the generality of paragraph (a) above, in the
event that CEC shall be obligated to indemnify any Purchaser Indemnitee pursuant
to Section 9.03(a) hereof as a result of the breach of the representation
contained in Section 3.12 hereof, CEC shall have the sole and exclusive right to
(i) if applicable and if requested by CEC, control and conduct all negotiations
with any governmental or regulatory agency or authority asserting any claim in
respect of the subject matter of such indemnity claim and (ii) if applicable and
if requested by CEC, develop any plan of remediation required in respect of the
subject matter of such claim and control and conduct (or cause to be conducted)
all such remediation work in respect of such claim. The Purchaser shall
cooperate with CEC in respect of
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the matters specified in clauses (i) and (ii) above and shall grant to CEC such
access, during normal business hours, to the facilities or the Purchaser as CEC
may reasonably request in order to conduct any such required remediation work,
provided that such remediation work shall not unreasonably interfere with the
business or operations of the Purchaser or any member of the CMH Group.
ARTICLE X
SPECIFIC AGREEMENTS
SECTION 10.01. Transfer of Certain Stock. (a) The parties recognize
that certain governmental and third-party consents and approvals are required to
transfer the shares of capital stock of the Clarklift/Samsung Entities other
than Normandie Manutention S.A. and Flandres Manutention S.A. (such shares of
capital stock requiring such consents and approvals, the "Specified Stock"). CEC
agrees to use it. commercially reasonable efforts to obtain such governmental
and third-party consents and approvals (other than the consents and approvals in
respect of the transfer of the Samsung-Clark Co., Ltd. shares) in a timely
manner, Provided that CEC shall not be obligated to pay any consent or similar
fee to any third party or otherwise incur any unreasonable expenses or suffer
any unreasonable burdens in obtaining such consents and approvals.
(b) In the event that any such consents and approvals are not obtained
by CEC as aforesaid on or prior to the Closing Date, then the Specified Stock
with respect to which such consent or approval has not been obtained shall not
be transferred from CEC to the Purchaser on the Closing Date, and CEC and the
Purchaser shall cooperate with each other to establish arrangements that are
reasonable and lawful as to CEC and the Purchaser which provide the Purchaser
with the benefits, risks, liabilities and burdens of Ownership of the Specified
Stock, provided that nothing contained in this Section 10.01 shall affect or
reduce any of the Purchaser's obligations under this Agreement or any of the
Ancillary Agreements to which it is a party, and provided, further, that CEC
shall not be obligated to incur any financial obligation in establishing or
complying with such arrangements. The parties hereto agree that the failure of
CEC to obtain such consents or approvals at, prior to or after the Closing Date,
after exercise of commercially reasonable efforts as specified above, shall not
(i) constitute a breach by CEC of any of its obligations under
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this Agreement, (ii) result in a Material Adverse Effect, or (iii) be a
justification for the Purchaser to fail to consummate the transactions
contemplated by this Agreement, it being understood that if all of the other
conditions to Closing set forth in this Agreement have been satisfied or waived
by the appropriate party, then the Closing shall occur notwithstanding the
failure to obtain such consents and approvals, and the provisions of paragraphs
(a) and (c) hereof shall apply with respect to any of the Specified Stock not
transferred on the Closing Date as a result of this paragraph (b).
(c) For a reasonable period of time not to exceed one year following
the Closing Date, CEC shall us. its commercially reasonable efforts to obtain
any such governmental and third-party consents and approvals referred to in
Section 10.01(a) hereof. If any such consents or approvals are obtained by CEC
after the Closing Date, then the Specified Stock with respect to which such
consent or approval has been obtained shall be deemed to have been transferred
by CEC to the Purchaser on and as of the Closing Date to the same extent as if
such Specified Stack had been transferred by CEC to the Purchaser on and as of
the Closing Date pursuant to Section 2.01 hereof, unless such consent or
approval specifies its effectiveness as of a later date, in which case the
Specified Stock shall be deemed to have been transferred by CEC to the Purchaser
on and as of such later date.
SECTION 10.02. Transfer of Clark GmbH. The Purchaser acknowledges that
the capital stock of Clark Equipment GmbH ("Clark GmbH") is currently owned in
part by CEC and in part by Clark Business Services Corporation (an indirect
wholly-owned subsidiary of CEC), and that for certain foreign law reasons it is
beneficial for the capital stock of Clark GmbH to continue to be owned by two
separate legal entities. Accordingly, the Purchaser agrees that at the Closing
it will make all necessary arrangements for the capital stock of Clark GmbH to
be owned in part by the Purchaser (or an affiliate of the Purchaser designated
by the Purchaser) and in part by a separate affiliate of the Purchaser
designated by the Purchaser. Purchaser and CEC shall bear equally all transfer
taxes and other revenue stamps required in connection with or arising out of any
such transfer of the capital stock of Clark GmbH. Purchaser shall be responsible
for and indemnify and hold harmless each CEC Indemnitee from and against any and
all tax liabilities arising out of the failure of the Purchaser to comply with
the provisions of this Section 10.02.
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SECTION 10.03. Certain Notices. (a) Pursuant to Sections 3.01 and 3.02
or the Asset Contribution Agreement dated as or March 31, 1992 by and between
CEC and CMHC (the "CEC/CMHC Agreement"), CMHC has, among other things, agreed to
indemnify and hold harmless certain Persons (each a "Clark Indemnified Person")
from and against all damages, louses, claims, obligations, liabilities, costs
(including reasonable attorneys' fees and expenses) and expenses suffered,
incurred or paid by the Clark Indemnified Persons as a result of or arising out
or various liabilities, obligations and contracts, all as more specifically
described in such Sections 3.01 and 3.02 (collectively, the "Clark Indemnified
Liabilities"). In the event that any action, suit, proceeding or demand shall be
commenced or made in respect of a Clark Indemnified Liability for which
indemnification will be sought under such Section 3.01 or 3.02, the respective
Clark Indemnified Persons (or CEC on behalf of such Clark Indemnified Persons)
shall provide CMHC with written notice of the commencement or making of such
action, suit, proceeding or demand.
(b) Upon receipt by CMHC or such written notice, CMHC shall either
promptly pay such Clark Indemnified Liability within 10 days after delivery of
such notice or assume the defense thereof through counsel reasonably
satisfactory to CEC; provided, however, that if CMHC shall elect to defend such
Clark Indemnified Liability, the respective Clark Indemnified Persons and CEC
(in the event CEC is not the Clark Indemnified Person making the claim) shall be
entitled to participate in any such action, suit, proceeding or demand with
counsel of its own choice but at its own expense.
(c) If CMHC fails to pay such Clark Indemnified Liability or assume
such defense within 10 days after receipt of such notice, or, in the case of
such assumption, CMHC shall fail to diligently prosecute such defense after such
assumption, CEC may, at its sole election, either pay such Clark Indemnified
Liability or assume such defense, through counsel of its own choosing, and the
reasonable fees and expenses of its attorneys shall in all respects be deemed to
be Clark Indemnified Liabilities and shall be entitled to the same
indemnification rights as all other Clark Indemnified Liabilities. In addition,
if the named parties to any action, suit, proceeding or demand in respect of a
Clark Indemnified Liability (including any impleaded parties) include both a
Clark Indemnified Person, on the one hand, and the Purchaser and/or any of its
subsidiaries or affiliate., on the other hand, and representation of both
parties by the same counsel would, in the written opinion of independent
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counsel reasonably satisfactory to both such parties, be inappropriate due to
actual or potential differing interests between them, then CEC may assume such
defense, through counsel of its own choosing, and the reasonable fees and
expenses of its attorneys shall in all respects be deemed to be Clark
Indemnified Liabilities and shall be entitled to the same indemnification rights
as all other Clark Indemnified Liabilities.
(d) Upon any assumption of such defense by CEC as specified in the
first sentence of paragraph (c) above, CEC shall be entitled to pays settle or
otherwise compromise any claims arising out of such action, suit, proceeding or
demand, on such terms as it may determine in its sole discretion, and any such
payment, settlement or compromise shall in all respects be deemed to be Clark
Indemnified Liabilities and shall be entitled to the same indemnification rights
as all other Clark Indemnified Liabilities.
(e) It is expressly acknowledged and agreed that nothing contained in
this Section 10.03 shall be construed to limit, nullify or otherwise reduce any
of CEC's rights or CMHC's obligations under the CEC/CMHC Agreement.
SECTION 10.04. Settlement or Compromise of Certain Claims.
Notwithstanding anything in Section 10.03 hereof to the contrary, neither the
Purchaser nor CMHC nor any subsidiary or affiliate of either entity shall,
without the prior written consent of CEC, settle or compromise any claim,
action, suit or proceeding or consent to the entry of any judgment in connection
with a Clark Indemnified Liability in any manner (i) which does not include as
an unconditional term thereof the delivery by the claimant or plaintiff to CEC
of a written release of CEC and all other Clark Indemnified Persons from all
liability in respect of such claim, action, suit or proceeding or (ii) that may
materially and adversely affect CEC or any other Clark Indemnified Person.
SECTION 10.05. Certain Undertakings. (a) From and after the closing
Date, CMHC hereby agrees, jointly and severally with the Purchaser, to pay,
perform and discharge on a timely basis each and every obligation of the
Purchaser set forth in this Agreement and in the Ancillary Agreements to which
the Purchaser is a party, and CMHC hereby further agrees to pay, perform and
discharge on a timely basis each of its obligations, liabilities and duties set
forth in this Agreement (including, without limitation, each of its obligations,
liabilities and duties set forth in Sections 5.08, 5.09, 5.11, 6.06, 10.03,
10.04 and 10.06 hereof).
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(b) CMHC hereby acknowledge. the undertaking of the Purchaser set forth
in Section 10.06 hereof and hereby confirms and agrees that each and every
obligation of CMHC under this Agreement, the Trademark Assignment Agreement, the
CEC/CMHC Agreement and the Intellectual Property Agreement dated as of March 31,
1992 by and between CEC and CMHC, are the joint and several obligations of CMHc
and the Purchaser.
SECTION 10.06. Additional Undertakings. (a) From and after the Closing
Date, the Purchaser hereby agrees, jointly and severally with CMHC and Clark
Canada, as applicable, to pay, perform and discharge on a timely basis (i) each
and every obligation of CMHC under this Agreement, the Trademark Assignment
Agreement, the CEC/CMHC Agreement and the Intellectual Property Agreement
referred to in Section 10.05(b) above and (ii) each and every obligation of
Clark Canada under the Asset Transfer Agreement dated as of March 31, 1992 by
and between Clark Canada and Old Clark Canada.
(b) Purchaser hereby acknowledges the undertaking of CMHC set forth in
Section 10.05 hereof and hereby confirms and agrees that each and every
obligation of the Purchaser hereunder and under the Ancillary Agreements to
which it is a party are the joint and several obligations of the Purchaser and
CMHC.
(c) Purchaser hereby acknowledges and agrees, jointly and severally
with CMHC and Clark Canada, that none of them shall have the right to, and the
Purchaser hereby agrees to cause each member of the CMH Croup (other than the
Clarklift/Samsung Entities) not to, assert any claims or causes of action
against CEC or any subsidiary or affiliate of CEC (and hereby expressly waives,
jointly and severally with CMHC and Clark Canada, any such claims or causes of
action), with respect to or arising out of the Clark Indemnified Liabilities (as
defined in Section 10.03(a) hereof), including but not limited to any claims or
causes of action in connection with any products, parts or components
manufactured or sold by another subsidiary, affiliate or business unit of CEC
which are or were incorporated into any products, parts, accessories,
attachments or components heretofore or hereafter sold by CEC or by any member
of the CMH Group in the conduct of the Business. With respect to any claims or
causes of actions referred to in the immediately preceding sentence, CEC agrees
to provide such reasonable cooperation as the Purchaser may reasonably request
in pursuing any such claims or causes of actions
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against third parties, provided that the Purchaser shall promptly reimburse CEC
for its out-of-pocket expenses reasonably incurred by CEC in connection with
such cooperation, and provided, further, that such cooperation shall not
unreasonably interfere with the operations of CEC or any of its subsidiaries,
affiliates or business units.
SECTION 10.07. Use of Name. The Purchaser agrees that from and after
the 40th Business Day following the Closing Date, it will not, and will not
permit any of its subsidiaries or affiliate. (including, without limitation, any
member of the CMH Croup) to, use any trade name, trademark, service mark or
trade dress incorporating both the term "Clark" and either (or both) of the
terms "Equipment" or "Components" or any derivations thereof. Notwithstanding
the foregoing, (a) the Purchaser and the members of the CMH Group (other than
the Clarklift/Samsung Entities) may deplete all inventory, work-in-process,
parts and materials existing on the Closing Date which uses any trade name,
trademark, service mark or trade dress incorporating both the term "Clark" and
either (or both) of the terms "Equipment" or "Components" or any derivations
thereof, (b) the Purchaser and the members of the CMH Group (other than the
Clarklift/Samsung Entities) may, for a period of 90 days following the Closing
Date, deplete all stationery, invoices and other paper goods existing on the
closing Date which use any trade name, trademark, service mark or trade dress
incorporating both the term "Clark" and the either (or both) of the terms
"Equipment" or "Components" or any derivation thereof and (c) the Purchaser and
the members of the CMH Group (other than the Clarklift/Samsung entities) may use
(but shall deplete as promptly as reasonably Practicable) all packaging,
brochures and parts manuals existing on the Closing Date which uses any trade
name, trademark, service mark or trade dress incorporating both the terms
"Clark" and either (or both) of the terms "Equipment" or "Components" or any
derivation thereof; provided, however, that in each case the Purchaser shall
place or cause to be placed on any such item a stamp, mark or other notation
identifying the Business as a business of the CMH Group (and not of CEC); and
provided, further, that in no event shall the Purchaser or any member of the CMH
Group reorder any of the foregoing items.
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ARTICLE XI
TERMINATION
SECTION 11.01. Events of Termination. This Agreement may be terminated
at any time prior to Closing (a) by mutual written agreement of the Purchaser
and CEC or (b) by either CEC or the Purchaser if the Closing shall not have
occurred on or prior to July 31, 1992; provided, however that the right to
terminate this Agreement under this Section 11.01 shall not be available to any
party whose failure to fulfill any obligation under this Agreement shall have
been the cause of, or shall have resulted in, the failure of the Closing to
occur prior to such date.
SECTION 11.02. Effect of Termination. In the event that this Agreement
shall be terminated pursuant to Section 11.01 hereof, all further obligations of
the parties hereto under this Agreement (other than pursuant to Sections 5.02,
5.05 and 12.02 hereof and as provided in the Confidentiality Agreement) shall
terminate without further liability or obligation of either party to the other
party hereunder (including, without limitation, any liability for the failure of
the Closing to occur as a result of any condition specified herein not being
satisfied on or prior to the date of such termination), except that (a) nothing
herein shall relieve any party from liability for any willful breach of this
Agreement and (b) nothing herein or in the Escrow Agreement (including, without
limitation, any forfeiture by the Purchaser of the Escrow Amount (as defined in
the Escrow Agreement) pursuant Section 5(b) of the Escrow Agreement) shall limit
or otherwise restrict any of CEC's rights or claims against the Purchaser
(whether arising at law, in equity or otherwise) for the failure by the
Purchaser to satisfy any of the conditions precedent set forth in Article VIII
hereof on and as of July 31, 1992.
ARTICLE XII
MISCELLANEOUS
SECTION 12.01. Knowledge of CEC. As used in this Agreement and the
Ancillary Agreements, the term "to the knowledge of CEC" and words of similar
import shall mean the actual knowledge, after due inquiry in the Case of the
named individuals below, of: Gary Bello, President of Clark Material Handling
Company; Henry Jackson, Vice President and Chief Financial Officer of Clark
Material Handling Company;
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Michael Grossman, Vice President and General Counsel of Clark Material Handling
Company; David Field, Associate Counsel of Clark Material Handling Company; or
any employee of CEC who shall remain an employee of CEC immediately following
the Closing.
SECTION 12.02. Expenses. Except as otherwise specifically provided in
this Agreement, the parties hereto shall pay all of their own expenses relating
to the transactions contemplated by this Agreement, including, without
limitation, the fees and expenses of their respective counsel, financial
advisors and accountants.
SECTION 12.03. Governing Law. The interpretation and construction of
this Agreement, and all matters relating hereto, shall be governed by the laws
of the state of New York applicable to contracts made and to be performed
entirely within the State of New York (regardless of the laws that might
otherwise govern under applicable New York principles of conflicts of law).
SECTION 12.04. Captions. The Article and Section captions used herein
are for reference purposes only, and shall not in any way affect the meaning or
interpretation of this Agreement.
SECTION 12.05. Publicity. Except as otherwise required by applicable
law, regulation or rule. of a national securities exchange, neither party hereto
nor any of their respective subsidiaries shall issue any press release or make
any other public statement, in each case relating to or in connection with or
arising out of this Agreement or the matters contained herein, without obtaining
the prior approval of the other party to the content and the manner of
presentation and publication thereof.
SECTION 12.06. Disclaimer of Projections, Etc. Neither party, nor any
subsidiary, affiliate or representative of either party, nor any of their
respective directors, officers or employees, makes any representation or
warranty to the other party except, in the case of CEC, CMHC, Clark Equipment
GmbH, Clark Components Korea, Inc. and the Purchaser, as specifically made in
this Agreement and in the Ancillary Agreements to which such Person is a party.
Neither CEC nor any of it. subsidiaries, affiliates or representatives nor any
of their respective directors, officers or employees Rakes any representation or
warranty to the Purchaser with respect to any estimates, projections, forecasts,
plans or budgets relating to the Business or to
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any member of the CMH Group. With respect to any such estimates, projections and
other forecasts, plans and budgets delivered by or on behalf of CEC to the
Purchaser or any of its representatives, the Purchaser acknowledges that (i)
there are uncertainties inherent in attempting to make such estimates,
projections, forecasts, plans and budgets, (ii) it is familiar with such
uncertainties, (iii) it is taking full responsibility far making its own
evaluation of the adequacy, accuracy and reasonableness of all such estimates,
projections, forecasts, plans and budgets so furnished to it or its
representatives and (iv) it shall have no claim, and shall not attempt to assert
any claim, against CEC or any of its subsidiaries or affiliate. or any of their
respective directors, officers, employees, agents, Stockholders, consultants,
investment bankers or representatives, or hold CEC or any such Persons liable,
with respect thereto.
SECTION 12.07. Notices. Any notice or other communications required or
permitted hereunder shall be sufficiently given if delivered in person or sent
by telecopy or by registered or certified mail, postage prepaid, return receipt
requested, addressed as follows:
(a) if to CEC, to it at:
Clark Equipment Company
100 North Michigan Street
South Bend, Indiana 46601
Telecopy No.; (219) 239-0237
Attn: Bernard D. Henely, Esq.
Vice President and
General Counsel
with a copy to:
White & Case
1155 Avenue of the Americas
New York, New York 10036
Telecopy No.: (212) 354-8113
Attn: William F. Wynne, Jr., Esq.
(b) if to the Purchaser,
to it at:
Terex Corporation
201 W. Walnut Street
Green Bay, Wisconsin 54303
Telecopy No.: (414) 432-5094
Attn: Chief Executive Officer
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with a copy to:
KCS Industries, Inc.
500 Post Road East
Suite 320
Westport, Connecticut 06880
Telecopy No.: (203) 222-7976
Attn: Marvin B. Rosenberg, Esq.
General Counsel
and an additional copy to:
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Telecopy No.: (212) 735-2000
Attn: J. Michael Schell
or in any case to such other address or telecopy number as shall be furnished in
writing by any such party to the other party, and such notice or communication
shall be deemed to have been given as of the date so delivered or sent by
telecopy or five days after deposited in the mails, as applicable; provided,
however, that notice of a change of address shall be effective only upon receipt
thereof.
SECTION 12.08. Parties in Interest. (a) This Agreement may not be
transferred, assigned, pledged or hypothecated by any party hereto without the
prior written consent of the other party. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
(b) Notwithstanding the foregoing, the Purchaser may at any time prior
to the Closing designate in writing to CEC one or more of its wholly-owned
subsidiaries to acquire any part of the Group Stock, provided that
notwithstanding such designation, each of the Purchaser and CMHC shall remain
fully liable for the performance of all of its obligations hereunder and under
each of the Ancillary Agreements to which it is or is to become a party.
SECTION 12.09. Counterparts. This Agreement may be executed in two or
more counterparts, all of which taken together shall constitute one
instrument.
SECTION 12.10. Entire Agreement. This Agreement, including the
Exhibits, the Disclosure Schedule, the Ancillary
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Agreements, the Confidentiality Agreement and the other documents referred to
herein which form a part hereof, contain the entire understanding of the parties
hereto with respect to the subject matter contained herein and therein. This
Agreement and the Ancillary Agreements supersede all prior agreements and
understandings between the parties with respect to such subject matter other
than the Confidentiality Agreement.
SECTION 12.11. Disclosure Schedule. Each party hereto acknowledges and
agrees that the Sections contained in the Disclosure Schedule are intended to be
complementary and that all items disclosed in any Section of the Disclosure
Schedule which are appropriate for disclosure in another Section of the
Disclosure Schedule shall be incorporated without reference to such other
Section of the Disclosure Schedule.
SECTION 12.12. Transfer, Etc. Taxes. Except as otherwise specifically
provided in this Agreement or in any of the Ancillary Agreements, all domestic
and foreign stamp, transfer, notorial, documentary, sales, use, registration and
other similar taxes and fees incurred in connection with the execution or
delivery of this Agreement or the consummation of the transactions contemplated
hereby (collectively, the "Transfer Taxes") shall be borne equally by CEC and
the Purchaser. The Purchaser shall obtain any stock transfer stamps required and
shall properly file, with the cooperation of CEC, on a timely basis all
necessary tax returns, reports, forms, and other documentation with respect to
any Transfer Taxes, and shall provide to CEC, upon request, appropriate invoices
evidencing all such Transfer Taxes.
SECTION 12.13. construction of Certain Provisions. Each party hereto
acknowledges and agrees that the specification of any dollar amount in the
representations and warranties or other provisions contained in this Agreement
or the inclusion of any specific item in any Section of the Disclosure Schedule
is not intended to imply that such amounts or any higher or lower amounts, or
the items so included or any other items, are or are not material, and neither
party shall use the fact of the setting of such amounts herein or the inclusion
of any such item in the Disclosure Schedule in any dispute or controversy
between the parties as to whether any obligation, item or Batter not described
or included herein or in the Disclosure Schedule is or is not material for
purposes of this Agreement.
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SECTION 12.14. Amendments; No Waivers. This Agreement may not be
changed orally, but only by an agreement in writing signed by the parties
hereto. Any provision of this Agreement can be amended, supplemented or modified
by written agreement of the parties hereto and can be waived in writing by the
party entitled to the benefit of such provision. No waiver or failure to insist
upon strict compliance with any provision of this Agreement shall operate as a
waiver of, or estoppel with respect to, any subsequent or other failure to
comply strictly with each 'of the provisions of this Agreement.
SECTION 12.15. Severability. In case any provision in this Agreement
shall be held invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions hereof will not in any way be
affected or impaired thereby.
SECTION 12.16. Third Party Beneficiaries. Except as otherwise set forth
herein, each party hereto intends that this Agreement shall not benefit or
create any right or cause of action in or on behalf of any Person other than the
parties hereto.
SECTION 12.17. References to Subsidiaries and Affiliates. As used in
this Agreement, (i) the term "subsidiary" when used in reference to any person
or entity shall mean any corporation of which outstanding securities having
ordinary voting power to elect a majority of the Board of Directors of such
corporation are owned directly or indirectly by such person or entity and (ii)
the term "affiliate" shall have the meaning set forth in Rule 12b-2 of the
General Rules and Regulations promulgated under the Securities Exchange Act of
1934, as amended.
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IN WITNESS WHEREOF, each of the parties hereto has caused its corporate
name to be hereunto subscribed by its officer thereunto duly authorized, all as
of the day and year first above written.
CLARK EQUIPMENT COMPANY
By /s/
---------------------------
Name:
Title: Vice President
TEREX CORPORATION
By /s/
---------------------------
Name:
Title:
CLARK MATERIAL HANDLING COMPANY (to the
extent of its obligations and agreements set
forth or referred to in Sections 10.05 and
10.06 hereof)
By /s/
---------------------------
Name:
Title: Vice President
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<PAGE> 1
EXHIBIT 10.9
FIRST AMENDMENT
FIRST AMENDMENT (the "FIRST AMENDMENT") dated as of July 31, 1992 by
and between CLARK EQUIPMENT COMPANY ("CEC") and TEREX CORPORATION
("Purchaser"). Except as otherwise defined herein, capitalized terms used
herein and defined in the Stock Purchase Agreement referred to below shall be
used herein as therein defined.
W I T N E S S E T H :
_ _ _ _ _ _ _ _ _ _
WHEREAS, the parties hereto have entered into a Stock Purchase
Agreement, dated as of May 27, 1992 (the "Stock Purchase Agreement"), as amended
hereby; and
WHEREAS, the parties to the Stock Purchase Agreement desire to amend
the Stock Purchase Agreement;
NOW THEREFORE, it is agreed:
1. The definition of "Ancillary Agreements" contained in Section 1.01
of the Stock Purchase Agreement is hereby amended by deleting the term "Korean
Mortgage" and inserting in lieu thereof the term "Korean Pledge Agreement".
2. The definition of "Clarklift/Samsung Entities" contained in Section
1.01 of the Stock Purchase Agreement is hereby amended by inserting immediately
following the phrase "Clarklift of Washington/Alaska, Inc.," the phrase
"Midland Clarklift, Inc.,".
3. The definition of "Group Stock" contained in Section 1.01 of the
Stock Purchase Agreement is hereby amended by inserting the phrase "40,000
shares of common stock, no par value, of Midland Clarklift, Inc.;" immediately
following the phrase "Clarklift of Washington/Alaska, Inc.;" contained therein.
<PAGE> 2
4. The definition of "German Mortgage" contained in Section 1.01 of
the Stock Purchase Agreement is hereby amended by deleting the phrase "8.08(b)"
contained therein and by inserting in lieu thereof the phrase "8.06(b)".
5. The definition of "Korean Mortgage" contained in Section 1.01 of
the Stock Purchase Agreement is hereby deleted in its entirety and the
following definition is added in lieu thereof:
"Korean Pledge Agreement" shall have the meaning assigned to such
term in Section 8.06(a) hereof.
6. The definition of "Transferred Affiliates" contained in Section
1.01 of the Stock Purchase Agreement is hereby amended by inserting the term
"Midland Clarklift, Inc., a South Carolina corporation;" immediately following
the phrase "Clarklift of Washington/Alaska, Inc., a Washington Corporation;".
7. Section 1.01 of the Stock Purchase Agreement is hereby amended by
inserting the following new definitions therein:
"CCI" shall have the meaning assigned to such term in
Section 8.06(a) hereof.
"CMH" shall have the meaning assigned to such term in
Section 8.06(a) hereof.
8. Section 2.01 of the Stock Purchase Agreement is hereby amended by
deleting the first sentence thereof in its entirety and inserting in lieu
thereof the following:
Subject to the terms and conditions set forth in this
Agreement, including, without limitation, the terms
and conditions set forth in Section 10.01, CEC agrees
to, and shall cause the Other Sellers to, sell, assign,
transfer and deliver to the Purchaser on the Closing
Date and the Purchaser agrees to purchase from CEC and
the Other Sellers on the Closing Date the Group Stock,
except for the stock of Samsung-Clark Co., Ltd., which
may be assigned and transferred to CMHC on the Closing
Date or on a date subsequent to the Closing Date mutually
agreed upon by CEC and the Purchaser provided, however,
that nothing
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<PAGE> 3
in this provision shall be construed to exclude the shares of
Samsung-Clark from the definition of Group Stock.
9. Section 2.01 of the Stock Purchase Agreement is hereby
amended by deleting the phrase "the opening" contained in the last sentence
therein and inserting in lieu thereof the phrase "the close".
10. Section 2.02(d) of the Stock Purchase Agreement is hereby
amended by deleting the phrase "the opening" contained in the first sentence
therein and by inserting in lieu thereof the phrase "the close".
11. Section 5.09(c) of the Stock Purchase Agreement is hereby
amended by deleting the period at the end of the first and second sentences
thereof and adding the following language at the end of each such sentence:
", listing CEC and its past, present and future subsidiaries and
affiliates and members of the CMH Group as additional insureds and
stating that CEC is to be notified in writing in advance if the policy
or policies are cancelled or coverage amounts reduced."
12. The Stock Purchase Agreement is hereby amended by adding a
new Section 5.13 which shall read, in its entirety:
SECTION 5.13. Tax Matters. Neither the Purchaser nor any of
its subsidiaries or affiliates shall engage or cause any of the
Transferred Affiliates to engage in any transactions or activities on
the Closing Date that are outside the ordinary course of business which
give rise to any tax liability for which CEC or any of its affiliates is
or may be liable.
13. Section 8.06 of the Stock Purchase Agreement is hereby
amended to read, in its entirety:
SECTION 8.06. Receipt of Korean Pledge Agreement and German
Mortgage. CEC shall have received (a) a Pledge Agreement, executed by
each of CMH Acquisition Corp. ("CMH") and Clark Components
International, Inc. ("CCI"), which shall provide for a first priority
perfected pledge by CCI of the shares of Clark
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<PAGE> 4
Components Korea, Inc. and a first priority perfected pledge by CMH of
the shares of CCI (the "Korean Pledge Agreement"), which Korean Pledge
Agreement shall secure all of the Purchaser's obligations under the Note
and shall be in form and substance reasonably satisfactory to CEC, and
(b) from Clark Equipment GmbH, a mortgage creating a valid first
priority perfected mortgage lien on all of the real property (including
all buildings and improvements thereon) owned by Clark Equipment GmbH in
Saarn, Germany (the "German Mortgage"), which German Mortgage shall
secure all of Purchaser's obligations under the Note and shall be in
form and substance reasonably satisfactory to CEC.
14. Exhibit 1.01(a) of the Stock Purchase Agreement is hereby deleted
in its entirety and replaced by Exhibit 1.01(a) attached hereto.
15. Exhibit 2.04 of the Stock Purchase Agreement is hereby amended to
add the term "Midland Clarklift, Inc." immediately after the term "Clarklift of
El Paso, Inc.," contained therein.
16. Exhibit 2.02(c) of the Stock Pledge Agreement is deleted in its
entirety and replaced by Exhibit 2.02(c) attached hereto.
17. Exhibit 5.09 of the Stock Purchase Agreement is deleted in its
entirety and replaced by Exhibit 5.09 attached hereto.
18. Exhibit 7.03(a) of the Stock Purchase Agreement is deleted in its
entirety and replaced by Exhibit 7.03(a) attached hereto.
19. Exhibit 7.03(b) of the Stock Purchase Agreement is deleted in its
entirety and replaced by Exhibit 7.03(b) attached hereto.
20. Exhibit 8.03(a) of the Stock Purchase Agreement is deleted in its
entirety and replaced by Exhibit 8.03(a) attached hereto.
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<PAGE> 5
21. Exhibit 8.03(b) of the Stock Purchase Agreement is deleted in its
entirety and replaced by Exhibit 8.03(b) attached hereto.
22. Pursuant to Section 5.07 of the Stock Purchase Agreement, the
Disclosure Schedules are hereby amended by including in said Disclosure
Schedules the additional items set forth on Annex I attached hereto.
23. This First Amendment is limited as specified and shall not
constitute a modification, acceptance or waiver of any other provision of the
Stock Purchase Agreement, any of the Ancillary Agreements or the Disclosure
Schedules.
24. From and after the date hereof, all references in the Stock
Purchase Agreement, each of the Ancillary Documents and the Disclosure
Schedules shall be deemed to be references to the Stock Purchase Agreement, the
Ancillary Documents or the Disclosure Schedules as amended hereby.
25. This First Amendment may be executed on separate counterparts by
the parties hereto, each of which when so executed and delivered shall be an
original, but all of which shall constitute one and the same instrument.
26. The interpretation and construction of this First Amendment, and
all matters relating hereto, shall be governed by the laws of the State of New
York applicable to contracts made and to be performed entirely within the State
of New York (regardless of the laws that might otherwise govern under
applicable New York principles of conflicts of laws).
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<PAGE> 6
IN WITNESS WHEREOF, each of the parties hereto has caused its corporate
name to be hereunto subscribed by its officer thereunto duly authorized, all as
of the day and year first above written.
CLARK EQUIPMENT COMPANY
By /s/ Bernard D. Henely
-----------------------------------
Name: Bernard D. Henely
Title: Vice President
TEREX CORPORATION
By /s/ Marvin B. Rosenberg
----------------------------------
Name: Marvin B. Rosenberg
Title: Secretary
CLARK MATERIAL HANDLING COMPANY
(to the extent of its obligations
and agreements set forth or
referred to in Sections 10.05 and
10.06 of the Stock Purchase
Agreement, as amended hereby)
By /s/ John J. Moran, Jr.
----------------------------------
Name: John J. Moran, Jr.
Title: Vice President
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<PAGE> 1
Exhibit 10.10
TRADEMARK ASSIGNMENT AGREEMENT
DATED AS OF July 31, 1992
BY AND BETWEEN
CLARK EQUIPMENT COMPANY,
as Assignor
AND
CLARK MATERIAL HANDLING COMPANY,
as Assignee
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C> <C>
ARTICLE 1 DEFINITIONS ..................................................... 1
1.1 General ......................................................... 1
1.2 "Agreement" ..................................................... 2
1.3 "Assigned Marks" ................................................ 2
1.4 "Assumed Liabilities" ........................................... 2
1.5 "Eligible Goods and Services .................................... 2
1.6 "Marks" ......................................................... 2
1.7 "Registrations" ................................................. 3
1.8 "Retained Business" ............................................. 3
1.9 "Retained Marks" ................................................ 3
ARTICLE 2 INTELLECTUAL PROPERTY RIGHTS .................................... 3
2.1 Assignment ...................................................... 3
2.1.1 Grant ........................................................... 3
2.1.2 Delivery of Assignment Instruments .............................. 3
2.1.3 Amendment of Trademark Registrations ............................ 3
2.1.4 Use of Marks; Change of Names ................................... 4
2.2 Grant of License ................................................ 6
2.3 Reservation of Rights ........................................... 6
2.4 No Other Assignments, Licenses or Access ........................ 6
ARTICLE 3 DEFENSE AND MAINTENANCE ......................................... 6
3.1 Infringement Defense ............................................ 6
3.1.1 Notice and Control .............................................. 6
3.1.2 Procedure ....................................................... 7
3.2 Maintenance of Registrations .................................... 7
ARTICLE 4 WARRANTIES ...................................................... 7
</TABLE>
(i)
<PAGE> 3
<TABLE>
<CAPTION>
Page
<S> <C> <C> <C>
ARTICLE 5 INDEMNIFICATION ................................................. 7
5.1. Indemnification ................................................. 7
5.2 Assumed Liabilities ............................................. 8
ARTICLE 6 MISCELLANEOUS ................................................... 8
6.1 Notices ......................................................... 8
6.2 Successors and Assigns .......................................... 8
6.3 Amendment, Modification and Waiver .............................. 9
6.4 No Third Party Beneficiaries .................................... 9
6.5 Interpretation .................................................. 9
6.6 Legal Enforceability ............................................ 9
6.7 Governing Law ................................................... 9
6.8 Entire Agreement ................................................ 9
6.9 Expenses ........................................................ 10
6.10 Counterparts .................................................... 10
ARTICLE 7 TERMINATION OF LICENSE .......................................... 10
</TABLE>
(ii)
<PAGE> 4
SCHEDULES
<TABLE>
<CAPTION>
<S> <C>
1.3 ASSIGNED MARKS
1.7 REGISTRATIONS
2.1.2 FORM OF TRADEMARK ASSIGNMENT
2.2(a) LICENSED MARKS
2.2(b) LICENSE AGREEMENT
</TABLE>
(iii)
<PAGE> 5
TRADEMARK ASSIGNMENT AGREEMENT dated as of July 31, 1992, by and
between CLARK EQUIPMENT COMPANY, a Delaware corporation (the "Assignor"), and
CLARK MATERIAL HANDLING COMPANY, a Kentucky corporation (the "Assignee").
Capitalized terms used herein and not otherwise defined herein shall have the
respective meanings assigned to such terms in the Stock Purchase Agreement, and
all such definitions are expressly made a part of this Agreement as though fully
and completely set forth herein.
WHEREAS, Assignor, either directly or through the Other Sellers, owns
all of the issued and outstanding shares of capital stock of each member of the
CMH Group other than the Clarklift/Samsung Entities, and owns a portion of the
issued and outstanding shares of capital stock of each of the Clarklift/Samsung
Entities (collectively, the "Group Stock");
WHEREAS, Assignor and Terex Corporation, a Delaware corporation and the
parent company of the Assignee have entered into a Stock Purchase Agreement
dated as of May 27, 1992 (the "Stock Purchase Agreement"), providing for the
sale by Assignor to the Purchaser of the Group Stock, all on the terms and
subject to the conditions set forth in the Stock Purchase Agreement and the
Ancillary Agreements; and
WHEREAS, pursuant to the Stock Purchase Agreement, Assignor has agreed
to assign to Assignee, and Assignee has agreed to acquire from Assignor, rights
in certain marks owned by Assignor, in accordance with the terms and conditions
set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants
and agreements hereinafter set forth, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings:
1.1 General. Unless the context indicates otherwise, the terms
"hereof", "herein" and "hereunder" as
<PAGE> 6
used in this Agreement shall refer to this Agreement in its entirety and not to
any particular portion of this Agreement.
1.2 "Agreement" means this Trademark Assignment Agreement and all
Schedules and amendments and supplements, if any, hereto.
1.3 "Assigned Marks" means all rights in (i) the CLARK Mark and all
Marks that incorporate the term "Clark", but do not also include (x) the word
"Equipment," (y) the word "Components," or (z) any derivative of either
"Equipment" or "Components," for use in connection with Eligible Goods and
Services, and only for such use, in those countries listed on Schedule 1.7
hereto; (ii) each of the Registrations listed on Schedule 1.3 annexed hereto
which relates entirely or principally to Eligible Goods and Services, to the
extent, and only to the extent, such registration relates to the country, and
the Eligible Goods and Services indicated on said Schedule as to such
registration; and (iii) the right to register in countries set forth on Schedule
1.7 applications for registration, as set forth in Section 2.1.3(a) hereof, for
the CLARK Mark and other Marks that incorporate the word "Clark," but do not
also include (x) the word "Equipment," (y) the word "Components," or (z) any
derivative of either "Equipment" or "Components."
1.4 "Assumed Liabilities" means all liabilities arising from or related
to the use, in the conduct of the Business prior to the Closing Date, of any
Assigned Mark.
1.5 "Eligible Goods and Services" means forklift trucks, industrial
trucks, tow tractors, tuggers, powered hand trucks and walkies, as well as
parts, accessories and attachments relating to any of the foregoing, together
with services and activities incidental to the foregoing, to the extent
manufactured, sold and provided by Assignor exclusively with respect to the
Business immediately prior to the Closing Date, plus any new models of or
improvements to any of the foregoing products, but excluding transmissions,
transaxles, axles, brakes, torque converters and systems to transfer power, and
components and parts thereof and any other products, parts, components or
services manufactured, distributed, or provided by Assignor or any of its other
divisions or business units.
1.6 "Marks" means all domestic and foreign trademarks, service marks,
trade dress, and trademark and
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<PAGE> 7
service mark registrations and applications therefor owned by Assignor on the
Closing Date.
1.7 "Registrations" means the domestic or foreign trademark or service
mark registrations for the CLARK Mark and for the Marks that incorporate the
term "Clark", and applications therefor, that are listed on Schedule 1.7
attached hereto.
1.8 "Retained Business" means any business engaged in by Assignor on
the Closing Date, or prior or subsequent thereto, other than the Business.
1.9 "Retained Marks" means all rights in and to the CLARK Mark and any
other Marks owned by Assignor or in which Assignor has any rights, other than
the Assigned Marks.
ARTICLE 2
INTELLECTUAL PROPERTY RIGHTS
2.1 Assignment.
2.1.1 Grant. Effective as of the Closing Date, Assignor hereby assigns
and transfers to Assignee, and Assignee accepts, (a) all of Assignor's right,
title and interest in and to the Assigned Marks, together with the goodwill
associated with and symbolized by any Assigned Mark so assigned and transferred
and (b) the right to sue for past infringement of any Assigned Mark.
2.1.2 Delivery of Assignment Instruments. As soon as practical after
the Closing Date, Assignor shall deliver to Assignee executed instruments of
assignment substantially in the form of the Trademark Assignment contained in
Schedule 2.1.2 annexed hereto, with respect to any Registration which is an
Assigned Mark.
2.1.3 Amendment of Trademark Registrations. (a) As soon as practical
after the Closing Date, to the extent permitted by applicable law, Assignor
shall file in the United States Patent and Trademark Office (the "PTO") and each
of the appropriate offices of the applicable foreign governments all instruments
necessary to apply for all amendments to each Registration, where applicable,
excluding Registrations on Schedule 1.3, so as to delete from its list of goods
and services any Eligible Goods and
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<PAGE> 8
Services. Assignor shall use its commercially reasonable efforts to prosecute
each such application through to completion, and shall retain each Registration
with respect to all goods and services other than the Eligible Goods and
Services. Assignee shall have the right to file in the PTO and appropriate
foreign governmental agencies, for the countries set forth on Schedule 1.7
hereto, applications for registration of the CLARK Mark and other Marks that
incorporate the term "Clark," but do not also incorporate (i) the word
"Equipment," or (ii) the word "Components," or (iii) any derivative of
"Equipment" or "Components," with respect to the Eligible Goods and Services.
Assignor agrees to execute further documents necessary to effectuate this
provision, including but not limited to consents to use.
(b) As soon as practical after the Closing Date, to the extent
permitted by applicable law, Assignee shall file in the PTO and each of the
appropriate offices of the applicable foreign governments all instruments
necessary to apply for all amendments to each Registration on Schedule 1.3
relating principally but not entirely to Eligible Goods and Services, so as to
delete from its list of goods and services any goods and services that are not
Eligible Goods and Services. Assignee shall use its commercially reasonable
efforts to prosecute each such application through to completion, and shall
retain each Registration with respect to all Eligible Goods and Services. As to
each such Registration in connection with which Assignee files for an amendment,
Assignor shall have the right to file, in the country issuing said Registration,
an application for a registration of the mark in question for goods and services
other than Eligible Goods and Services. Assignee agrees to execute further
documents necessary to effectuate this provision, including but not limited to
consents to use.
2.1.4 Use of Marks; Change of Names. (a) From and after the Closing
Date, Assignee shall be entitled to use all of the Assigned Marks in accordance
with the terms hereof. Assignee will, as promptly as practicable following the
Closing Date, remove or obliterate all the Retained Marks from its signs,
purchase orders, invoices, sales orders, labels, letterheads, shipping documents
and other materials, and Assignee shall not put into use after the Closing Date
any such materials not in existence on the Closing Date that bear any Retained
Mark or any Mark similar thereto (except that this provision shall not diminish
Assignee's right to use the Assigned Marks or any variation thereof).
Notwithstanding the foregoing, Assignee may (a)
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<PAGE> 9
deplete all inventory, work-in-process, parts and materials existing on the
Closing Date which use any Retained Mark or a mark similar thereto, (b) for a
period of ninety (90) days following the Closing Date, deplete all stationery,
invoices and other paper goods existing on the Closing Date which use any
Retained Mark or a mark similar thereto, and (c) use (but shall deplete as
promptly as reasonably practical) all packaging, brochures and parts manuals
existing on the Closing Date which use any Retained Mark or a mark similar
thereto; provided, however, that in each case Assignee shall place or cause to
be placed on any such item a stamp, mark or other notation identifying the
Business as a business of the CMH Group (and not of CEC); and provided, further,
that in no event shall Assignee or any member of the CMH Group reorder any of
the foregoing items. Nothing in this provision shall diminish Assignee's right
to use any Assigned Marks or any variation thereof.
(b) From and after the 40th Business Day following the Closing Date,
Assignee shall not, nor shall any entity affiliated with Assignee, use any trade
name or Mark that incorporates both the term "Clark" and (i) the term
"Equipment," or (ii) the term "Components," or (iii) any derivative of
"Equipment" or "Components." Within 40 Business Days after the Closing Date,
Assignee shall cause each of the members of the CMH Group set forth below to
change its corporate name to the name set forth opposite such corporation below:
<TABLE>
<CAPTION>
CMH Group Member New Corporate Name
---------------- ------------------
<S> <C>
Clark Equipment GmbH Clark Material Handling
GmbH
Clark Components International Clark Material Handling
Inc. International Inc.
Clark France Manutention S.A. Clark Material Handling
France Manutention S.A.
Clark Maquinaria S.A. Clark Material Handling
Maquinaria S.A.
Clark Components Korea, Inc. Clark Material Handling
Korea, Inc.
</TABLE>
2.2 Grant of License. Notwithstanding any other provision of this
Agreement, with regard to the Marks set forth on Schedule 2.2(a) annexed hereto
(the "Licensed
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<PAGE> 10
Marks"), the provisions of the terms and conditions of the "License Agreement,"
annexed hereto as Schedule 2.2(b), shall control.
2.3 Reservation of Rights. Assignor reserves all rights in Marks not
specifically granted to Assignee pursuant to this Agreement.
2.4 No Other Assignments, Licenses or Access. Except as expressly
provided in this Agreement, Assignee is granted no assignments, licenses or
rights by implication or otherwise in technology, business information,
trademarks or other intellectual property rights owned, controlled or used by
Assignor. Assignee acquires no rights hereunder in the Retained Marks.
ARTICLE 3
DEFENSE AND MAINTENANCE
3.1 Infringement Defense.
3.1.1 Notice and Control. In the event that either party hereto or any
of its affiliates or subsidiaries becomes a defendant in an infringement action
commenced by a third party, and related to one or more of the Assigned Marks or
the Retained Marks, said party shall promptly notify the other party in writing.
In such case, Assignor and Assignee shall confer with regard to all material
aspects of the defense. In the event that any claim in the action is for
infringement of an Assigned Mark, Assignee shall control the defense and bear
the expense for such claim, and in the event any claim is for infringement of a
Retained Mark, Assignor shall control the defense and bear the expense for such
claim. In either event, if the resolution of any such action could adversely
affect any of the Retained Marks, Assignor shall have the right to control the
defense of that portion of the action which so relates to or affects the
Retained Marks, and if it could adversely affect any of the Assigned Marks,
Assignee shall have the right to control the defense of that portion of the
action which so relates to or affects the Assigned Marks. If either party elects
not to defend and control the defense of a claim which it has the right to
defend hereunder, then the other party shall have the right to defend and
control the defense of such claim at its sole expense.
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<PAGE> 11
3.1.2 Procedure. The parties hereto shall cooperate with each other at
all times in connection with any infringement action under this Section 3.1. If
only one of the parties is participating in such action, then the other party's
cooperation shall be at no out-of-pocket expense to such other party.
3.2 Maintenance of Registrations. After the Closing Date, Assignee may
pursue, maintain, or renew any rights it has received under this Agreement in
the Assigned Marks, but it shall have no obligation to do so.
ARTICLE 4
WARRANTIES
Except as set forth in the Stock Purchase Agreement, Assignor makes no
warranties or representations.
ARTICLE 5
INDEMNIFICATION
5.1. Indemnification. (a) Assignee hereby agrees to indemnify, defend
and hold harmless Assignor and its subsidiaries and affiliates and their
respective directors, officers, employees, agents and attorneys, from and
against any claim directly or indirectly resulting from, arising out of, or
related to the use by Assignee or any subsidiary or affiliate thereof, whether
or not in accordance with this Agreement, of (i) any Retained Mark, Assigned
Mark, or similar Mark, or (ii) any name using the term "Clark."
(b) Assignor hereby agrees to indemnify, defend and hold harmless
Assignee and its subsidiaries and affiliates and their respective directors,
officers, employees, agents and attorneys, from and against any claim directly
or indirectly resulting from, arising out of, or related to the use by Assignor
or any subsidiary or affiliate thereof, whether or not in accordance with this
Agreement, of (i) any Retained Mark, Assigned Mark, or similar Mark, or (ii) any
name using the term "Clark."
5.2 Assumed Liabilities. Upon the terms and subject to the conditions
set forth in this Agreement and in addition to any other liabilities otherwise
expressly
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<PAGE> 12
assumed by Assignee pursuant to this Agreement, Assignee hereby confirms that it
has assumed and agreed to pay, perform and discharge forthwith any and all
Assumed Liabilities.
ARTICLE 6
MISCELLANEOUS
6.1 Notices. Any notice or other communications required or permitted
hereunder shall be sufficiently given if delivered in person or sent by telecopy
or by registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:
(a) if to the Assignor, Clark Equipment Company
to it at: 100 North Michigan Street
South Bend, Indiana 46601
Telecopy No.: (219) 239-0237
Attn: Bernard D. Henely, Esq.
Vice President and
General Counsel
with a copy to: White & Case
1155 Avenue of the Americas
New York, New York 10036
Telecopy No.: (212) 354-8113
Attn: William F. Wynne, Jr.,
Esq.
(b) if to the Assignee, Clark Material Handling
to it at: Company
106 West Vine Street,
Suite 701
Lexington, Kentucky 40507
Telecopy No.: (606) 288-1355
Attn: Michael J. Grossman,
Esq.
General Counsel
6.2 Successors and Assigns. This Agreement may not be transferred,
assigned, pledged or hypothecated by Assignee without the prior written consent
of Assignor.
6.3 Amendment, Modification and Waiver. This Agreement may be amended,
modified or supplemented only by written agreement of the parties. Each party
hereto may, only by an instrument in writing, waive compliance by the
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<PAGE> 13
other party hereto with any term or provision of this Agreement on the part of
such other party hereto to be performed or complied with. The waiver by either
party hereto of a breach of any term or provision of this Agreement shall not be
construed as a waiver of any subsequent breach.
6.4 No Third Party Beneficiaries. This Agree- ment is solely for the
benefit of the parties hereto and is not intended to confer upon any other
person except the parties hereto any rights or remedies hereunder.
6.5 Interpretation. The Article and Section headings contained in this
Agreement are solely for the purpose of reference, are not part of the agreement
of the parties and shall not in any way affect the meaning or interpretation of
this Agreement. Whenever any words are used herein in the masculine gender, they
shall be construed as though they were also used in the feminine gender in all
cases where it would so apply.
6.6 Legal Enforceability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof. Any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
6.7 Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of New York applicable to
contracts made and to be performed entirely within the State of New York.
6.8 Entire Agreement. This Agreement, including the Schedules and the
other agreements and documents referred to herein and incorporated herein by
reference, and the Stock Purchase Agreement shall constitute the entire
agreement between Assignor and Assignee with respect to the subject matter
hereof and shall supersede all previous agreements, negotiations, commitments
and writings with respect to such subject matter.
6.9 Expenses. Except as otherwise provided in this Agreement or the
Stock Purchase Agreement, Assignor and Assignee shall each pay their own costs
and expenses incurred (whether or not payable as of the Closing Date) in
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<PAGE> 14
connection with the consummation of the transactions contemplated by this
Agreement, including without limitation the fees and expenses of their
respective counsel, financial advisors and accountants.
6.10 Counterparts. This Agreement may be executed in two or more
counterparts, all of which taken together shall constitute one instrument.
ARTICLE 7
TERMINATION OF LICENSE
The grant of license set forth in Section 2.2 of the Intellectual
Property Agreement between CEC and CMHC
-10-
<PAGE> 15
dated as of March 31, 1992 is hereby terminated upon execution of this Agreement
by the parties hereto.
IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of
each of the parties as of the day first above written.
CLARK EQUIPMENT COMPANY
By /s/
--------------------------------------
Name:
Title:
WITNESS:
/s/
- ------------------------
CLARK MATERIAL HANDLING COMPANY
By /s/
--------------------------------------
Name:
Title:
WITNESS:
/s/
- ------------------------
-11-
<PAGE> 16
SCHEDULE 1.3
ASSIGNED MARKS
I. UNITED STATES REGISTRATIONS
<TABLE>
<CAPTION>
Regis- Goods/
Mark tration No. Exp. Date Services
- ---- ----------- --------- --------
<S> <C> <C> <C>
Clark 165,644 01/05/08 Class 19 -
Motor
propelled
trucks
Clark 166,313 01/05/08 Class 23 -
(Supp. Tractors
Reg.)
Clark 507,796 03/22/99 Class 19 -
Power operated
industrial
material
handling
trucks used
merely to
transport
goods
Clark 512,742 7/26/99 Class 23 -
Power operated
gas engine &
electric
battery
powered
industrial
material
handling
tractors for
use in local
plant
operations
Clark 814,501 9/06/06 Class 35 -
Tires
</TABLE>
<PAGE> 17
Schedule 1.3
Page 2
<TABLE>
<CAPTION>
Regis- Goods/
Mark tration No. Exp. Date Services
- ---- ----------- --------- --------
<S> <C> <C> <C>
Clark 1,110,490 1/02/99 Int'l. Class 7
- Automated
storage/retrie-
val systems
consisting of
machines &
apparatus for
handling,
storing &
retrieving
materials &
parts therefor
</TABLE>
<PAGE> 18
Schedule 1.3
Page 3
<TABLE>
<CAPTION>
Date of
Regis- Regis- Good/
Mark tration No. tration Services
- ---- ----------- ------- --------
<S> <C> <C> <C>
Clarklift 660,744 4/22/58 Power Operated
Industrial Lift
Trucks
Clarktor 596,737 10/12/54 Towing Tractors
Clark 718,718 7/18/61 Renting of
Rental Material
System Handling
Equipment
Clark 939,080 7/25/72 Renting of
Rental Material
System Handling
Equipment,
Earth-Moving
and Loading
Machinery &
Truck-Trailers
</TABLE>
<PAGE> 19
Schedule 1.3
Page 4
II. FOREIGN REGISTRATIONS
<TABLE>
<CAPTION>
Regis- Goods/
Mark tration No. Exp. Date Services
- ---- ----------- --------- --------
<S> <C> <C> <C>
Clark D250,228 7/19/92 Class 16 -
(Australia) Printed
publications
relating to any of
the following,
namely:
Earthmoving
equipment,
construction
equipment, road
making & logging
equipment,
handling
equipment, &
machinery &
attachments
therefor,
forklifts & other
industrial
machines for
handling &
lifting; carrying
& stacking
vehicles,
tractors, freight
container handling
equipment &
vehicles &
attachments
therefore & power
shovels & cranes
</TABLE>
<PAGE> 20
Schedule 1.3
Page 5
<TABLE>
<CAPTION>
Regis- Goods/
Mark tration No. Exp. Date Services
- ---- ----------- --------- --------
<S> <C> <C> <C>
Clark B290,971 7/19/92 Printed
(Australia) publications
relating to any of
the following,
namely:
earthmoving
equipment,
construction
equipment, road
making & logging
equipment,
handling
equipment, &
machinery &
attachments
therefor,
forklifts & other
industrial
machines for
handling &
lifting; carrying
& stacking
vehicles,
tractors, freight
container handling
equipment &
vehicles &
attachments
therefor & power
shovels & cranes
Clark 811941922 7/15/96 Class 7.20,
(Brazil) 7.25, 7.5 -
Digging
conveyor
tractors
(conveying
shovels), on
</TABLE>
<PAGE> 21
Schedule 1.3
Page 6
<TABLE>
<CAPTION>
Regis- Goods/
Mark tration No. Exp. Date Services
- ----- ----------- --------- --------
<S> <C> <C> <C>
tires, industrial
conveyor tractors
(conveying
shovels), on
tires; automotor
stackers,
self-propelled on-
tire hydraulic
cranes
Clark 811941906 7/15/96 Classes 40.20 &
(Brazil) 40.25 -
Services: Renting
services of
digging conveyor
tractors on tires;
industrial
conveyor tractors
on tires,
automotor
stackers,
self-propelled on-
tire hydraulic
cranes, training
services of
operators for the
above products of
machinists of
mechanical &
servo-aid
transmission
maintenance, power
supply, steering
shafts &
propellers, torque
converters,
</TABLE>
<PAGE> 22
Schedule 1.3
Page 7
<TABLE>
<CAPTION>
Regis- Goods/
Mark tration No. Exp. Date Services
- ---- ----------- --------- --------
<S> <C> <C> <C>
digging
conveyor
tractor on
tires,
industrial
conveyor
tractors, self-
propelled on-
tire hydraulic
cranes
Clark 797,491 9/04/93 Classes 6, 7,
(W. 8, 9, 12 -
Germany) Material
handling &
transporting,
earthmoving &
construction
machinery
including power
operated lift
trucks, stackers,
pallet & platform
trucks, industrial
& towing tractors,
loader-backhoe
vehicles, straddle
carriers, tractor
shovels, front end
loaders, scrapers,
bulldozers, timber
& lumber handling
vehicles,
personnel
carriers,
trailers,
semitrailers,
freight
</TABLE>
<PAGE> 23
Schedule 1.3
Page 8
<TABLE>
<CAPTION>
Regis- Goods/
Mark tration No. Exp. Date Services
- ---- ----------- --------- --------
<S> <C> <C> <C>
carriers, shipping
containers for use
with vehicles,
truck bodies &
parts, attachments
& accessories
therefor, namely
devices for
loading,
unloading,
transporting,
lifting, raking,
opening, pulling,
pushing,
compressing,
fastening,
turning, holding,
removing,
weighing, digging,
shovelling,
transporting,
emptying,
protecting,
excavating,
transferring,
placing on edge,
enclosing with
fence, clearing
away, ploughing,
compressing,
connecting,
twisting materials
& objects
Clark 628,857 5/15/01 Class 12 -
(W. Power operated
Germany) industrial
material
</TABLE>
<PAGE> 24
Schedule 1.3
Page 9
<TABLE>
<CAPTION>
Regis- Goods/
Mark tration No. Exp. Date Services
- ---- ----------- --------- --------
<S> <C> <C> <C>
handling trucks
used merely to
transport goods,
and power operated
gas engine and
electric battery
powered industrial
material handling
tractors for use
in local plant
operation
Clark 418,718 9/13/03 Classes 7 & 12
(Italy) - Material
handling &
transporting,
earthmoving &
construction
machinery
including power
operated lift
trucks, stackers,
pallet & platform
trucks, industrial
& towing tractors,
loader-backhoe
vehicles, straddle
carriers, tractor
shovels, front end
loaders, scrapers,
bulldozers, timber
& lumber handling
vehicles,
personnel
carriers,
</TABLE>
<PAGE> 25
Schedule 1.3
Page 10
<TABLE>
<CAPTION>
Regis- Goods/
Mark tration No. Exp. Date Services
- ---- ----------- --------- --------
<S> <C> <C> <C>
trailers,
semitrailers,
freight carriers,
shipping
containers for use
with vehicles,
truck bodies &
parts, attachments
& accessories
therefor
</TABLE>
<PAGE> 26
Schedule 1.3
Page 11
<TABLE>
<CAPTION>
Date of
Regis- Regis- Good/
Mark tration No. tration Services
- ---- ----------- ------- --------
<S> <C> <C> <C>
Clarklift 136460 4/08/72 Power Operated
(Australia) Lift Trucks &
Towing
Tractors.
Clarklift 003179435 9/15/85 Power Operated
(Brazil) Lift Trucks &
Towing
Tractors.
Clarklift 719,858 4/02/78 Power Operated
(W. Lift Trucks &
Germany) Tractor Trucks.
Clarkstor 284927 12/27/72 Automatic
(Italy) Warehousing
Storage &
Retrieval Machines
& Control Units, &
Racks & Shelving
for Use Therewith.
Clark A326615 02/01/79 Rental & Hiring
Rental of Material
System Handling
(Australia) Equipment being
Vehicles &
Machinery Used
for Transporta-
tion & Storage
of Goods.
Clark B379340 02/01/79 Rental & Hiring
Rental of Vehicles
System Used for Soil
(Australia) Working, Earth
Moving, Timber
Processing,
Civil
</TABLE>
<PAGE> 27
Schedule 1.3
Page 12
<TABLE>
<CAPTION>
Date of
Regis- Regis- Good/
Mark tration No. tration Services
- ---- ----------- ------- --------
<S> <C> <C> <C>
Engineering
Construction,
Mining &
Agriculture.
Clark 007044747 12/25/79 Renting of
Rental Material
System Handling
(Brazil) Equipment,
Earth Moving
Machinery &
Loading
Machinery.
Clark 1205461 06/02/82 Renting of
Rental Material
System Handling
(France) Equipment,
Earth Moving &
Loading
Machinery &
Truck Trailers.
Clark 989,207 04/02/79 Renting of
Rental Machines for
Systems Moving &
(W. Transporting
Germany) Machines &
Implements for
Moving &
Transporting of
Objects &
Materials, for
Earthmoving (also
as Construction
Machine) as well
as for Loading &
Unloading.
</TABLE>
<PAGE> 28
Schedule 1.3
Page 13
<TABLE>
<CAPTION>
Date of
Regis- Regis- Good/
Mark tration No. tration Services
- ---- ----------- ------- --------
<S> <C> <C> <C>
Clark 327349 11/26/75 Renting of
Rental Material
System Handling
(Italy) Equipment,
Earth Moving &
Loading Machinery
& Truck Trailers,
Road Rolling
Machines,
Machinery for the
Spreading of Road
Materials &
Machinery for the
Spraying of Road
Materials.
</TABLE>
<PAGE> 29
SCHEDULE 1.7
REGISTRATIONS
With respect to each registration listed in this Schedule 1.7 wherein any
product, service or class of a product or service is listed in brackets,
Assignor shall file an application to amend seeking the deletion of all products
and services which appear in bold-face and the addition of all products and
services which are underlined.
I. UNITED STATES REGISTRATIONS
<TABLE>
<CAPTION>
Regis-
Mark tration No. Exp. Date Goods/Services
- ---- ----------- --------- --------------
<S> <C> <C> <C>
Clark *165,644 01/05/08 Class 19 -
Motor
propelled
trucks
Clark *166,313 01/05/08 Class 23 -
(Supp. Tractors
Reg.)
Clark *507,796 03/22/99 Class 19 -
Power operated
industrial
material
handling
trucks used
merely to
transport
goods
Clark * 512,742 7/26/99 Class 23 -
Power operated
gas engine &
electric
battery
powered
industrial
</TABLE>
- --------------------------
* Each registration marked with an asterisk shall be assigned to Assignee
pursuant to this Agreement.
<PAGE> 30
Schedule 1.7
Page 2
<TABLE>
<CAPTION>
Regis-
Mark tration No. Exp. Date Goods/Services
- ---- ----------- --------- --------------
<S> <C> <C> <C>
material
handling
tractors for
use in local
plant
operations
Clark * 814,501 19/06/06 Class 35 -
Tires
Clark 1,026,003 6/02/95 [Int'l. Class
2 - Paint]
[Int'l. Class
3 - Battery
cleaners,
carburetor
cleanser &
degreasers]
Int'l. Class 4
-[Chain & cable
lubricants, metal
slide lubricants,
penetrating oils,
spray lubricants,
belt dressings,
engine
lubricants,]
transmission
lubricants,
[hydraulic
lubricants &
general purpose
lubricants]
[Int'l. Class
6 - Locks and
chains]
</TABLE>
<PAGE> 31
Schedule 1.7
Page 3
<TABLE>
<CAPTION>
Regis-
Mark tration No. Exp. Date Goods/Services
- ---- ----------- --------- --------------
<S> <C> <C> <C>
Int'l. Class 7 -
For mobile
machines the
following:
[Operator's cab
assemblies,
roll-over
protection
structures, guard
elements, seats,
heaters, locks,
hydraulic systems,
hydraulic
actuators,
hydraulic
cylinders,
hydraulic pistons,
hydraulic hose,
hydraulic fluid;
packing, guides,]
torque converters,
axles, axle
housings, [fork
truck mast
assemblies, forks,
chains, loader
buckets, & boom
assemblies]
[Int'l. Class
9 - Electric
Rotors,
</TABLE>
<PAGE> 32
Schedule 1.7
Page 4
<TABLE>
<CAPTION>
Regis-
Mark tration No. Exp. Date Goods/Services
- ---- ----------- --------- --------------
<S> <C> <C> <C>
electric wire,
electric contact
tips, electric
lights, light
fixtures, backup
alarms, & fire
extinguishers]
[Int'l. Claus
11 - Heaters]
Int'l. Class 12 -
For land vehicles
the following:
[new and
remanufactured
internal
combustion
engines, engine
accessories,
radiators,
adaptors,
bearings,
brackets,
bushings, clamps,
covers, cutting
edges, gussets,
bucket teeth,
lubrication
elements, wear
caps, controls,
couplers,
diaphragms, engine
governors,
pistons, rings,
pumps, sheaves,
sprockets, fan
</TABLE>
<PAGE> 33
Schedule 1.7
Page 5
Regis-
Mark tration No. Exp. Date Goods/Services
- ---- ----------- --------- --------------
belts, oil
filters, air
filters, forks,
gears, seals,]
torque converters,
[clutches,
universal joints,
differentials,
tires, instrument
panels, operators'
cab assemblies,
guard elements,
hydraulic
cylinders,
hydraulic hose,]
axles, [boom
assemblies; fuel
filters,
fasteners,
fittings, flanges,
gaskets, gages,
electrical
systems,
batteries,
armatures,
capacitors, wire
harness, meters,
electrical
instruments,
motors, coils,
condensers
connectors,
regulators,
relays, rotors,
solenoids, fuses,
<PAGE> 34
Schedule 1.7
Page 6
Regis-
Mark tration No. Exp. Date Goods/Services
- ---- ----------- --------- --------------
switches, wiring,
yokes,]
transmissions,
[housings, loader
buckets, shafts,
sprags, impellers,
springs,] axle
housings.
[Wheels,] brakes,
(instruments,
roll-over
protection
structures,
hydraulic
actuators,
hydraulic pistons,
guides and fork
truck mast
assemblies]
[Int'l. Class
17 - Packings]
[Int'l. Class
20 - Seats]
<PAGE> 35
Schedule 1.7
Page 7
<TABLE>
<CAPTION>
Regis-
Mark tration No. Exp. Date Goods/Services
- ---- ----------- --------- --------------
<S> <C> <C> <C>
Clark * 1,110,490 1/02/99 Int'l. Class 7
- Automated
storage/retrie-
val systems
consisting of
machines &
apparatus for
handling,
storing &
retrieving
materials &
parts therefor
Clark 1,142,245 12/09/00 Int'l. Class 7
- [Front
loaders,
bulldozers,]
axles for
machines,
torque
converters for
machines,
[winches, and
parts
therefor]
Int'l. Class
12 - [Lift
trucks, pallet
trucks,
platform
trucks, towing
tractors,]
axles for land
vehicles,
transmissions
for land
vehicles, and
parts therefor
</TABLE>
<PAGE> 36
Schedule 1.7
Page 8
<TABLE>
<CAPTION>
Date of
Regis- Regis- Good/
Mark tration No. tration Services
- ---- ----------- --------- --------------
<S> <C> <C> <C>
Clarklift * 660,744 4/22/58 Power Operated
Industrial Lift
Trucks
Clarktor * 596,737 10/12/54 Towing Tractors
Clark * 718,718 7/18/61 Renting of
Rental Material
System Handling
Equipment
Clark * 939,080 7/25/72 Renting of
Rental Material
System Handling
Equipment,
Earth-Moving
and Loading
Machinery &
Truck-Trailers
</TABLE>
<PAGE> 37
Schedule 1.7
Page 9
II. FOREIGN REGISTRATIONS
<TABLE>
<CAPTION>
Regis- Goods/
Mark tration No. Exp. Date Services
- ---- ----------- --------- --------------
<S> <C> <C> <C>
Clark A293773 1/28/97 Class 12 -
(Australia) Vehicles &
trailers for
soil-working,
earthmoving,
[materials
handling,] timber
handling, timber
processing, civil
engineering
construction,
mining,
agriculture,
horticulture,
transport &
personnel carrying
& parts, fittings
& accessories for
all the aforesaid,
the foregoing
goods including
their said
fittings &
accessories
</TABLE>
<PAGE> 38
Schedule 1.7
Page 10
<TABLE>
<CAPTION>
Regis- Goods/
Mark tration No. Exp. Date Services
- ---- ----------- --------- --------------
<S> <C> <C> <C>
Clark B307894 6/07/98 Class 7 -
(Australia) Machines,
equipment &
apparatus for
Boil-working,
earthmoving,
[materials
handling,] timber
handling, timber
processing, civil
engineering
construction,
mining,
agriculture &
horticulture;
cranes; & parts,
fittings &
accessories for
all the foregoing
</TABLE>
<PAGE> 39
Schedule 1.7
Page 11
Regis- Goods/
Mark tration No. Exp. Date Services
- ---- ----------- --------- --------------
Clark * D250,228 7/19/92 Class 16 -
(Australia) Printed
publications
relating to any of
the following,
namely:
Earthmoving
equipment,
construction
equipment, road
making & logging
equipment,
handling
equipment, &
machinery &
attachments
therefor,
forklifts & other
industrial
machines for
handling &
lifting; carrying
& stacking
vehicles,
tractors, freight
container handling
equipment &
vehicles &
attachments
therefore & power
shovels & cranes
<PAGE> 40
Schedule 1.7
Page 12
Regis- Goods/
Mark tration No. Exp. Date Services
- ---- ----------- --------- --------------
Clark * B290,971 7/19/92 Printed
(Australia) publications
relating to any
of the
following,
namely:
earthmoving
equipment,
construction
equipment, road
making &
logging
equipment,
handling
equipment, &
machinery &
attachments
there for,
forklifts &
other
industrial
machines for
handling &
lifting;
carrying &
stacking
vehicles,
tractors,
freight
container
handling
equipment &
vehicles &
attachments
therefor &
power shovels &
cranes
<PAGE> 41
Schedule 1.7
Page 13
<TABLE>
<CAPTION>
Regis- Goods/
Mark tration No. Exp. Date Services
- ---- ----------- --------- --------------
<S> <C> <C> <C>
Clark 071,609 10/26/98 Classes [1, 2,
(Benelux) 4, 5, 6,] 7,
[8, 9, 10, 11,]
12, [16, 17, 18,
19, 20, 21, 29,
30, 31, 32, 33]
Class 7 [Axles,
transmissions,
transaxles, torque
converters and
brakes for
machinery and
equipment and
apparatus for soil
working,
earthmoving,
timber handling
and processing,
engineering
construction,
mining,
agriculture and
horticulture, and
off-highway
transport and
personnel
carrying, and
parts, fittings
and accessories
for all of the
foregoing.]
Class 12 [Axles,
transmissions,
transaxles torque
converters and
brakes for
vehicles and
trailers for soil
working,
</TABLE>
<PAGE> 42
Schedule 1.7
Page 14
<TABLE>
<CAPTION>
Regis- Goods/
Mark tration No. Exp. Date Services
- ---- ----------- --------- --------------
<S> <C> <C> <C>
earthmoving,
timber handling
and Processing,
engineering
construction,
mining,
agriculture and
horticulture, and
off-highway
transport and
personnel
carrying, and
parts, fittings
and accessories
for all of the
foregoing.]
Clark * 1272/ 5/31/00 Class 7 - Motor
0235.941 propelled
(Brazil) trucks,
including
industrial
trucks &
tractors
Clark 003067858 10/20/94 Class 7.60 -
(Brazil) Transmissions &
torque
converters[, &
rotary
couplers]
Clark * 811941922 7/15/96 Class 7.20,
(Brazil) 7.25, 7.5 -
Digging conveyor
tractors
(conveying
shovels), on
tires, industrial
conveyor tractors
(conveying
shovels), on
tires;
</TABLE>
<PAGE> 43
Schedule 1.7
Page 15
<TABLE>
<CAPTION>
Regis- Goods/
Mark tration No. Exp. Date Services
- ---- ----------- --------- --------------
<S> <C> <C> <C>
automotor
stackers, self-
propelled on-
tire hydraulic
cranes
Clark * 811941906 7/15/96 Classes 40.20 &
(Brazil) 40.25 -
Services: Renting
services of
digging conveyor
tractors on tires;
industrial
conveyor tractors
on tires,
automotor
stackers,
self-propelled on-
tire hydraulic
cranes, training
services of
operators for the
above products of
machinists of
mechanical &
servo-aid
transmission
maintenance, power
supply, steering
shafts &
propellers, torque
converters,
digging conveyor
tractor on tires,
industrial
conveyor tractors,
self-
</TABLE>
<PAGE> 44
Schedule 1.7
Page 16
<TABLE>
<CAPTION>
Regis- Goods/
Mark tration No. Exp. Date Services
- ---- ----------- --------- --------------
<S> <C> <C> <C>
propelled on-
tire hydraulic
cranes
Clark 1,453,861 3/10/98 [Classes 1-22 &
(France) 22-42 - All
goods in these
classes]
Class 7 [Axles,
transmissions,
transaxles torque
converters and
brakes for
machinery and
equipment and
apparatus for soil
working,
earthmoving timber
handling and
processing,
engineering
construction,
mining,
agriculture and
horticulture, and
off-highway
transport and
personnel
carrying, and
parts, fittings
and accessories
for all of the
foregoing.]
Class 12 -
[Axles,
transmissions,
transaxles
torque
converters and
brakes for
vehicles and
trailers for
</TABLE>
<PAGE> 45
Schedule 1.7
Page 17
Regis- Goods/
Mark tration No. Exp. Date Services
- ---- ----------- --------- --------------
soil working,
earthmoving timber
handling and
processing,
engineering
construction,
mining,
agriculture and
horticulture, and
off-highway
transport and
personnel
carrying, and
parts, fittings
and accessories
for all of the
foregoing.]
<PAGE> 46
Schedule 1.7
Page 18
Regis- Goods/
Mark tration No. Exp. Date Services
- ---- ----------- --------- --------------
Clark 907295 5/31/99 Classes [1, 6,]
(W. 7, [11,] 12,
Germany) [17 & 19]
Class 7 [Axles,
transmissions,
transaxles torque
converters and
brakes for
machinery and
equipment and
apparatus for soil
working.
earthmoving,
timber handling
and processing.
engineering
construction,
mining,
agriculture and
horticulture, and
off-highway
transport and
personnel
carrying, and
parts, fittings
and accessories
for all of the
foregoing.]
Class 12 [Axles,
transmissions,
transaxles, torque
converters and
brakes for
vehicles and
trailers for soil
working,
earthmoving,
timber handling
and processing,
engineering
<PAGE> 47
Schedule 1.7
Page 19
Regis- Goods/
Mark tration No. Exp. Date Services
- ---- ----------- --------- --------------
construction,
mining,
agriculture and
horticulture,
and off-highway
transport and
personnel
carrying, and
parts, fittings
and accessories
for all of the
foregoing.]
<PAGE> 48
Schedule 1.7
Page 20
Regis- Goods/
Mark tration No. Exp. Date Services
- ---- ----------- --------- --------------
Clark * 797,491 9/04/93 Classes 6, 7,
(W. 8, 9, 12 -
Germany) Material
handling &
transporting,
earthmoving &
construction
machinery
including power
operated lift
trucks,
stackers,
pallet &
platform
trucks,
industrial &
towing
tractors,
loader-backhoe
vehicles,
straddle
carriers,
tractor
shovels, front
end loaders,
scrapers,
bulldozers,
timber & lumber
handling
vehicles,
personnel
carriers,
trailers, semi-
trailers,
freight
carriers,
shipping
containers for
use with
vehicles, truck
bodies & parts,
attachments &
accessories
therefor,
namely devices
for loading,
<PAGE> 49
Schedule 1.7
Page 21
Regis- Goods/
Mark tration No. Exp. Date Services
- ---- ----------- --------- --------------
unloading,
transporting,
lifting, raking,
opening, pulling,
pushing,
compressing,
fastening,
turning, holding,
removing,
weighing, digging,
shovelling,
transporting,
emptying,
protecting,
excavating,
transferring,
placing on edge,
enclosing with
fence, clearing
away, ploughing,
compressing,
connecting,
twisting materials
& objects
<PAGE> 50
Schedule 1.7
Page 22
Regis- Goods/
Mark tration No. Exp. Date Services
- ---- ----------- --------- --------------
Clark * 628,857 5/15/01 Class 12 -
(W. Power operated
Germany) industrial
material handling
trucks used merely
to transport
goods, and power
operated gas
engine and
electric battery
powered industrial
material handling
tractors for use
in local plant
operation
<PAGE> 51
Schedule 1.7
Page 23
Regis- Goods/
Mark tration No. Exp. Date Services
- ---- ----------- --------- --------------
Clark * 418,718 9/13/03 Classes 7 & 12
(Italy) - Material
handling &
transporting,
earthmoving &
construction
machinery
including power
operated lift
trucks, stackers,
pallet & platform
trucks, industrial
& towing tractors,
loader-backhoe
vehicles, straddle
carriers, tractor
shovels, front end
loaders, scrapers,
bulldozers, timber
& lumber handling
vehicles,
personnel
carriers,
trailers,
semitrailers,
freight carriers,
shipping
containers for use
with vehicles,
truck bodies &
parts, attachments
& accessories
therefor
<PAGE> 52
Schedule 1.7
Page 24
Regis- Goods/
Mark tration No. Exp. Date Services
- ---- ----------- --------- --------------
Clark 248,450 5/31/09 Classes [1, 2,
(Italy) 4, 6,] 7, [8,
9, 11,] 12,
[17, 19 & 20]
Class 7 [Axles,
transmissions,
transaxles, torque
converters and
brakes for
machinery and
equipment and
apparatus for soil
working.
earthmoving,
timber handling
and Processing,
engineering
construction,
mining,
agriculture and
horticulture, and
off-highway
transport and
personnel
carrying, and
parts, fittings
and accessories
for all of the
foregoing.]
Class 12 [Axles,
transmissions,
transaxles torque
converters and
brakes for
vehicles and
trailers for soil
working,
earthmoving,
timber handling
and processing,
<PAGE> 53
Schedule 1.7
Page 25
<TABLE>
<CAPTION>
Regis- Goods/
Mark tration No. Exp. Date Services
- ---- ----------- --------- --------------
<S> <C> <C> <C>
engineering
construction,
mining,
agriculture and
horticulture,
and off-highway
transport and
personnel
carrying, and
parts, fittings
and accessories
for all of the
foregoing.]
Clark 954,512 12/21/91 Class 9 -
(Japan) (Renewal
applied [Axles,
for) transmissions,
transaxles, torque
converters and
brakes for]
industrial
machinery &
implements [& all
other goods
belonging to this
Class (excluding
troughs, cages for
poultry, printing
& bookbinding
machinery &
implements,
buffers, springs,
pipe fittings,
packing and
gaskets)]
Clark 998,975 11/08/92 Class 11 -
(Japan) [Axles,
transmissions,
transaxles,
torque
converters and
</TABLE>
<PAGE> 54
Schedule 1.7
Page 26
Regis- Goods/
Mark tration No. Exp. Date Services
- ---- ----------- --------- --------------
brakes for]
electrical
machinery &
implements
[(excluding
household electric
appliances),
telephone
apparatus, wire
communication
apparatus, carrier
apparatus,
wireless
communication
apparatus, applied
radio apparatus,
remote control &
telemetering
apparatus, parts &
accessories of
electric
communication
machinery &
implements,
applied electronic
machinery &
apparatus,
electric
materials]
<PAGE> 55
Schedule 1.7
Page 27
Regis- Goods/
Mark tration No. Exp. Date Services
- ---- ----------- --------- --------------
Clark 1,898,379 10/28/96 Class 12 -
(Japan) [Axles,
transmissions,
transaxles
torque
converters and
brakes for]
transportation
equipment, &
parts &
accessories
<PAGE> 56
Schedule 1.7
Page 28
<TABLE>
<CAPTION>
Date of
Regis- Regis- Good/
Mark tration No. tration Services
- ---- ----------- --------- --------------
<S> <C> <C> <C>
Clarklift * 136460 4/08/72 Power Operated
(Australia) Lift Trucks &
Towing
Tractors.
Clarklift 370,656 10/7/80 [Power operated
(Benelux) Industrial Lift
Trucks,] all Goods
Included in this
Class, excluding
forklift trucks,
industrial trucks,
tow tractors,
tuggers, powered
hand trucks,
walkies and other
types of mobile
material handling
equipment, as well
as parts,
accessories and
attachments
relating to any of
the foregoing.
Clarklift * 003179435 9/15/85 Power Operated
(Brazil) Lift Trucks &
Towing
Tractors.
Clarklift 1,241,099 7/18/83 [Power Operated
(France) Industrial Lift
Trucks,] all
Goods Included
in this Class,
excluding
forklift
</TABLE>
<PAGE> 57
Schedule 1.7
Page 29
<TABLE>
<CAPTION>
Date of
Regis- Regis- Good/
Mark tration No. tration Services
- ---- ----------- --------- --------------
<S> <C> <C> <C>
trucks, industrial
trucks, tow
tractors, tuggers
powered hand
trucks, walkies
and other types of
mobile material
handling
equipment, as well
as parts,
accessories and
attachments
relating to any of
the foregoing.
Clarklift * 719,858 4/02/78 Power Operated
(W. Lift Trucks &
Germany) Tractor Trucks.
Clarkstor * 284927 12/27/72 Automatic
(Italy) Warehousing
Storage &
Retrieval Machines
& Control Units, &
Racks & Shelving
for Use Therewith.
Clark * A326615 02/01/79 Rental & Hiring
Rental of Material
System Handling
(Australia) Equipment being
Vehicles &
Machinery Used
for Transporta-
tion & Storage
of Goods.
Clark *B379340 02/01/79 Rental & Hiring
</TABLE>
<PAGE> 58
Schedule 1.7
Page 30
<TABLE>
<CAPTION>
Date of
Regis- Regis- Good/
Mark tration No. tration Services
- ---- ----------- --------- --------------
<S> <C> <C> <C>
Rental of Vehicles
System Used for Soil
(Australia) Working, Earth
Moving, Timber
Processing,
Civil
Engineering
Construction,
Mining &
Agriculture.
Clark * 007044747 12/25/79 Renting of
Rental Material
System Handling
(Brazil) Equipment,
Earth Moving
Machinery &
Loading
Machinery.
Clark * 1205461 06/02/82 Renting of
Rental Material
System Handling
(France) Equipment,
Earth-Moving &
Loading
Machinery &
Truck Trailers.
</TABLE>
<PAGE> 59
Schedule 1.7
Page 31
<TABLE>
<CAPTION>
Date of
Regis- Regis- Good/
Mark tration No. tration Services
- ---- ----------- --------- --------------
<S> <C> <C> <C>
Clark * 989,207 04/02/79 Renting of
Rental Machines for
Systems Moving &
(W. Transporting
Germany) Machines &
Implements for
Moving &
Transporting of
Objects & Materials
for Earthmoving
(also as
Construction
Machine) as well as
for Loading &
Unloading.
Clark * 327349 11/26/75 Renting of
Rental Material
System Handling
(Italy) Equipment,
Earth Moving &
Loading Machinery
& Truck Trailers,
Road Rolling
Machines,
Machinery for the
Spreading of Road
Materials &
Machinery for the
Spraying of Road
Materials.
</TABLE>
<PAGE> 60
SCHEDULE 2.1.2
TRADEMARK ASSIGNMENT
WHEREAS, CLARK EQUIPMENT COMPANY, a Delaware corporation, having its
principal place of business at 100 North Michigan Street, South Bend, Indiana,
owns all right, title and interest in and to the trademarks described and set
forth on Attachment "A" hereto and the United States trademark registrations in
respect thereof (the "Marks"); and
WHEREAS, CLARK MATERIAL HANDLING COMPANY, a Kentucky corporation, with
principal offices at 333 West Vine Street, Lexington, Kentucky, desires to
acquire, and CLARK EQUIPMENT COMPANY has agreed to transfer to CLARK MATERIAL
HANDLING COMPANY, said Marks;
NOW, THEREFORE, for good and valuable consideration, receipt of which
is hereby acknowledged, CLARK EQUIPMENT COMPANY does hereby assign and transfer
to CLARK MATERIAL HANDLING COMPANY its entire right, title and interest in and
to the Marks, as are more particularly described and set forth on Attachment "A"
hereto, together with the goodwill of the business symbolized by the Marks and
all claims for damages for past infringements of such Marks.
IN WITNESS WHEREOF, CLARK EQUIPMENT COMPANY has caused this instrument to be
executed in its name and on its behalf by its officer, duly authorized
thereunto, effective as of the 31st day of July, 1992.
CLARK EQUIPMENT COMPANY
By____________________________
Title:
<PAGE> 61
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this 31st day of July, 1992, before me personally appeared
________________________, to me known who, being by me duly sworn, did depose
and say that he resides at ____________________________ and that he is
_____________________ of CLARK EQUIPMENT COMPANY described herein and which
executed the foregoing instrument and that he signed his name thereto pursuant
to the authority by said CLARK EQUIPMENT COMPANY.
_______________________________
Notary Public
<PAGE> 62
SCHEDULE 2.1.2
ATTACHMENT "A"
ASSIGNMENT
OF U.S. TRADEMARKS FROM
CLARK EQUIPMENT COMPANY TO
CLARK MATERIAL HANDLING COMPANY
<TABLE>
<CAPTION>
Regis- Goods/
Mark tration No. Issue Date Services
- ---- ----------- --------- --------------
<S> <C> <C> <C>
Clark 165,644 3/13/23 Class 19 -
Motor
propelled
trucks
Clark 166,313 3/27/23 Class 23 -
(Supp. Tractors
Reg. )
Clark 507,796 3/22/49 Class 19 -
Power operated
industrial
material
handling
trucks used
merely to
transport
goods
Clark 512,742 7/26/49 Class 23 -
Power operated
gas engine &
electric
battery
powered
industrial
material
handling
tractors for
use in local
plant
operations
Clark 814,501 9/6/66 Class 35 -
Tires
</TABLE>
<PAGE> 63
Schedule 2.1.2
Attachment "A"
Page 2
Regis- Goods/
Mark tration No. Issue Date Services
- ---- ----------- --------- --------------
Clark 1,110,409 1/2/79 Int'l. Class 7
- Automated
storage/retrie-
val systems
consisting of
machines &
apparatus for
handling,
storing &
retrieving
materials &
parts therefor
<PAGE> 64
Schedule 2.1.2
Attachment "A"
Page 3
<TABLE>
<CAPTION>
Regis- Goods/
Mark tration No. Issue Date Services
- ---- ----------- --------- --------------
<S> <C> <C> <C>
Clarklift 660,744 4/22/58 Power Operated
Industrial Lift
Trucks
Clarktor 596,737 10/12/54 Towing Tractors
Clark 718,718 7/18/61 Renting of
Rental Material
System Handling
Equipment
Clark 939,080 7/25/72 Renting of
Rental Material
System Handling
Equipment,
Earth-Moving
and Loading
Machinery &
Truck-Trailers
</TABLE>
<PAGE> 1
EXHIBIT 10.11
SECOND AMENDED AND RESTATED
GENERAL OPERATING AGREEMENT
Agreement made this 29th day of November, 1990, by and between Clark
Material Handling Company, formerly known as Clark Material Systems Technology
Company, a business unit of Clark Equipment Company, with offices in Lexington,
Kentucky ("Clark") and Chase Manhattan Leasing Company (Michigan), Inc.,
formerly known as Clark Equipment Credit Corporation, with offices in Buchanan,
Michigan ("Chase").
Statement of Purpose
Clark and Chase wish to enter into this Agreement in order to establish
the terms and conditions which will be applicable to the financing by Chase of
products manufactured or distributed by Clark. This Agreement amends and
restates the Amended and Restated General Operating Agreement dated 10 March,
1987 ("Operating Agreement") between Clark Material Systems Technology Company,
a business unit of Clark Equipment Company, and Chase.
NOW, THEREFORE, in consideration of the mutual promises contained
herein, Clark and Chase hereby agree as follows:
(1) Definitions. As used in this Agreement the terms set forth below
shall have the following definitions:
1.1 Products - shall mean new and used equipment now, heretofore or
hereafter manufactured or distributed by the Industrial Truck Division of Clark
Equipment Company or by Clark in the United States, together with
all accessories or attachments thereto.
1.2 New Products - shall mean those Products which are new and unused
(but shall include Products which have been used for demonstration purposes for
less than 100 recorded hours) and in good and usable condition which were
currently offered for sale by Clark at the time Chase provided financing for
such Products.
1.3 Long Term Rental Products - shall mean those Products which are
held by a Dealer for lease, sublease, rent or subrent to end users pursuant to
Rental Contracts having an initial term of one year or more, including those
Products which are leased, subleased, rented or subrented by a Dealer to an end
user pursuant to a Rental Contract having an initial term of one year or more
which has expired but which has been extended on a month to
1
<PAGE> 2
month or longer basis.
1.4 Short Term Rental Products - shall mean those Products which are
held by a Dealer for lease, sublease, rental or subrental to end users pursuant
to Rental Contracts having terms of less than one year.
1.5 Other Products - shall mean all Products other than New Products,
Long Term Rental Products and Short Term Rental Products.
1.6 Current Parts - shall mean service and replacement parts for use on
Products, which are in good and usable condition, not obsolete, which are
currently offered for sale by Clark, in respect of which there have been line
item sales of twelve (12) or more by Clark in the preceding twelve (12) month
period which parts are now, heretofore or hereafter manufactured or distributed
by or on behalf of Clark.
1.7 Parts - shall mean service and replacement parts for use on
Products, which parts are now, heretofore or hereafter manufactured or
distributed by or on behalf of Clark.
1.8 Dealers - shall mean all dealers or distributors who are now or
hereafter authorized to purchase for resale Products and/or Parts from Clark
including sub-dealers, as such term is defined in the Dealer Agreement. Unless
specifically provided to the contrary, Dealers shall also include Branches. For
the purposes of Sections 1, 3.4, 3.8, 4.3, 7 and 8 of this Agreement, Dealers
shall also mean (a) those dealers or distributors whose Dealer Agreements
expired or were not renewed, and (b) those dealers or distributors not covered
by (a) which were formally terminated as dealers by Clark but in the case of
both (a) and (b) only with respect to Products financed for and/or Parts shipped
to such dealers or distributors prior to the date Chase received notice of said
expiration, non-renewal or termination.
1.9 Branches - shall mean all retail sales and/or rental outlets
operated by Clark and all separate corporations which operate as Dealers of
which Clark directly or indirectly owns or controls all or a majority of the
outstanding voting stock.
1.10 Dealer Agreement - shall mean the agreement or agreements between
Clark and the Dealer pursuant to which the Dealer is appointed an authorized
dealer or distributor of Products and/or Parts and any amendment, extension or
renewal thereof, now or hereafter in effect from time to time.
2
<PAGE> 3
1.11 Retail Contracts - shall mean any and all writings evidencing or
reflecting the retail sale of Products by Dealers to retail buyers, including
leases with nominal purchase options, but not including Rental Contracts.
1.12 Rental Contracts - shall mean any and all writings evidencing or
reflecting the lease, sublease, rental or subrental of Products by Dealers to
end users, but excluding leases with nominal purchase options.
1.13 Rental Products - shall mean Products which are leased, subleased,
rented or subrented to an end user pursuant to a Rental Contract by a Dealer.
1.14 Fair Market Value - shall mean the wholesale value of the
Products, Parts or other collateral, as the case may be, as mutually agreed to
by Clark and Chase. If Clark and Chase are unable to agree within 30 days after
a wholesale value is first quoted by either Clark or Chase, the wholesale value
shall be determined by an independent appraiser who is mutually acceptable to
Clark and Chase. The cost of such appraiser shall be shared equally. If Clark
and Chase are unable to agree on an acceptable appraiser, then the wholesale
value shall be established by a majority of a group of three appraisers, one
selected by Clark at its expense, one selected by Chase at its expense, and one
selected by the other two appraisers. The cost of the third appraiser shall be
shared equally.
1.15 Floor Plan Financing - shall mean financing extended by Chase with
respect to Products which are purchased by Dealers from Clark or from another
Dealer and which are held by Dealers for resale.
1.16 Rental Financing - shall mean financing extended by Chase with
respect to Long Term Rental Products or Short Term Rental Products which are
owned by the Dealer.
1.17 Retail Financing - shall mean financing extended by Chase with
respect to Retail Contracts.
1.18 CRS - shall mean Clark Rental System Inc., a Michigan corporation.
1.19 DTL Financing - shall mean financing extended by Chase with
respect to Long Term Rental Products or Short Term Rental Products which are
leased to the Dealer by CRS or by an assignee of CRS.
1.20 Unpaid Balance - shall mean for a Long Term Rental Product with
respect to which Chase extended Long Term Rental Financing - the unpaid
principal balance owed
3
<PAGE> 4
to Chase with respect to such Product, plus interest accrued to the date of
payment by Clark notwithstanding any moratorium regarding interest imposed by
bankruptcy or other statute or law, but in no event more than ninety (90) days'
interest, plus all Expenses.
1.21 Expenses - shall mean one-half (1/2) of the reasonable costs and
expenses incurred by Chase in connection with the repossession of Long Term
Rental Products and the foreclosure of its security interest therein, including
without limitation, outside legal fees, advertising expenses, costs and expenses
of repairing and preparing Products for sale (provided, however, that the costs
and expenses of repairing and preparing a Product for sale shall not exceed five
percent (5%) of the Unpaid Balance for each such Product without the prior
approval of Clark) and any other out-of-pocket expenses incurred by Chase but
not including any out-of-pocket expenses incurred by Chase employees for travel
and travel related costs. Chase shall choose and direct the activities of
outside legal counsel, but shall give consideration to the recommendations made
by Clark in regard thereto.
1.22 Finance Penetration - shall mean the percentage of (a) the
aggregate number of New Products for which Chase has provided either Retail
Financing or Rental Financing to (b) the aggregate number of New Products
shipped to Dealers by Clark, all as calculated on a year to date calendar basis.
(2) Extension of Financing to Dealers.
2.1 Financing Accommodations
(a) During the term of this Agreement, and so long as Clark fulfills
its obligations under this Agreement, Chase agrees to acquire such receivables
as are tendered to it by Clark which, in Chase's reasonable judgment, are
creditworthy and which are generated by the Floor Plan Financing, Rental
Financing or Retail Financing and to otherwise extend wholesale and retail
financing accommodations with respect to those transactions that Chase, in its
reasonable judgment, deems creditworthy.
(b) Chase shall continue to provide Clark, its Dealers and customers
with the high level of services, support and programs in effect as of the date
hereof except to the extent modified by this Agreement. Any existing programs
which are discontinued shall be replaced with other appropriate programs and any
discontinuation shall only occur after consultation with, and 60 days' prior
notice to, Clark.
(c) During the term of this Agreement, those
4
<PAGE> 5
field personnel of Chase engaged in providing financing relating to Clark shall
not be utilized to provide wholesale or retail financing for any products or
equipment other than products or equipment which are sold or distributed by
Clark or its Dealers, provided, however, that if Chase's Finance Penetration is
less than 15% in any one or more of Chase's finance regions, such Chase field
personnel may call on other businesses in such finance regions of Chase
specifically excluding any businesses which sell, rent or lease or offer to
sell, rent or lease products or parts which are reasonably competitive with
Products or Parts. During the term of this Agreement, Chase shall provide no
less than six (6) such field persons unless otherwise mutually agreed to by
Chase and Clark.
(3) Wholesale Financing.
3.1 Financing Plans and Programs. After consultation with Clark, Chase
shall establish the terms and conditions of the plans and programs applicable to
Floor Plan Financing and Rental Financing. Chase can modify the terms of any
such plans or programs (but only with respect to future transactions) at any
time, but shall notify Clark in writing of any such modification at least 30
days prior to the effective date thereof; provided, however, that if Clark does
not consent to the modification of such plan or program in writing (but
excluding changes in interest rate spreads or interest rates where Clark has not
subsidized the applicable interest rate, which shall not require Clark's consent
unless Clark has guaranteed capital financing with respect to a particular
Dealer, in which Clark's consent shall be required, which consent shall not be
unreasonably withheld), it shall have no liability under this Agreement with
respect to any financing extended by Chase under, or in accordance with, the
modified plan or program. Chase may extend Floor Plan Financing or Rental
Financing to a Dealer on terms which differ from the terms of the standard plan
(as approved by Clark) which is then in effect, but if Clark does not consent
thereto in writing, Clark shall have no liability under this Agreement with
respect to such financing. Clark agrees that Chase's plans and programs that are
identified on Exhibit 1., attached hereto and incorporated by reference herein,
are hereby approved by Clark as of the date of this Agreement.
3.2 Documentation. Each Dealer shall execute such promissory notes,
security agreements, financing statements, guarantees and other related
documents and instruments as may be required by Chase in connection with
wholesale financing extended to such Dealer by Chase.
3.3 Procedures. Clark shall notify Chase of each
5
<PAGE> 6
pending shipment of a Product to a Dealer on which Floor Plan Financing, Rental
Financing or DTL Financing has been requested by the Dealer from Chase. If Chase
approves the financing of such Product, it shall remit to Clark the amount owed
by the Dealer to Clark within one (1) working day of the receipt of Clark's
invoice therefor. Notwithstanding the foregoing, Clark may, from time to time,
request Chase to defer payment of an invoice to a stated later date. Chase
agrees to defer such payment provided all of the following conditions are
satisfied: (a) Chase receives written notice of such requests from Clark at the
time Clark notifies Chase of a pending shipment; (b) the Product that is to be
shipped to the Dealer is subject to an interest-free floorplan period; and (c)
the stated later date for payment requested by Clark is not later than the date
on which the interest free floorplan period for such Product expires. In
consideration for such deferred payments by Chase, Clark shall pay to Chase
annually, an amount equal to 3% per annum of the average daily outstanding
balances of all such invoices during their deferral period. Chase shall have no
responsibility to finance any Product shipped to a Dealer who is included on
Chase's list of Dealers that are subject to credit restrictions provided notice
of such Dealers was given by Chase to Clark prior to the shipment of such
Product. If Chase remits amounts to Clark with regard to a non-approved
transaction for a Dealer that is subject to credit restrictions, Clark shall,
after notice thereof by Chase to Clark within 14 days after such remittance,
return such amounts to Chase. Any amounts payable directly to the Dealer in
connection with Rental Financing or DTL Financing shall be paid by Chase to the
Dealer in accordance with the terms and conditions set forth in the agreements
between Chase and the Dealer and the policies announced by Chase from time to
time.
3.4 Dealer Default.
(a) Exercise of Remedies. In the event a Dealer fails to pay any
indebtedness to Chase as and when due or is otherwise in default to Chase with
respect to its obligations, Chase may (subject to the requirements of Section
3.8 hereof) take such action and exercise or refrain from exercising such
remedies as it deems appropriate with respect to the collection, modification,
extension or enforcement of such indebtedness, including but not limited to the
acceleration of all or any part of the Dealer's outstanding indebtedness and the
repossession of all Products, Parts and any other collateral securing the
Dealer's indebtedness. Chase must notify Clark in advance, whether by telephone,
in writing or in person, of any acceleration of a Dealer's indebtedness or
lawsuit against a Dealer. Notwithstanding any provision to the contrary, if a
Dealer is in default with respect to
6
<PAGE> 7
repayment of any indebtedness owed to Chase other than in connection with a sale
out of trust, Clark shall be given notice thereof and shall have the right, at
Clark's option, on no more than three consecutive occasions (provided Clark has
cured the default on each prior occasion) , to cure such default within 15 days
from the date of Chase's notice specified above, prior to Chase's exercise of
any remedies with respect thereto. Provided, however, the foregoing shall not
affect Chase's rights to exercise its remedies with respect to other
indebtedness owed to Chase.
(b) Repurchase of New Products and Long Term Rental Products. Chase
shall notify Clark in writing at least five (5) days in advance (or such longer
period as Chase may provide to Dealer) of any foreclosure sale, whether public
or private, or any retention by Chase of collateral in satisfaction of debt. In
the event that Chase retains possession, after foreclosure of its security
interest pursuant to subsection 3.4(e) below, of any New Products or Long Term
Rental Products, it shall tender such Products to Clark and shall convey free
and clear title thereto. Provided, however, that as to any such Products which
are in the possession of end users pursuant to Rental Contracts, Chase shall
tender the applicable Rental Contract pertaining to the Product. Upon tender,
Clark shall purchase (i) such New Products and (ii) Long Term Rental Products
having an Unpaid Balance and the related Rental Contracts, in the case of both
(i) and (ii), free and clear of any liens or encumbrances and pay to Chase the
applicable repurchase price. With respect to Long Term Rental Products upon
which there is no Unpaid Balance owed to Chase, Clark shall have an option to
purchase all but not less than all such Products and the related Rental
Contracts free and clear of any liens or encumbrances at the applicable
repurchase price. The repurchase price for New Products shall be the net invoice
cost of such New Products to Dealers (plus freight if freight was included in
the amount financed by Chase and less any cash discounts if such cash discounts
were used to reduce the net invoice price financed by Chase). The repurchase
price for Long Term Rental Products having an Unpaid Balance, shall be the
Unpaid Balance owed to Chase with respect to the Long Term Rental Products. The
repurchase price for Long Term Rental Products upon which there is no Unpaid
Balance owed to Chase shall be the Fair Market Value of such Long Term Rental
Products. Any of the foregoing amounts which are paid by Clark to Chase but
which are owed to a subsidiary of Chase shall be paid by Chase to such
subsidiary.
(c) Repurchase of Short Term Rental Products, Other Products, and Other
Collateral. Chase shall send notice to Clark of its repossession of any Short
Term
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Rental Products, Other Products and other collateral along with a listing of all
such items. Clark shall have no obligation to repurchase Short Term Rental
Products, Other Products, or any other collateral. However, Clark shall have the
right by giving Chase notice within 30 days after receiving Chase's notice of
repossession of such Short Term Rental Products, Other Products or any other
collateral, at Clark's option, to purchase not less than all Short Term Rental
Products and/or all Other Products and/or all other collateral of which Chase
retains possession after foreclosure of its security interest pursuant to
subsection 3.4(e) below, upon which Chase has a first priority lien. In the
event that Clark exercises its option to purchase, within the 30-day period
specified above, all of such Short Term Rental Products and/or all Other
Products and/or all other collateral, then Chase shall tender such Short Term
Rental Products and/or all Other Products and/or other collateral to Clark and
Clark shall pay to Chase an amount equal to the Fair Market Value of such Short
Term Rental Products and/or Other Products and/or other collateral. Any such
Short Term Rental Products, Other Products or other collateral that are
repurchased by Clark shall be free and clear of any liens or encumbrances.
(d) Repurchase of Current Parts. In the event that Chase repossesses
any Current Parts, it shall tender such Current Parts to Clark and convey free
and clear title thereto (except for any interest Clark may have in such Current
Parts). Upon tender, Clark shall purchase the Current Parts free and clear of
any liens or encumbrances (regardless of whether any indebtedness is owed to
Chase with respect thereto) and pay to Chase an amount equal to the then current
net invoice cost of such Current Parts to Dealers less, the amount of any and
all liabilities owed by the Dealer to Clark but not including any out-of-pocket
expenses incurred by Clark employees for travel and travel related costs.
(e) Foreclosure of Security Interest. Prior to the tender of such New
Products, Long Term Rental Products and Rental Contracts, and Short Term Rental
Products, Other Products, and any other collateral to the extent Clark exercises
its option to repurchase same pursuant to Sections 3.4 (b) and (c), Chase shall
have the obligation to foreclose its security interest in all such items to be
repurchased by Clark in accordance with the requirements of the Uniform
Commercial Code or other applicable law. Chase shall notify Clark in writing at
least five (5) days in advance (or such longer period as Chase may provide to
Dealer) of any foreclosure sale, whether public or private, or any retention by
Chase of collateral in satisfaction of debt. Chase shall convey to Clark good
title to all such New Products, Long Term Rental Products
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<PAGE> 9
and Rental Contracts, Short Term Rental Products, Other Products, and any other
collateral free and clear of all liens, security interests, claims and
encumbrances of any kind whatsoever. Chase shall execute such documents as Clark
may reasonably request in order to convey title to such New Products, Long Term
Rental Products and Rental Contracts, Short Term Rental Products, Other
Products, and any other collateral to Clark, which documents shall include an
appropriate warranty of title. Notwithstanding the foregoing, Clark shall have
the option of taking an assignment of Chase's rights in not less than all New
Products and/or all Long Term Rental Products and Rental Contracts and/or all
Short Term Rental Products and/or all Other Products and/or all other collateral
in which Chase has a first priority security interest prior to its foreclosure
of its security interest. If Clark elects to exercise this option, Chase shall
also assign to Clark all of Chase's rights in and to the indebtedness owed by
the Dealer to Chase directly related to Chase's financing of such New Products,
Long Term Rental Products and Rental Contracts, Short Term Rental Products,
Other Products, and other collateral which are assigned to Clark under this
section, including any promissory notes or other evidences of indebtedness
directly related to Chase's financing thereof and, if legally possible, that
portion of any guarantees of such indebtedness. Chase agrees to execute and
deliver to Clark such documents as may reasonably be necessary in order to
effectuate such an assignment. Chase shall warrant that any security interest
assigned to Clark by Chase is a properly perfected first priority security
interest. Upon assignment, Clark shall pay to Chase an amount equal to the price
payable by Clark for each category of collateral as specified in subsections 3.4
(b), (c) and (d) above, as the case may be.
(f) Further Assistance. Clark agrees to use good faith efforts to
assist Chase in the disposition of any other collateral which is repossessed by
Chase from a Dealer.
(g) At the request of Clark, if such request is made within 15 days of
repurchase by Clark, Chase shall promptly deliver, at Chase's expense, any New
Products, Long Term Rental Products, Short Term Rental Products, Other Products
and other collateral, and Parts including related contracts, repurchased by
Clark to such location within the area of primary responsibility of the
corresponding Dealer as Clark may reasonably designate. Otherwise, Chase shall
deliver the aforesaid items to such location as Clark may reasonably designate
at Clark's expense.
(h) For the purposes of this Section 3.4, if Chase is the successful
bidder on any collateral covered
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by this Agreement at any foreclosure sale, the amount bid by Chase shall not
reduce or otherwise affect the amounts payable by Clark to Chase for such
collateral under this Agreement prior to such foreclosure sale. If a party other
than Chase or Clark purchases any collateral covered by this Agreement at any
foreclosure sale, Chase shall have no obligation to tender to Clark and Clark
shall have no obligation to repurchase from Chase such collateral purchased by
such party.
3.5 Sales Out of Trust. Clark shall have no responsibility or
obligation to Chase in the event of a sale out of trust by a Dealer which is not
a Branch unless specifically agreed to in writing by Clark and Chase. In the
event of a sale out of trust by a Branch, the entire unpaid Balance owed to
Chase with respect to the Product which has been sold out of trust shall be paid
in full to Chase by Clark. Chase agrees to notify Clark whether by telephone, in
writing, or in person, within one (1) business day of its becoming aware of a
cash held sale out of trust by a Dealer.
3.6 Dealer Terminations. Clark and Chase agree to make good faith
efforts to keep the other advised of all material Dealer problems, any
intentions to place a Dealer on C.O.D., any potential or contemplated Dealer
terminations, non-renewals, or accelerations of Dealer indebtedness. In addition
to the foregoing, Clark agrees to promptly send to Chase a copy of any notice of
termination or non-renewal sent to a Dealer and Chase agrees to promptly send to
Clark a copy of any notice of acceleration of a Dealer's indebtedness.
3.7 Residual Agreements.
(a) In connection with its Tax Affected Leasing Program, CRS
has previously obtained agreements ("Residual Agreements") from certain Dealers
pursuant to which the Dealers agree to either (i) repurchase from CRS the
Products which are subject to those leases upon expiration of the lease term or
(ii) assist CRS in the remarketing of such Products and pay to CRS an agreed
upon portion of the difference between the residual value of the Product and the
resale price. With respect to Residual Agreements in existence prior to March
10, 1987, in the event that the Dealer who executed such Residual Agreement is
terminated by Clark for any reason whatsoever, then Clark agrees to perform, or
cause to be performed by another Dealer acceptable to CRS, the obligations of
the terminated Dealer pursuant to the Residual Agreement.
(b) With respect to Residual Agreements entered into after
March 10, 1987, the obligations of Clark with respect thereto, if any, shall be
as set forth
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in a separate writing signed by Clark and CRS which specifically identifies the
particular Residual Agreement to which such obligations relates.
3.8 Modification of Wholesale Financing. Except with respect to Dealers
which are included from time to time on Clark's list of Dealers which are
subject to modification restrictions (and notice thereof has been given to
Chase, unless Clark's prior written consent has first been obtained, such
consent not to be unreasonably withheld), Chase may, at its option and without
notice to or the consent of Clark, refinance, assign, transfer or otherwise
modify or amend (but not extend beyond three months) the terms and conditions of
any Floor Plan Financing, Rental Financing or DTL Financing transaction or any
Rental Contract related thereto and the liability of Clark hereunder shall not
be altered, discharged or in any way affected thereby.
3.9 Interest Subsidy Programs. In the event that Clark elects to
subsidize the interest rates payable by Dealers to Chase, Clark agrees to pay
promptly to Chase each month the difference between (a) the amount of interest
which would have accrued during the prior month on all wholesale financing to
which the subsidized rate applies, if calculated at the rate required by Chase
and (b) the amount of interest which accrued during the prior month on all
wholesale financing to which the subsidized rate applies, at the subsidized rate
actually payable by the Dealers.
(4) Retail Financing.
4.1 Financing Plans and Programs. After consultation with Clark, Chase
shall establish the terms and conditions of its Retail Financing programs, and
such terms and conditions may be amended or revised from time to time after
consultation with Clark, upon 30 days' prior notice provided, however, that
changes in interest rates for retail financing programs may be made after two
days' prior notice. Such programs shall, in Chase's judgment, give appropriate
consideration to Clark's recommendations and proposals. Notwithstanding the
above, in the event that Clark has subsidized any interest rate for a retail
financing program, Chase shall not change or modify its interest rate for such
program for the period during which Chase has committed in writing to such
subsidized rate without Clark's prior written consent.
4.2 Purchase of Retail Contracts. Chase may, at its option, purchase
Retail Contracts from Dealers in accordance with the terms of (a) the agreement
in effect from time to time between Chase and Dealer pertaining to retail
financing ("Retail Finance Agreement") and (b)
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Chase's programs and policies announced to Dealers from time to time. Except in
the case of Branches, Chase shall, in its sole discretion, determine (i) the
terms and conditions of the Retail Finance Agreement (ii) the acceptability of
each retail transaction; (iii) the form and content of the Retail Contract and
all other documentation which will be required to evidence and secure the
obligations of the retail customer to the Dealer and to Chase; (iv) the form and
content of the Dealer's assignments, endorsements and warranties on the sale of
the Retail Contract by the Dealer to Chase.
4.3 Liability of Clark. Unless specifically agreed to in writing by
Clark or as may otherwise be provided for in this Agreement, Clark shall have no
liability or obligation with respect to Retail Contracts purchased from Dealers
which are not Branches.
4.4 Modification of Retail Financing. Chase may, at its option, and
without notice to or the consent of Clark, extend, refinance, assign, transfer
or otherwise modify or amend the terms and conditions of any Retail Contract
purchased from Dealers who are not Branches; provided, however, that if Clark
has agreed in writing pursuant to Section 4.3 that it has liability with respect
to such a Retail Contract, then Chase shall give prior notice to Clark of any of
the foregoing actions which would materially affect the liability of Clark and
unless it consents, Clark's obligations with respect thereto shall be discharged
in full.
4.5 Interest Subsidy Programs. In the event that Clark elects to
subsidize the finance charges payable by retail customers pursuant to Retail
Contracts, Clark agrees to promptly pay Chase each month the difference between
(a) the total finance charge required by Chase on Retail Contracts subject to
the program purchased by Chase during the preceding month and (b) the total
subsidized finance charge actually payable by the retail customer pursuant to
all such Retail Contracts. In the event the retail customer prepays the Retail
Contract prior to the expiration of the term, Chase agrees to pay promptly to
Clark the unearned portion (calculated by the Rule of 78's or other method,
whichever is applicable) of the amount paid by Clark to Chase pursuant to this
Section with respect to such Retail Contract.
(5) Capital Financing.
5.1 Chase, at its option, will provide capital financing to Dealers
which are acceptable to Chase through its capital loan program; and such
financing shall be on such terms and to such extent as Chase in its sole
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discretion deems appropriate.
5.2 If agreed to in writing or by telex prior to the date in which the
capital financing is extended, Clark will guarantee either full or partial
payment of any capital loan made by Chase to a Dealer. Provided, however, that
if in any calendar year, the amount of payments made by Clark under its capital
loan guarantees reaches an amount equal to the greater of (i) 20% of the
outstanding principal balance of all capital loans as of January 1 of such
calendar year, or (ii) $1,000,000.00, then (a) Clark shall have no obligation to
make any further payments under any capital loan guarantees during the remainder
of that calendar year and (b) Clark shall be released and forever discharged
from liability for those payments which are due and payable by Clark under any
capital loan guarantees during the remainder of that calendar year. For purposes
of this Section , a payment shall be deemed to be due and payable by Clark under
a capital loan guarantee only on the first date on which all of the conditions
for payment by Clark as set forth in the specific capital loan guarantee
agreement have been satisfied, provided Chase has proceeded in a reasonable and
timely manner to satisfy such conditions.
(6) Reporting.
6.1 Clark shall provide Chase with copies of any Dealer Financial
Profiles, to the extent that such Profiles may be prepared by Clark from time to
time.
6.2 Clark shall provide to Chase annually a forecast of wholesale sales
projected by Clark for the immediately succeeding 12 month period plus quarterly
updates, if available.
6.3 Clark shall, to the extent such a list is generated by Clark,
provide Chase with a list of Dealers who are subject to modification
restrictions. The rights of Chase under Section 3.8 shall not apply to Dealers
which are included from time to time on such list after Chase has been notified
that such Dealers are on such list.
6.4 Clark and Chase shall, to the extent and at the time either one of
them becomes aware of the same, promptly notify the other party of any proposed
changes in the name, identity, ownership or structure of a Dealer, as well as
any proposed sale of stock or assets, other than sales of assets in the ordinary
course of business.
6.5 Clark shall provide Chase on a monthly basis with a summary age
trial balance for the open account of Dealers.
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6.6 To the extent that such a list is generated by Clark in the normal
course of its business, Clark shall provide Chase on a monthly basis a list of
Dealers with unpaid balances for New Products financed by Clark.
6.7 Clark shall notify Chase of Dealers which are subject to Clark
credit restrictions. The obligations of Clark under Sections 3.4 (b) and 3.4 (d)
shall not apply to such Dealers in connection with financing transactions
between Chase and such Dealers which are entered into after Chase has been so
notified.
6.8 Chase shall provide Clark with the following reports:
(a) A monthly report of the Floor Plan Financing balances owed
by Dealers to Chase, including the applicable rate of interest for such
financing;
(b) A monthly report of all wholesale financing balances owed
by Dealers to Chase, including Floor Plan Financing, Rental Financing and Dealer
Open Account;
(c) A monthly report showing the total amount of all Retail
Contracts purchased by Chase from Dealers which are subject to an interest
subsidy program described in Section 4.5 hereof, including the subsidized rate
applicable to each such Retail Contract;
(d) If requested by Clark, a copy of the Dealer's monthly
Floor Plan Financing statement;
(e) A monthly report which shows for each Dealer the total
number and dollar value of all Retail Contracts purchased by Chase from such
Dealer;
(f) Such other reports as may, from time to time, be
reasonably requested by Clark which can be reproduced in the ordinary course of
business at reasonable additional cost to or programming by Chase; and
(g) A monthly list of Dealers who are subject to credit
restrictions.
(7) Representations and Warranties. Clark represents and warrants to
Chase as follows:
(a) Any New Products or new Parts sold by Clark to a Dealer or
directly to a retail customer, the purchase of which is financed by Chase, shall
conform to any description or specification which Clark expressly issues to the
purchaser of said Product or Part;
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(b) That Clark will fulfill its express or implied warranty
obligations, if any, with respect to any Product or Part, the purchase of which
is financed by Chase, subject to any applicable exclusions for implied
warranties and the limitations of remedies and damages applicable to said
express or implied warranties; and
(c) Any Floor Plan Financing, Rental Financing or DTL
Financing extended by Chase to a Dealer in connection with a Product which is
sold to the Dealer by Clark arises from a genuine sale at wholesale of such
Products to the Dealer to whom such financing is extended.
(8) Services of Clark.
8.1 During the terms of this Agreement, Clark agrees to perform the
following services at such times and in such manner as may be reasonably
requested by Chase:
(a) Clark shall furnish estimated residual values for use by
Chase in connection with any Products financed by Chase.
(b) Clark shall appraise all Rental Products in connection
with the sale of substantially all of the assets of a Dealer, the sale of a
majority of the voting stock of a Dealer, or when otherwise reasonably requested
by Chase. Provided, however, that Chase may not otherwise request more than five
(5) such additional appraisals in any one year period of time.
(c) Clark shall supervise and monitor an inspection system
established by Chase for Rental Products owned by Dealers, which system requires
that a Dealer inspect at least 90% of all Rental Products owned by each Dealer
at least once each year.
(d) Clark shall negotiate, process and document all changes or
revisions to the standard form of Rental Contracts, subject, however, to prior
approval of Chase with respect to Rental Contracts which are to be assigned to
Chase with such approval not to be unreasonably withheld.
(e) Clark shall maintain an adequate supply of all forms of
Rental Contracts and all other agreements or documents related to Rental
Financing and furnish such forms to the Dealers along with instructions for
their usage; provided, however, that Chase shall furnish to Clark an adequate
supply of forms 292-140-4083 and 292-140-4011/1, or their substitutes, an
adequate supply of all documents pertaining to Rental Financing, and an adequate
supply of such other documents and forms as may be mutually agreed upon.
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(f) Clark shall furnish training to the Dealers, from time to time, for
all aspects of the Rental Financing. With respect to such training sessions
which are wholly sponsored by Clark, the Chase field personnel engaged in
providing financing relating to Clark as provided in Section 2.1 (c) hereof may
attend such training sessions.
(g) Clark shall assist in the design and development of new Rental
Financing plans and programs.
(h) Clark shall make training available to Chase field personnel
engaged in providing financing to Clark as provided in Section 2.1 (c) hereof
which Clark, in its sole discretion, deems appropriate, one (1) time per twelve
month period.
The services described in this section shall be performed by Clark in a
high quality and professional manner, and in no event shall the level and
quality of such services be less than those in effect on the date of this
Agreement. Clark shall have no liability to Chase for any losses or damages
suffered by Chase arising out of Clark's performance or failure to perform the
services described in this Section 8.1, unless such losses or damages are caused
by the gross negligence or willful misconduct of Clark.
8.2 In exchange for the services described in Section 8.1 hereof, Chase
shall pay to Clark for so long as Clark provides such services, on or before the
fifteenth day of December 1990, and continuing on the fifteenth day of each
succeeding month during the term of this Agreement, a monthly fee of $6,000.00.
Any and all expenses of any kind incurred by Clark in connection with the
performance of the services described in Section 8.1 hereof shall be borne by
Clark except for those expenses incurred by Clark which are directly related to
any future name change by Chase.
8.3 In consideration of the financing business which may be generated
by Chase as a result of this Agreement, Chase shall pay to Clark on the
fifteenth day of each month an amount equal to .25% on the combined net volume
of: (i) Rental Financing; (ii) DTL Financing; (iii) Rental Financing of products
not manufactured or distributed by Clark; (iv) Retail Contracts; and (v) Capital
Financing (the total of (i) - (v) being hereafter referred to as "Finance
Volume"). This .25% service fee percentage shall be applicable for the initial
$100 million of Finance Volume during any calendar year period. The fee
percentage shall be increased to .30% for the Finance Volume in excess of $100
Million during any calendar year period.
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9. Confidentiality.
9.1 Clark acknowledges and agrees that the information it receives from
Chase is of a confidential nature, except information which can be obtained from
documents available to the public. Clark will keep all such information
confidential and will not disclose it to others without Chase's prior written
consent, except for disclosure on a need-to-know basis to Clark's lenders,
auditors or other representatives, and except to the extent required to be
disclosed pursuant to any subpoena or order of any court or administrative or
legislative body. Clark shall promptly advise Chase of any such subpoena or
order and shall permit Chase at Chase's own cost and expense to resist the
granting thereof or attempt to narrow the scope thereof. Clark will take
appropriate action by instruction, agreement or otherwise with any party to whom
confidential information is properly disclosed under this Agreement to insure
that the non-disclosure obligations of this Agreement are complied with by such
party.
9.2 Chase acknowledges and agrees that the information it receives from
Clark is of a confidential nature, except information which can be obtained from
documents available to the public. Chase will keep all such information
confidential and will not disclose it to others without Clark's prior written
consent, except for disclosure on a need-to-know basis to Chase's lenders,
auditors or other representatives, and except to the extent required to be
disclosed pursuant to any subpoena or order of any court or administrative or
legislative body. Chase shall promptly advise Clark of any such subpoena or
order and shall permit Clark at Clark's own cost and expense to resist the
granting or attempt to narrow the scope thereof. Chase will take appropriate
action by instruction, agreement or otherwise with any party to whom
confidential information is properly disclosed under this Agreement to insure
that the non-disclosure obligations of this Agreement are complied with by such
party.
(10) Documentation Services on Behalf of Clark.
10.1 During the term of this Agreement, Chase hereby agrees to perform
on behalf of Clark, unless otherwise requested by Clark, the following services:
(a) prepare security agreements, UCC-1 financing statements
and other similar documents or instruments which are necessary to obtain a
perfected security interest in the collateral which secures repayment of the
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indebtedness owed by Dealers to Clark;
(b) obtain the Dealer's signature on the documents and
instruments described in Section 10.1(a) above;
(c) file UCC-1 financing statements, amendments thereto, and
continuations thereof with the appropriate state and local filing offices;
(d) prepare and send letters notifying other creditors that
Clark intends to obtain a purchase money security interest in certain collateral
of the Dealer;
(e) store and maintain all of the documents and instruments
described in this Section 10.1; and
(f) provide Clark with duplicate originals of the documents
and instruments described in this Section 10.1 if requested in writing by Clark.
10.2 In exchange for the services described in Section 10.1 hereof,
Clark shall pay to Chase, for so long as Chase provides such services, a monthly
fee of $2,000 and Clark shall reimburse Chase for any out-of-pocket expenses
paid by Chase in connection with its performance of the services described in
Section 10.1 hereof, including but not limited to (a) any filing fees or taxes
paid by Chase in connection with those financing statements and continuation
statements which show Clark as the secured party; (b) any filing fees or taxes
paid by Chase in connection with any redocumentation required as a result of any
corporate reorganization or name change of Clark; and (c) one-half of the cost
of any UCC lien searches made by Chase in order to determine the identity of the
creditors described in Section 10.1(d) hereof. Such amounts shall be paid by
Clark to Chase within thirty days of its receipt of Chase's invoice therefor.
10.3 The security agreements, UCC-1 financing statements and other
documents and instruments which are prepared and filed by Chase pursuant to
Section 10.1 hereof shall be in such form as may be approved from time to time
by Clark. Clark hereby acknowledges and agrees that the forms of documents and
instruments used as of the date of this Agreement are acceptable to Clark.
10.4 Chase agrees to use good faith efforts to perform the services
described in Section 10.1 hereof in a diligent manner. Chase shall exercise the
same degree of care in performing those services as it exercises in performing
similar services with respect to its own security agreements and UCC-1 financing
statements. Chase shall have no liability to Clark for any losses or damages
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suffered by Clark arising out of Chase's performance or failure to perform the
services described in Section 10.1 hereof, unless such losses or damages are
caused by the gross negligence or willful misconduct of Chase.
(11) Term.
11.1 This Agreement shall be effective for a period of three years
commencing on the date set forth in the first paragraph hereof. This Agreement
shall continue thereafter unless or until it is terminated by either party
giving the other party at least six months' prior notice of termination.
11.2 Notwithstanding Section 11.1 above, either party shall have the
right to terminate this Agreement prior to the expiration of the initial three
year period at any time upon 6 months' prior notice to the other party, upon the
occurrence of any of the following events: (a) if Chase's Finance Penetration
with regard to Clark's U.S. market falls below 15%; or (b) if the aggregate new
volume amount of combined Retail Financing and Rental Financing acquired by
Chase during any period of twelve (12) consecutive months falls below
$75,000,000.
11.3 In the event of any breach or default in the performance by either
party of its obligations under this Agreement and the failure of such party to
remedy such default within 30 days after notice thereof from the other party,
then the other may, at its option, terminate this Agreement upon at least 30
days' prior notice. The right of a party to terminate this Agreement due to a
breach or default in the performance by the other party of its obligations
hereunder shall be in addition to any other rights or remedies which may be
available at either law or equity; provided, however, THAT NEITHER PARTY SHALL
BE LIABLE FOR CONSEQUENTIAL DAMAGES WHATSOEVER OR HOWSOEVER CAUSED.
11.4 In the event of a sale or transfer of all or substantially all of
the stock of Chase, other than to a subsidiary of The Chase Manhattan
Corporation, or in the event the ultimate parent of Chase becomes at any time a
party other than The Chase Manhattan Corporation, then within one hundred eighty
(180) days after the effective date of (a) such sale or transfer, or (b) The
Chase Manhattan Corporation ceases to be the ultimate parent of Chase, Clark
may, at its option, terminate this Agreement upon at least ninety (90) days'
prior written notice.
11.5 Notwithstanding the expiration or termination of this Agreement,
the rights and obligations of the parties hereto with respect to transactions
entered into prior to the effective date of termination shall remain
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unchanged and in full force and effect.
(12) Miscellaneous.
12.1 This Agreement shall not be assigned to any other person, firm or
corporation by either of the parties hereto, without the prior written consent
of the other party; provided, however, that this Agreement shall be binding upon
and shall be deemed automatically assigned to any person, firm or corporation
which hereafter acquires substantially all of the assets of Clark and assumes
its obligations for the distribution of Products and Parts to Dealers; and
provided further that, unless otherwise agreed to in writing by Chase, Clark
Equipment Company and Clark shall remain jointly and severally liable for the
performance of all of Clark's obligations under this Agreement. If requested by
Chase, Clark agrees to cause such person, firm or corporation to execute an
agreement, in form and substances reasonably satisfactory to Chase, pursuant to
which such person, firm or corporation assumes all of the obligations of Clark
under this Agreement.
12.2 The terms and conditions of this Agreement shall apply in full to
all Floor Plan Financing, Rental Financing, Retail Financing, DTL Financing and
capital financing extended by Chase on or after the effective date of this
Agreement. Except with respect to capital financing extended by Chase prior to
the effective date of this Agreement, which shall be governed by the terms and
conditions of this Agreement, all such financing extended by Chase prior to the
effective date of this Agreement shall continue to be governed by the terms of
the Operating Agreement in effect prior to amendment by this Agreement.
12.3 (a) Chase hereby subordinates to Clark any security interest, lien
or other encumbrance which Chase may now have or hereafter acquire in (i) all
Parts and all proceeds thereof; (ii) To the extent of the unpaid balance owed to
Clark for such sale, all Products sold to a Dealer by Clark and all proceeds
thereof except for (x) any chattel paper for which Chase gives new value to the
Dealer and of which Chase takes possession in the ordinary course of business
and (y) any item which is traded-in to a Dealer upon the Sale of Products and
which item is financed by Chase for a Dealer. For purposes of this section,
Chase shall be deemed to have given new value to the Dealer for an entire item
of chattel paper if Chase pays to the Dealer or to Clark an amount at least
equal to the unpaid balance owed to Clark with respect to the Product covered by
such chattel paper.
(b) Clark hereby subordinates to Chase any security interest, liens or
other encumbrance which Clark
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may now have or hereafter acquire in any and all collateral of each Dealer with
the exception of the collateral described in Section 12.3(a) above.
12.4 Unless otherwise expressly provided elsewhere in this Agreement,
any notices or other communications required or permitted to be given under this
Agreement shall be in writing and may be sent by personal delivery, by telex or
by certified or registered mail postage fully prepaid, addressed as follows:
If to Chase: Chase Manhattan Leasing
Company (Michigan), Inc.
500 Circle Drive
Buchanan, Michigan 49107
Attention: President
If to Clark: Clark Material Handling
Company
333 West Vine Street
Suite 1700
Lexington, Kentucky 40507
Attention: Vice
President - Sales
With a copy to: Clark Material Handling
Company
106 West Vine Street
Suite 701
Lexington, Kentucky 40507
Attention: General
Counsel
or to such other addresses as the respective parties may subsequently designate
in writing. Such notices shall be deemed effective upon receipt thereof by the
party to whom it is given.
12.5 Any headings or captions preceding the paragraphs hereof are
intended solely for convenience of reference and shall not affect the meaning,
construction or effect of this Agreement.
12.6 This Agreement contains all of the terms and conditions agreed
upon by the parties and no other agreements, oral or otherwise, regarding the
subject matter of this Agreement shall be deemed to exist or bind the parties.
No subsequent modification or waiver of any provision of this Agreement shall be
effective unless in writing and signed by duly authorized representatives of
Chase and Clark, and any such modification or waiver shall
21
<PAGE> 22
then be effective only for the period, on the conditions and for the specific
instances and purposes set forth in such writing.
12.7 Failure of either party to require performance of any provision
hereof shall not affect the right to require full performance thereof at any
time thereafter, and the waiver by either party of a breach of any such
provision shall not constitute a waiver of any subsequent breach thereof or
nullify the effectiveness of such provision.
12.8 This Agreement shall be construed and the legal relations between
the parties determined in accordance with the laws of the State of Michigan. If
any provision or part hereof is prohibited or invalidated by applicable law,
only such provision or part shall be ineffective without invalidating the
remaining provisions hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
CLARK MATERIAL HANDLING
COMPANY
A Business Unit of CLARK
EQUIPMENT COMPANY
By: /s/
--------------------------
Title:
------------------------
CHASE MANHATTAN LEASING
COMPANY (MICHIGAN), INC.
By: /s/
--------------------------
Title: Vice President
------------------------
22
<PAGE> 1
EXHIBIT 10.12
SECOND AMENDMENT TO THE SECOND AMENDED
AND RESTATED GENERAL OPERATING AGREEMENT
THIS SECOND AMENDMENT TO THE SECOND AMENDED AND RESTATED GENERAL
OPERATING AGREEMENT, is made this 15th day of April 1994 by and among Clark
Material Handling Company ("Clark"), Drexel Industries, Inc. ("Drexel") and
Clark Credit Corporation ("Credit").
STATEMENT OF PURPOSE
Clark, Drexel and Credit are parties to that certain Second Amended and
Restated General Operating Agreement dated 29 November 1990 (the "Operating
Agreement") as amended by that certain First Amendment to the Second Amended and
Restated General Operating Agreement dated 30 October 1992 (the "FIRST
AMENDMENT") which sets forth the terms and conditions applicable to the
financing by Credit of products manufactured or distributed by Clark and/or
Drexel. Drexel was an affiliate of Clark but effective 15th April 1994 Drexel
has been sold to DAC Acquisition Corp. and is no longer affiliated with Clark.
The purpose of this SECOND AMENDMENT is to delete Drexel as a party to the
Operating Agreement.
NOW, THEREFORE, in consideration of the mutual promises contained
herein, Clark, Drexel and Credit hereby agree that the Operating Agreement is
amended as follows:
1. Effective 15th April 1994, the FIRST AMENDMENT will terminate and be
of no force and effect as if the FIRST AMENDMENT had never been executed, and
Drexel will no longer be a party to the Operating Agreement. Notwithstanding the
foregoing, (a) the obligations of Drexel pursuant to the FIRST AMENDMENT and (b)
the Guaranty of Clark of the obligations of Drexel to Credit arising under the
Operating Agreement as provided by Section 5 of the FIRST AMENDMENT, shall, in
each case, remain in full force and effect as to all such obligations incurred
by Drexel to Credit prior to 15th April 1994. The change of names and references
thereto made by the FIRST AMENDMENT from "Chase Manhattan Leasing Company
(Michigan), Inc." and "Chase" to "Clark Credit Corporation" and "Credit",
respectively, shall also continue.
2. Except as herein specifically amended, the terms and conditions of
the Operating Agreement shall remain unchanged and shall continue in full force
and effect.
1
<PAGE> 2
IN WITNESS WHEREOF, Clark, Drexel and Credit have executed this SECOND
AMENDMENT as of the date first set forth above.
CLARK MATERIAL HANDLING COMPANY
By: /s/
----------------------------------
Title: Secretary
-------------------------------
DREXEL INDUSTRIES, INC.
By: /s/
----------------------------------
Title: Secretary
-------------------------------
CLARK CREDIT CORPORATION
By: /s/
----------------------------------
Title: Senior Vice President
-------------------------------
2
<PAGE> 1
EXHIBIT 10.13
THIRD AMENDMENT TO THE SECOND AMENDED AND RESTATED
GENERAL OPERATING AGREEMENT
THIS THIRD AMENDMENT TO THE SECOND AMENDED AND RESTATED GENERAL OPERATING
AGREEMENT, is made effective the first day of August, 1994 by and between Clark
Material Handling Company ("Clark") and Clark Credit Corporation ("Credit").
STATEMENT OF PURPOSE
Clark and Credit are parties to the Second Amended and Restated General
Operating Agreement dated November 29, 1990 as amended by that First Amendment
to the Second Amended and Restated General Operating Agreement dated October 30,
1992 and further amended by that certain Second Amendment to the Second Amended
and Restated General Operating Agreement dated April 15, 1994 (the "Operating
Agreement") which sets forth the terms and conditions applicable to the
financing by Credit of products manufactured or distributed by Clark. The
purpose of this Third Amendment is to modify the operating Agreement by deleting
certain services required to be performed by Clark and the corresponding fees to
be paid by Credit, as well as modifying certain volume fees payable by Credit.
NOW, THEREFORE, in consideration of the mutual promises contained herein, Clark
and Credit hereby agree that the Operating Agreement is further amended as
follows:
1. Section 8 of the Operating Agreement captioned "Services of Clark"
and consisting of Sections 8.1, 8.2 and 8.3, is hereby deleted in its
entirety and replaced with the following:
(8) Volume Fees. In consideration of the financing business
which may be generated by Credit as a result of this
Agreement, Credit shall pay to Clark on the fifteenth day of
each month an amount equal to .25% on the previous month's
combined net volume of: (i) Rental Financing (excluding any
such financing which relates to or comes under that certain
Agreement dated 23 January 1987 between CRS and Clark, as
successor-in-interest to Clark Equipment Company), and (ii)
Retail Financing (the total of (i) - (ii) being hereafter
referred to as "Finance Volume"). This .25% service fee
percentage shall be applicable for the initial $100 million of
Finance Volume during any calendar year. The fee percentage
shall be increased to .30% for the Finance Volume in excess of
$100 million during any calendar year.
2. Except as herein specifically amended, the terms and conditions of
the Operating Agreement as amended shall remain unchanged and shall
continue in full force and effect.
IN WITNESS WHEREOF, Clark and Credit have executed this Third Amendment as of
the date first set forth above.
CLARK MATERIAL HANDLING COMPANY CLARK CREDIT CORPORATION
("Clark") ("Credit")
By By /s/
----------------------------- ----------------------
Title Title President
------------------------- -------------------
<PAGE> 1
EXHIBIT 10.14
ASSIGNMENT OF SECOND AMENDED AND
RESTATED GENERAL OPERATING AGREEMENT
THIS AGREEMENT is made this 22nd day of March, 1995 by and between Clark
Material Handling Company ("CMHC"), a Kentucky corporation, with offices in
Lexington, Kentucky, Clark Credit Corporation ("CCC") f/k/a Chase Manhattan
Leasing Company (Michigan), Inc., a Michigan corporation, with offices in
Buchanan, Michigan, and Associates Commercial Corporation ("ACC"), a Delaware
corporation, with offices in Dallas, Texas.
STATEMENT OF PURPOSE
CCC is a party to that certain Second Amended And Restated General Operating
Agreement (the "Operating Agreement") dated 29 November 1990 with Clark
Equipment Company ("Clark"). On or about 31 March 1992, Clark transferred
substantially all of the assets of its Material Handling business unit to CMHC,
including its interests in the Operating Agreement pursuant to the terms and
conditions of the Operating Agreement. CCC anticipates merging into, or
transferring its assets and liabilities to, ACC on or about 31 March 1995. The
actual date of such merger or transfer shall hereinafter be referred to as the
"Date of Merger". The parties hereto intend by this Agreement to document the
Assignment of the Operating Agreement by CCC to ACC effective on the Date of
Merger.
NOW, THEREFORE, in consideration of the mutual promises contained herein, CMHC,
CCC, and ACC hereby agree as follows:
(1) Effective on the Date of Merger, CCC assigns all of its right,
title and interests in and to the Operating Agreement to ACC and ACC
agrees to assume all of the rights and obligations of CCC under the
Operating Agreement.
(2) Except as herein specifically set forth, the terms and conditions
of the Operating Agreement shall remain unchanged and shall continue in
full force and effect.
IN WITNESS WHEREOF, CMHC, CCC, and ACC, by their authorized representatives,
have executed this Agreement as of the date first set forth above.
CLARK MATERIAL HANDLING COMPANY
("CMHC")
By: /s/
--------------------------------------
Title: V.P. Finance
-----------------------------------
CLARK CREDIT CORPORATION
("CCC")
By: /s/
-------------------------------------
Title: Senior Vice President
-----------------------------------
ASSOCIATES COMMERCIAL CORPORATION
("ACC")
By: /s/
-------------------------------------
Title: Senior Vice President
-----------------------------------
<PAGE> 1
Exhibit 10.15
SDRC SDRC Operations, Inc.
2000 Eastman Drive Agreement No. ________________
Milford, Ohio 45150-2789
MASTER SOFTWARE LICENSE AND SERVICE AGREEMENT
SDRC OPERATIONS, INC. ("SDRC") AND
CUSTOMER Clark Material Handling
-----------------------------------------------------------------------
ADDRESS 749 West Short Street
----------------------------------------------------------------------
CITY Lexington STATE KY ZIP 40508
------------------------- ------------- -----------------------------
This Agreement shall consist of the terms and conditions contained in the
Schedules listed below which are designated by Customer's Initials and a
Licensed Software Designation Agreement executed by SDRC and Customer
referencing the Agreement Number cited above. Additional SDRC software and
services may be ordered from time-to-time by Customer's execution of a
supplemental Licensed Software Designation Agreement referencing the Agreement
Number cited above, and upon execution by SDRC of such supplemental Licensed
Software Designation Agreement, such future orders shall be governed by the
terms and conditions referenced herein.
Terms and Conditions Customer's Initials
o Standard Annual Software License Schedule _______________
o Standard Extended Term Software License Schedule _______________
o Maintenance and Support Schedule _______________
o Services Schedule _______________
===============================================================================
This Agreement, together with the terms and conditions incorporated by
reference, contains the entire understanding of SDRC and Customer and supersedes
all prior written or oral communications between the parties with respect to the
subject matter hereof. This Agreement does not operate as an acceptance of any
conflicting terms and conditions and shall prevail over any conflicting
provisions of any purchase order of Customer or any other instruments, it being
understood that any purchase order issued by Customer shall be for Customer's
convenience only and shall not be made a part of this Agreement. Deviations from
these terms and conditions shall not be valid unless specifically agreed to in
writing by an authorized employee of SDRC. By executing this Agreement below,
Customer acknowledges that it has reviewed the terms and conditions incorporated
into this Agreement and agree to be legally bound by same. Customer may not
assign any of its rights or obligations under this Agreement. This Agreement
shall be governed by, Subject to and construed in accordance with the laws of
the State of Ohio.
================================================================================
CUSTOMER_______________________________ SDRC Operations, Inc.
BY_____________________________________ BY________________________________
NAME __________________________________ NAME______________________________
TITLE__________________________________ TITLE_____________________________
DATE___________________________________ DATE______________________________
<PAGE> 2
SDRC SDRC Operations, Inc.
2000 Eastman Drive Agreement No. ________________
Milford, Ohio 45150-2789
STANDARD EXTENDED TERM SOFTWARE LICENSE SCHEDULE
Customer Clark Material Handling Address 749 West Short Street
----------------------------- -------------------------
Lexington, KY 40508
-------------------------
1. Definitions
1.1 Licensed Programs(s) means the executable code version of the SDRC
software designated by Customer in the Licensed Software Designation
Agreement and any related documentation.
1.2 Computer System means the computer hardware equipment on which
Customer has elected to install and/or execute Licensed Program(s).
2. License Fee:
2.1 The extended term license fee is the aggregate of the fees stated in
the Licensed Software Designation Agreement for each Licensed Program
selected by Customer.
2.2 The fee shall be due and payable on the date the Licensed Program(s)
are shipped.
3 License Grants:
3.1 Licensed Program(s), including any documentation relating to or
describing such Licensed Program(s) such as, but not limited to, user
manuals, now or hereafter provided by SDRC, are furnished to Customer
under a non-exclusive, non-transferable license solely for Customer's
own use on the single designated Computer System on which each
Licensed Program is first installed. The Licensed Program(s) may only
be copied with the proper inclusion of SDRC's copyright notice for use
on such single Computer System for archival and back-up purposes. The
Licensed Program(s) may not be reverse compiled, disassembled or
otherwise reverse engineered.
3.2 If Customer is unable to operate the Licensed Program(s) on the
Computer System due to equipment malfunction, the Licensed Program(s)
may be transferred temporarily to another Computer System during the
period of equipment malfunction.
4. Installation:
Customer shall install the Licensed Program(s) only on Customer's
Computer System designated on the Licensed Software Designation
Agreement.
5. Title:
No title to or ownership in the Licensed Program(s) is transferred to
Customer. Title to and all applicable rights in patents, copyrights
and trade secrets in the Licensed Program(s) shall remain in SDRC or
third parties from whom SDRC has obtained rights to license the
Licensed Program(s). Licensed Program(s) provided hereunder,
including the ideas, concepts, know-how and technology contained
therein, are proprietary and confidential to and contain trade secrets
of SDRC or third parties from whom SDRC has obtained rights to license
the Licensed Program(s), and Customer agrees to be bound by and
observe the proprietary, confidential and trade secret nature thereof
as herein provided. Customer agree to take appropriate action by
instruction or agreement with its employees who are permitted access
to the Licensed Program(s) to fulfill its obligations hereunder.
Except as may be permitted in writing by SDRC, Customer shall not
provide or otherwise make available, the Licensed Program(s) or copies
thereof to any third party.
6. Term and Termination:
6.1 The terms of each license granted hereunder shall commence on the date
the extended term license fee is due and payable by Customer and shall
continue until such time as Customer discontinues use of the Licensed
Program(s) on the Computer System specified above, but otherwise shall
be without restriction as to time.
6.2 SDRC shall have the right to terminate Customer's license if Customer
fails to comply with these license terms and conditions. SDRC shall
give written notice to Customer of any such default and if the default
is not remedied within 30 days after such notice, the license shall
terminate.
6.3 Customer agrees, upon expiration of the license term or upon
termination by reason of Customer's default, to immediately return or
destroy the Licensed Program(s) and copies thereof as directed by
SDRC, and, if requested by SDRC, to certify in writing as to the
destruction or return of the Licensed Program(s) and all copies
thereof.
<PAGE> 3
7. Warranty:
7.1 SDRC WARRANTS THAT FOR A PERIOD OF 90 DAYS AFTER DELIVERY OF LICENSED
PROGRAM(S) TO CUSTOMER, THE LICENSED PROGRAM(S) WILL PERFORM IN
ACCORDANCE WITH THE SDRC USER DOCUMENTATION. IN THE EVENT THE LICENSED
PROGRAM(S) DO NOT PERFORM IN ACCORDANCE WITH THE USER DOCUMENTATION,
THEN DURING THE 90 DAY WARRANTY PERIOD SDRC SHALL AT ITS OPTION (I)
CORRECT ANY VARIANCE BETWEEN LICENSED PROGRAM(S) PERFORMANCE AND
LICENSED PROGRAM(S) USER DOCUMENTATION; (II) REPLACE THE LICENSED
PROGRAM(S) MEDIA. THE FOREGOING SHALL BE CUSTOMER'S SOLE AND EXCLUSIVE
REMEDY FOR ERROR OR DEFECT IN THE LICENSED PROGRAM(S).
7.2 THE ABOVE WARRANTIES ARE IN LIEU OF ALL OTHER WARRANTIES, EXPRESS,
IMPLIED OR STATUTORY, WHICH WARRANTIES ARE HEREBY DISCLAIMED,
INCLUDING THE WARRANTY OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE.
8. Patent and Copyright Indemnification:
SDRC hall defend any action, suit or proceeding brought against
Customer in so far as it is based on a claim that the Licensed
Program(s) delivered hereunder infringe any United States patent or
copyright issued or registered as of the date of this Agreement,
provided that SDRC is promptly notified by Customer of the action and
given full authority , information and assistance (at SDRC's expense)
for the defense of the action. SDRC shall pay all damages and costs
awarded therein against Customer, but shall not be responsible for any
compromise made without its consent. SDRC may, at its option and
expense, revoke or modify the Licensed Program(s) so that infringement
will not exist or refund to Customer the price thereof as depreciated
or amortized by an equal annual amount over the lifetime of the
Licensed Program(s) as established by SDRC. SDRC's commitment shall
not extend to any infringement or claim thereof which is based upon
the combination of the Licensed Program(s) delivered hereunder with
software not supplied by SDRC.
9. Use of Licensed Program(s) and Limitation of Liability:
9.1 Customer shall retain full control over the use of the Licensed
Program(s) and any modifications or enhancements thereof as well as
Customer's use of any recommendations provided by SDRC during the
course of providing services under any other Schedule of this
Agreement. Accordingly Customer agrees to be solely responsible for
the design, repair and configuration of Customer's equipment,
machinery, systems and/or products. Customer assumes all risks and
liability for results obtained by the use or implementation of the
designs in any way influenced by the use of the Licensed Program(s) or
the provision of services, whether such designs are used singly or in
combination with other designs or products. Customer agrees that SDRC
shall have no liability to Customer or to any third party for any
ordinary, special or consequential damages or losses which might arise
directly or indirectly by reason of Customer's use of the Licensed
Program(s) or the provision of services. Customer shall protect,
indemnify, hold harmless and defend SDRC of and from any loss, costs,
damage or expense, including any attorney's fees, arising out of any
claim asserted against SDRC that is in any way associated with the
matters set forth in this Paragraph 9.1.
9.2 With respect to any claim not subject to Section 9.1, the liability of
SDRC for any claim hereunder, regardless of the form of action,
whether in contract or tort, including claims of negligence against
SDRC, shall be limited to the total of all amounts Customer has paid
to SDRC for the Licensed Program(s) or services that are alleged to
have caused damages or that is related to the cause of action. In no
event shall SDRC be liable for any incidental or consequential damages
including, without limitation, loss of use, loss of profits or other
consequential damages, even if SDRC has been advised of the
possibility of such damages. No action, regardless of form, arising
out of the transactions under this Agreement may be brought by
Customer more than two years after the cause of action has occurred.
10. Maintenance and Support:
Customer may elect to order from SDRC maintenance and support under
the terms and conditions of the Maintenance and Support Schedule,
11. Proprietary Right:
Information and data supplied by SDRC with the Licensed Program(s)
delivered hereunder, such as, but not limited to, user manuals and
documentation, are confidential and proprietary to SDRC and contain
trade secrets of SDRC. Such information and data are furnished solely
to assist Customer in the installation, operation and use of the
Licensed Program(s). All such confidential and proprietary information
and data shall be so marked and Customer agrees to abide by the terms
of such markings and not to reproduce or copy such data except as is
reasonably necessary for proper use of the Licensed Program(s).
12. Export:
12.1 Customer acknowledges that the Licensed Program(s) provided hereunder
may be subject to export controls. Customer agrees that any Licensed
Program(s) licensed hereunder will not be exported (or reexported from
the country where it was first installed), directly
<PAGE> 4
or indirectly, separately or as a part of a system, without Customer,
at its own cost, fort obtaining all licenses from the United States
Department of Commerce and any other appropriate agency of the United
States Government as may be required by law.
12.2 Customer acknowledges and agrees that it shall not use the Licensed
Program(s) in the design, development, production, stockpiling or use
of missiles, or chemical or biological weapons nor shall it use the
Licensed Program(s) for facilities which are intended to produce
chemical weapons or chemical weapon precursors, unless a validated
export license is obtained from the United States Department of
Commerce where required.
12.3 Customer further acknowledges and agrees that it shall not use the
Licensed Program(s) either directly or indirectly to design, develop,
fabricate or test nuclear weapons or nuclear explosive devices or to
design, construct, fabricate, operate or construct components for
facilities: for the chemical processing of irradiated special nuclear
or source material: for the production of heavy water; for the
separation of isotopes of sources and special nuclear material, or for
the fabrication of nuclear reactor fuel containing plutonium unless a
validated export license is obtained from the United States Department
of Commerce where required.
13. Taxes:
The license fees and any other amounts payable pursuant to this
Agreement are exclusive of all national, state, regional, local,
municipal or other taxes and fees including, but not limited to,
excise, sales, use, property, ad valorem, intangible, goods and
services and value added taxes, customs duties and registration fees,
now in force or enacted in the future, and all such taxes and fees,
except taxes based on SDRC's net worth, capital or net income shall be
paid directly by the Customer, or if paid by SDRC, Customer will
reimburse SDRC.
14. Notice:
All notices required to be given hereunder shall be in writing. Notice
shall be considered delivered and effective upon receipt when sent by
registered or certified mail, return receipt requested, addressed to
the parties as set forth above. Either party, upon written notice to
the other, may change any name or address to which future notice shall
be sent.
15. Uncontrollable Circumstances:
If the performance of any part of this Agreement by SDRC or Customer
is prevented or delayed by acts of civil or military authority, flood,
fire, epidemic, war or riot, or other acts beyond the reasonable
control of either party, the party affected shall be excused from such
performance only during the continuance of any such event; provided
however, that if such delay in performance extends for more than 60
days, the other party, at its discretion, upon giving written notice,
may terminate this Agreement.
16. Regulations for Federal Acquisition:
If Customer is a unit or agency of the United States Government, the
following provisions apply:
(i) if the Licensed Program(s) are supplied to the Department of
Defense (DOD), the Licensed Program(s) are classified as commercial
Computer Software and the Government is obtaining only "restricted
rights" in the Licensed Programs(s) and its documentation as that term
is defined in Clause 252.227-7013(c)(l)of the DFARS; and (ii) if the
Licensed Program(s) are supplied to any unit or agency of the United
States Government other than DOD, the Government's rights in the
Licensed Program(s) and its documentation will be as defined in Clause
52.227-19(c)(2) of the FAR or, in the case of NASA, in Clause
18-52.227-86(d) of the NASA Supplement to the FAR.
17 General:
17.1 Customer may not assign any of its obligations, rights or remedies
hereunder and any such attempted assignment shall be null and void.
17.2 Customer shall not in any manner or form disclose, provide or
otherwise make available, in whole or in part, any Licensed Program(s)
and/or documentation to any third parties.
17.3 The waiver or failure of either party to exercise in any respect any
right provided for herein shall not be deemed a waiver of any further
right hereunder. This Schedule constitutes the entire terms and
conditions between the parties with respect to the subject licensing
of the Licensed Program(s) on an extended term basis and supersedes
all proposals, all previous negotiations and agreements, written or
oral, express or implied, between the parties with respect to the
license.
17.4 The terms and provisions contained in Sections 5,9, 11 and 12 shall
survive the termination of this Agreement.
17.5 This Agreement shall in all respects be governed by and construed in
accordance with the laws of the State of Ohio.
<PAGE> 5
SDRC SDRC Operations, Inc.
2000 Eastman Drive Agreement No. ________________
Milford, Ohio 45150-2789
MAINTENANCE AND SUPPORT SCHEDULE
Customer Clark Material Handling Address 749 West Short Street
----------------------------- ---------------------------
Lexington, KY 40508
---------------------------
The following are the terms and conditions under which SDRC agrees to furnish
and Customer agrees to accept Software maintenance and support services for the
Licensed Program(s) listed on the Licensed Software Designation Agreement under
the Agreement cited above.
I. Eligibility requirements
Services under this Schedule are applicable only to SDRC Licensed
Program(s).
II. Customer may purchase Maintenance and Support services for the Licensed
Program(s) by indicating on the Master Software License and Service
Agreement that it desires same (such services are automatically furnished
as part of any annual license). All such services shall be upon the
following terms and conditions:
1. Maintenance:
SDRC shall correct any material variance between Licensed Program(s)
performance and Licensed Program(s) user manual description, including the
correction of documentation and/or software codes. SDRC shall distribute to
Customer corrected Licensed Program(s) as soon as they are available. SDRC
will respond to Customer's request for service within a reasonable time
considering all circumstances at the time of the request, including the
nature of the service required.
SDRC shall distribute to Customer those enhancements to the Licensed
Program(s) released without restrictions by SDRC to other licensees.
Enhancements include:
a. Licensed Program(s) Enhancements:
Versions of Licensed Program(s) which encompass improvements,
extensions, and other changes which SDRC, in its discretion, deems to
be logical improvements or extensions of the original Licensed
Program(s) supplied to Customer.
b. Documentation:
Updates and extensions or amendments of user documentation of the
Licensed Program(s).
c. System Updates:
Customer acknowledges that certain Licensed Program(s) enhancements
may require either additional hardware or hardware updates, with
respect to the Customer's original computer system, in order for
Customer to gain the full benefits of said enhancements. All costs and
responsibilities for such new or additional hardware shall be borne
solely by Customer.
2. Support:
SDRC shall provide telephone service to Customer for the purpose of
assisting Customer with the application of SDRC Licensed Program(s).
(Telephone service is defined as "answering questions requiring a
nominal amount of time, usually during the same telephone call.")
Visits either to the SDRC site by Customer, or to Customer's site by
SDRC and services in addition to telephone service will be charged at
SDRC's then current labor rates plus expenses. Customer will be
informed in advance of incurring any charges.
Fees:
3. Customer shall pay to SDRC an annual fee in advance for other
services set forth in this Schedule. There shall be no charge for this
service for an Annual License of the Licensed Program(s).
4. Term:
The right to receive Maintenance and Support pursuant to an extended
term license shall be for ____(____) months, but in no event shall any
term be for more than twenty-four (24) months.
<PAGE> 6
III. Warranty and Limitation of Liability
1. EXCEPT AS STATED IN THE APPLICABLE LICENSE SCHEDULE, THERE ARE NO
EXPRESS OR IMPLIED WARRANTIES RESPECTING THE AGREEMENT, THIS SCHEDULE
AND THE SERVICES PROVIDED HEREUNDER, INCLUDING BUT NOT LIMITED TO THE
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE. THE WARRANTIES AND REMEDIES SET FORTH IN THE APPLICABLE
LICENSE SCHEDULE ARE EXCLUSIVE AND IN LIEU OF ALL OTHERS, ORAL OR
WRITTEN, EXPRESS OR IMPLIED.
2. SDRC will not be liable for any failure or delay in performance due in
whole or in part to any cause beyond SDRC's reasonable control. SDRC's
liability in connection with the provision of Licensed Program
enhancements, corrected versions of the Licensed Program(s) or
services hereunder shall be subject to Section 9 of the Standard
Extended Term Software License Schedule or the Standard Annual
Software License Schedule as applicable to the Licensed Program(s).
IV. General
1. Customer may not assign any of its obligations, rights or remedies
under this Schedule and any such attempted assignment shall be null
and void.
2. The waiver or failure of either party to exercise in any respect any
right provided for herein shall not be deemed a waiver of any further
right hereunder.
3. Customer agrees that SDRC may perform such tests as SDRC shall deem
necessary to monitor compliance with applicable software licenses at
any time, with or without notice, during normal business hours.
<PAGE> 7
SDRC SDRC Operations, Inc.
2000 Eastman Drive Agreement No. ________________
Milford, Ohio 45150-2789
SERVICES SCHEDULE
1. Services:
SDRC shall provide Customer with the Services set out in the Licensed
Software Designation Agreement. Amendments to the Licensed Software
Designation Agreement shall be agreed to in writing by both parties. Before
any amendments to the Licensed Software Designation Agreement are
implemented, all changes in the price necessitated by such amendments shall
be agreed to in writing.
2. Fees and Costs:
2.1 Customer shall pay SDRC for the Services, the fees and costs set out
in the Licensed Software Designation Agreement.
2.2 Fees and costs are due and payable by Customer upon receipt of
invoice.
2.3 The license fees and any other amounts payable pursuant to this
Agreement are exclusive of all national, state, regional, local,
municipal or other taxes and fees including, but not limited to,
excise, sales, use, property, ad valorem, intangible, goods and
services and value added taxes, customs duties and registration fees,
now in force or enacted in the future, and all such taxes and fees,
except taxes based on SDRC's net worth, capital or net income shall be
paid directly by the Customer, or if paid by SDRC, Customer will
reimburse SDRC.
2.4 In addition to the fees and costs, Customer shall reimburse SDRC
pursuant to SDRC's then current standard policies for all travel and
special or unusual out-of-pocket expenses incurred at Customer's
specific request which are not set forth in the Licensed Software
Designation Agreement.
3. Timetable:
While SDRC intends to use all reasonable efforts to provide the Services in
accordance with the timetable set out in the Licensed Software Designation
Agreement, it shall incur no liability whatsoever (whether in contract,
negligence or otherwise) for any loss or damage resulting from delay
however caused.
4. Intellectual Property Rights:
4.1 SDRC shall not be precluded in any way from developing, acquiring
and/or marketing know-how, techniques or materials which may be
similar to or competitive with know-how, techniques or materials
delivered to Customer under this Agreement, provided that SDRC shall
not utilize proprietary information disclosed to it by Customer in the
marketing of such materials.
4.2 In the event that the Services are to be provided by SDRC in
connection with software programs and related documentation supplied
by Customer in relation to which rights may be owned by third parties,
Customer warrants and represents that:
(i) Customer has all necessary permissions, express or otherwise, to
enable the software programs and documentation to be copied or
otherwise used by SDRC during the course of the Services;
(ii) in providing the Services SDRC will not be infringing the rights
of any third parties; and
(iii) the disclosure or use of the software programs and documentation
during the course of the Services will not involve the breach of
any confidential or contractual relationship.
5. Personnel:
5.1 SDRC reserves the sole right to determine the allocation of SDRC
personnel in providing the Services.
5.2 Nothing herein shall prevent SDRC from assigning SDRC personnel, who
are providing the Service to Customer under this Schedule, to perform
services similar to the Services for other customers of SDRC or
restrict SDRC in any other way in its use of SDRC personnel.
6. Warranty:
6.1 SDRC warrants that it will use reasonable care and skill in providing
the Services.
6.2 SDRC MAKES NO WARRANTY WITH RESPECT TO THE EQUIPMENT, MACHINERY,
SYSTEMS AND/OR PRODUCTS DERIVED OR RESULTING HEREUNDER OR WITH RESPECT
TO ANY EQUIPMENT, MACHINERY, SYSTEMS OR PRODUCTS OBTAINED BY SDRC IN
THE PERFORMANCE OF ITS SERVICES AND DELIVERED OR CONVEYED TO CUSTOMER
BY SDRC AND THE CUSTOMER ASSUMES ALL RISKS AND LIABILITY FOR THE
RESULTS OBTAINED BY THE MANUFACTURE, USE OR IMPLEMENTATION OF THE
SERVICES THAT ARE PROVIDED HEREIN, WHETHER USED SINGLY OR IN
COMBINATION WITH OTHER DESIGNS OR PRODUCTS. THE ABOVE WARRANTIES ARE
IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED AND ALL SUCH
WARRANTIES ARE HEREBY DISCLAIMED INCLUDING, BUT NOT LIMITED TO, THE
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
<PAGE> 8
7. Liability:
SDRC's liability in connection with the provision of Services hereunder
shall be subject to Section 9 of the Standard Extended Term Software
License Schedule or the Standard Annual Software License Schedule.
8. Export:
8.1 Customer acknowledges that the services, information, software and/or
technology provided hereunder may be subject to export controls.
Customer agrees that any services, information, software and/or
technology provided hereunder will not be exported (or rexported from
the country in which it is first installed), directly or indirectly,
separately or as part of a system, without Customer, at its own costs,
first obtaining all licenses from the United States Department of
Commerce, United States Department of State or any other appropriate
agency of the United States Government as may required by law.
8.2 Customer acknowledges and agrees that it shall not use any services,
information, software and/or technology provided hereunder in the
design, development, production, stockpiling or use of missiles, or
chemical or biological weapons nor shall it use any Licensed
Program(s) for facilities which are intended to produce chemical
weapons or chemical weapon precursors, unless a validated export
license is obtained from the United States Department of Commerce
where required.
8.3 Customer further acknowledges and agrees that it shall not use any
services, information, software and/or technology hereunder either
directly or indirectly to design, develop, fabricate or test nuclear
weapons or nuclear explosive devices or to design, construct,
fabricate, operate or construct components for facilities: for the
chemical processing of irradiated special nuclear or source material;
for the production of heavy water, for the separation of isotopes of
source and special nuclear material; or for the fabrication of
nuclear reactor fuel containing plutonium unless a validated export
license is obtained from the United States Department of Commerce
where required.
9. Hiring of SDRC Employees:
Customer agrees that during the term of this agreement and for a period of
one (1) year after the completion of the Service described in the Licensed
Software Designation Agreement in Article 1 above, Customer shall not,
except with the prior written consent of SDRC, offer any employment to any
of SDRC's employees.
10. General:
10.1 Customer may not assign or otherwise transfer any of its obligations,
rights or remedies under this Schedule and any such attempted
assignment or transfer shall be null and void.
10.2 The waiver or failure of either party to exercise in any respect any
right provided for herein shall not be deemed a waiver of any further
right hereunder. This Schedule constitutes the entire terms and
conditions between the parties with respect to the project covered in
the Licensed Software Designation Agreement and supersedes all
proposals, all previous negotiations and agreements, written or oral,
express or implied, between the parties with respect to such project.
10.3 The complete or partial invalidity or enforceability of any provision
herein for any purpose shall in no way affect the validity or
enforceability of such provision for any other purpose or the
remaining provisions. Any such provision shall be deemed to be severed
for that purpose subject to such consequential modification as may be
necessary for the purpose of such severance.
10.4 All notices required to be given hereunder shall be in writing. Notice
shall be considered delivered and effective upon receipt when sent by
registered or certified mail, return receipt requested, addressed to
the parties set forth above. Either party, upon written notice to the
other, may change any name or address to which future notice shall be
sent.
10.5 This Schedule shall be governed by, subject to and construed in
accordance with the laws of the State of Ohio.
<PAGE> 9
ISSC/ Clark Material Handling Company
Amendment #5 to Agreement for Systems Operations Services
- --------------------------------------------------------------------------------
Clark Material Handling Company, having its principal place of business at 333
West Vine Street, Lexington, Kentucky 40507 "Clark") and Integrated Systems
Solutions Corporation, a Delaware corporation, having its headquarters at 44
South Broadway, White Plains, New York 10601 ("ISSC"), agree that the following
terms and conditions amend and/or supplement the Agreement for Systems
Operations Services, dated March 2, 1992, between Clark and ISSC, (the
"Amendment"). ISSC acknowledges that the Agreement was assigned by Clark
Equipment Company to Clark Material Handling Company. This Amendment corrects,
clarifies or changes those sections of the Agreement as indicated below. Unless
modified herein, all other terms defined in the Agreement, Amendments, and
Schedules shall have the same meaning when used in this Amendment. All terms and
conditions of the Agreement and its subsequent Amendments not otherwise
specifically amended or supplemented herein remain unchanged and in full force
and effect.
The Term of this Amendment will begin as of the date it is executed by both
Parties or upon commencement of any Services provided hereunder, whichever is
first, and will run concurrently with the Agreement. Termination provisions of
the Agreement apply to this Amendment, unless specifically amended herein.
<TABLE>
Table of Contents
<CAPTION>
Section Title Page
<S> <C> <C>
1.0 Background and Objectives 1
2.0 Definitions, Documents and Term 1
2.3 Associated Contract Documents 1
3.0 Transition 2
3.7 Data Lines and Connections 2
3.11 Data Network Management Transition 2
4.0 ISSC Responsibilities 2
4.9 Operations, Support and Maintenance 2
4.10 Systems Management 3
4.11 Disaster Recovery 3
4.13 Help Desk 3
5.0 Clark Responsibilities 3
5.5 Other Responsibilities 3
6.0 Charges and Expenses 3
6.1 Charges 3
6.2 Resource Charges and Credits 3
6.4 Cost of Living Adjustment 4
6.12 Print Services Transition Charge 4
7.0 Invoicing and Payment 4
7.1 Annual Services Charge Invoices 4
7.2 ARC, RRC and COLA Invoices 4
7.9 Print Services Transition Charge Invoices 4
10.0 Termination 4
10.2 Termination For Convenience 4
17.0 General 5
</TABLE>
1.0 Background and Objectives
Add the following as paragraphs six and seven:
Clark has requested and ISSC has agreed to provide Clark's nightly batch printed
output from the Data Center to the designated location within the Data Center
for Clark's pickup as specified in this Amendment, ("Print Services").
Clark has also requested, effective July 1, 1995, to provide the microfiche,
Data Network management and disaster recovery services specified in the
Agreement. In addition. the Parties have evaluated Clark's strategic plans and
business requirements and have agreed to adjust the Baselines, ARCs and RRCs,
("Business Assessment Adjustment"). Therefore, ISSC agrees to amend the
Agreement to delete such services and adjust the Supplement and Schedules
accordingly.
2.0 Definitions, Documents and Term
2.3 Associated Contract Documents
Add the following to Section 2.3(a):
a) A Supplement #8 ("Supplement") containing the Charges, Term, and other
necessary information is a part of this Agreement. Supplement #8 amends,
replaces and restates in its entirety all previous Supplements. All
references to the Supplement contained in the Agreement, Schedules and any
preceding Amendments shall be deemed to refer to Supplement #8.
In reference to Section 2.3(b)
Pursuant to this Amendment, copies of Supplement #8, Revision #2 of Schedules G,
J and M, Revision #3 of Schedule I and Revision #4 of Schedules B and E are
attached hereto.
July 6, 1995
ISSC/Clark Confidential Amendment #5 Page 1 of 5
<PAGE> 10
x) plan, design, operate, support, maintain and provide problem resolution for
the logical and physical Data Network components between and including the
host processor and the ISSC front end processor (FEP) to include all
hardware and software (e.g, NCP and VTAM).
4.10 Systems Management
Delete the following Section 4.10(d):
d) invoke the disaster recovery plan when appropriate; and
4.11 Disaster Recovery
Delete the following Section 4.11 in its entirety:
ISSC on an annual basis and in cooperation with Clark, will update and test a
disaster recovery plan, as described in Schedule G.
ISSC will arrange for or provide a tested backup site ("Recovery Center") for
use in the event of unanticipated interruption of data processing capability at
the Data Center as described in Schedule G. If the Recovery Center is not
available when a disaster is declared, recovery services will be provided at
another recovery center or at an ISSC internal information processing facility
capable of providing services equivalent to the Recovery Center.
In the event of a disaster, access to the Recovery Center or other recovery
facilities may be on a shared, first-come-first-served basis with other
subscribers also experiencing a disaster.
Within 90 days following the execution of this Amendment, ISSC and Clark will
update the current Disaster Recovery Plan to include the CADAM applications. At
Clark's option, additional CADAM communications resources not currently
available (e.g., CADAM channel controllers, CSUs and incremental bandwidth) to
provide disaster recovery services for such applications, as mutually agreed to
by the Parties, will be the financial responsibility of Clark.
4.13 Help Desk
Replace Section 4.13 with the following:
ISSC will provide initial, single point-of-contact support to End Users,
including Clark's dealers and other authorized agents, to assist them with
problem determination, how-to questions, systems and Data Network status,
problem recording and reporting, problem resolution, and changes which may
affect them. ISSC will report the Data Network status to End Users calling the
Help Desk based upon the status provided to ISSC by Clark (or its designate).
Help desk support is more fully described in Schedule M.
ISSC shall provide Clark on-line access to Clark's problem management records
("PMRs") and such file shall be updated daily.
5.0 Clark Responsibilities
5.5 Other Responsibilities
Amend Section 5.5(f) as follows:
f) maintain responsibility for all printed output, other than the printed
output for which ISSC assumes responsibility under this Amendment;
Add the following as Sections 5.5(w), 5.5(x), 5.5(y), 5.5(z), 5.5(a1), 5.5(b1)
and 5.5(c1):
w) maintain and provide to ISSC a listing of the reports and/or jobs to be
printed at the Data Center;
x) specify the number of each report and/or job to be printed by ISSC;
y) define and execute the print jobs;
z) pickup the printed output at the designated location within the Data Center
after 7:30AM, Monday through Saturday or at other designated times, as
mutually agreed by the Parties;
a1) maintain responsibility for all microfiche output and distribution;
b1) plan, design, operate, support, maintain and provide problem resolution for
the logical and physical Data Network components except for that which ISSC
maintains responsibility under this Amendment; and
c1) provide LAN/WAN administration and provide to ISSC the network addresses
for host and ISSC FEP definitions.
6.0 Charges and Expenses
6.1 Charges
Add the following as paragraphs two, three and four:
Upon the Parties' execution of this Amendment or the commencement of Print
Services, whichever is first, Clark agrees to pay ISSC the charge specified in
the Supplement for the provision of the Print Services, (the "Annual Print
Services Charge").
Effective July 1, 1995, ISSC agrees to adjust the charge specified in the
Supplement for the deletion of the microfiche, Data Network management and
disaster recovery services as well as the adjustment to the Baselines, ARCs and
RRCs, (the "Business Assessment Adjustment").
All references to the Annual Services Charge contained in the Agreement,
Supplement, Schedules and any previous Amendments shall be deemed to mean the
sum of the charges:
1) reflected under the Annual Services Charge in the November 23, 1993
Supplement (hereinafter the "Initial Agreement Charge"); and
2) any charges or adjustments pursuant to this and any previous or future
Amendments.
6.2 Resource Charges and Credits
Replace Section 6.2 with the following:
During the month following the Amendment Date, ISSC will review the quantity of
Resource Units uti-
July 6, 1995
ISSC/Clark Confidential Amendment #5 Page 3 of 5
<PAGE> 11
17.0 General
The following is in addition to Section 17 of the Agreement:
In the event of any inconsistency in the terms of Agreement and the terms of
this Amendment. the terms of this Amendment shall apply. As amended herein, the
Agreement, the Supplement and all Schedules remain in full force and effect.
THE PARTIES ACKNOWLEDGE THAT THEY HAVE READ THIS AMENDMENT, UNDERSTAND IT, AND
AGREE TO BE BOUND BY ITS TERMS AND CONDITIONS. FURTHER, THE PARTIES AGREE THAT
THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN THE PARTIES
RELATING TO THIS SUBJECT SHALL CONSIST OF 1) THE AMENDMENTS, 2) THE SUPPLEMENT
#8, 3) THE SCHEDULES, AND 4) THE MARCH 2, 1992 AGREEMENT. THIS STATEMENT OF THE
AMENDMENT SUPERSEDES ALL PROPOSALS OR OTHER PRIOR AGREEMENTS, ORAL OR WRITTEN,
AND ALL OTHER COMMUNICATIONS BETWEEN THE PARTIES RELATING TO THIS SUBJECT MATTER
DESCRIBED IN THIS AMENDMENT.
Accepted by: Accepted by:
Integrated Systems Solutions Corporation Clark Material Handling Company
By /s/ J.L. Granderson By /s/ Gerald M. Bull
------------------------------------ ------------------------------------
Authorized Signature Authorized Signature
J.L. Granderson 7/7/95 Gerald M. Bull 7/7/95
------------------------------------ ------------------------------------
Name (Type or Print) Date Name (Type or Print) Date
July 6, 1995
ISSC/Clark Confidential Amendment #5 Page 5 of 5
<PAGE> 12
ISSC / Clark Material Handling Company
Amendment to Agreement for Systems Operations Services
- --------------------------------------------------------------------------------
Clark Material Handling Company, having its principal place of business at 333
West Vine Street, Lexington, Kentucky 40507 ("Clark") and Integrated Systems
Solutions Corporation, a Delaware corporation, having its headquarters at 560
White Plains Road, Tarrytown, New York 10591 ("ISSC"), agree that the following
terms and conditions amend and/or supplement the Agreement for Systems
Operations Services, dated March 2, 1992, between Clark and ISSC (the
"Amendment"). ISSC acknowledges that the Agreement was assigned by Clark
Equipment Company to Clark Material Handling Company. This Amendment corrects,
clarifies or changes those sections of the Agreement as indicated below. Unless
modified herein, all other terms defined in the Agreement, Amendments, and
Schedules shall have the same meaning when used in this Amendment. All terms and
conditions of the Agreement and its subsequent Amendments not otherwise
specifically amended or supplemented herein remain unchanged and in full force
and effect.
The Term of this Amendment will begin as of the date it is executed by both
Parties and will run concurrently with the Agreement. Termination provisions of
the Agreement apply to this Amendment, unless specifically amended herein.
<TABLE>
Table of Contents
<CAPTION>
Section Title Page
<S> <C> <C>
1.0 Background and Objectives 1
2.0 Definitions, Documents and Term 1
2.3 Associated Contract Documents 1
3.0 Transition 1
3.7 Data Lines and Connections 1
3.10 CADAM Transition 2
4.0 ISSC Responsibilities 2
4.6 Additional Machines 2
4.9 Operations, Support and Maintenance 2
4.11 Disaster Recovery 2
4.16 CADAM Software 2
5.0 Clark Responsibilities 2
5.5 Other Responsibilities
6.0 Charges and Expenses 2
6.11 CADAM Charges 2
7.0 Invoicing and Payment 2
7.8 CADAM Invoices 2
10.0 Termination 3
10.8 CADAM Termination 3
17.0 General 3
</TABLE>
1.0 Background and Objectives
Add the following as paragraphs four and five:
Clark desires that ISSC assume responsibility for operations and systems support
of Clark's Computer Augmented Design and Manufacturing ("CADAM") applications.
This Amendment documents the terms and conditions under which ISSC will provide
such Services to Clark.
2.0 Definitions, Documents and Term
2.3 Associated Contract Documents
Replace Section 2.3(a) with the following:
a) A Supplement #4 ("Supplement") containing the Charges, Term, and other
necessary information is a part of this Agreement. Supplement #4 amends,
replaces and restates in its entirety all previous Supplements. All
references to the Supplement contained in the Agreement and any preceding
Amendments shall be deemed to refer to Supplement #4.
Note:
In reference to Section 2.3(b) and pursuant to this Amendment, copies of
Supplement #4, Revision #1 of Schedules D and K, Revision #2 of Schedules A and
B, and Revision #3 of Schedule E are attached hereto. The graphic
representation, provided by ISSC to Clark, of the communications network
requirements for the CADAM applications added under this Amendment is included
herein and will become an attachment to the next revision of Schedule 1. Such
revision will be completed by no later than 30 days following the completion of
the migration of the CADAM applications to the Data Center and an updated copy
will be distributed to the Parties.
3.0 Transition
3.7 Data Lines and Connections
Add the following as paragraph six:
Clark will assume all financial responsibility for the provision of the data
lines required to connect and support CADAM applications at the Clark locations.
ISSC will provide, at ISSC's expense, the necessary
July 14,1993
ISSC/Clark Confidential Amendment #4 Page 1 of 3
<PAGE> 13
1) for the CADAM Transition Charge in twelve monthly installments
beginning in January 1994.
2) monthly for the CADAM Support Charge throughout the remainder of the
Term, subject to Section 3.11 of Schedule E; and
3) monthly for the CADAM Software Charge throughout the remainder of the
term.
b) Following the execution of this Amendment, ISSC will invoice Clark monthly
for 36 months for the CADAM Equipment Charge.
ISSC will pursue reductions in the charges related to the CADAM Software (i.e.,
license fees) and, if any such reductions are obtained, will adjust the CADAM
Software Charge to Clark in an amount equal to the costs savings realized by
ISSC.
10.0 Termination
10.8 CADAM Termination
Add the following as Section 10.8:
a) CADAM Transition Charge
The CADAM Transition Charge must be paid in full and is not subject to the
termination provisions under the Agreement.
b) CADAM Support Charge
Upon 90 days prior written notice to ISSC, Clark may terminate CADAM
support and the CADAM Support Charge therefor.
c) CADAM Software Charge
Upon 90 days prior written notice to ISSC, Clark may terminate CADAM
Software services and the CADAM Software Charge therefor.
d) CADAM Equipment Charge
The CADAM Equipment Charge must be paid in full and is not subject to the
termination provisions under the Agreement.
ISSC will provide termination assistance to Clark for CADAM applications subject
to the provisions of Section 10.6 of the Agreement.
17.0 General
The following is in addition to Section 17 of the Agreement:
In the event of any inconsistency in the terms of the Agreement and the terms of
this Amendment, the terms of this Amendment shall apply. As amended herein, the
Agreement, the Supplement #4 and all Schedules remain in full force and effect.
THE PARTIES ACKNOWLEDGE THAT THEY HAVE READ THIS AMENDMENT, UNDERSTAND IT, AND
AGREE TO BE BOUND BY ITS TERMS AND CONDITIONS. FURTHER, THE PARTIES AGREE THAT
THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN THE PARTIES
RELATING TO THIS SUBJECT SHALL CONSIST OF 1) THE AMENDMENTS, 2) THE SUPPLEMENT
#4, 3) THE SCHEDULES, AND 4) THE MARCH 2, 1992 AGREEMENT. THIS STATEMENT OF THE
AMENDMENT SUPERSEDES ALL PROPOSALS OR OTHER PRIOR AGREEMENTS, ORAL OR WRITTEN,
AND ALL OTHER COMMUNICATIONS BETWEEN THE PARTIES RELATING TO THIS SUBJECT MATTER
DESCRIBED IN THIS AMENDMENT.
Accepted by: Accepted by:
Integrated Systems Solutions Corporation Clark Material Handling Company
By /s/ J.L. Granderson By /s/ Carl E. Boyer
------------------------------------ ------------------------------------
Authorized Signature Authorized Signature
J.L. Granderson 7/15/93 Carl E. Boyer 7/15/93
------------------------------------ ------------------------------------
Name (Type or Print) Date Name (Type or Print) Date
July 14,1993
ISSC/Clark Confidential Amendment #4 Page 3 of 3
<PAGE> 14
ISSC / Clark Material Handling Company
Amendment to Agreement for Systems Operations Services
Clark Material Handling Company, having its principal place of business at 333
West Vine Street, Lexington, Kentucky 40507 ("Clark") and Integrated Systems
Solutions Corporation, a Delaware corporation, having its headquarters at 560
White Plains Road, Tarrytown, New York 10591 ("ISSC"), agree that the following
terms and conditions amend and/or supplement the Agreement for Systems
Operations Services, dated March 2, 1992, between Clark and ISSC (the
"Amendment"). ISSC acknowledges that the Agreement was assigned by Clark
Equipment Company to Clark Material Handling Company. This Amendment corrects,
clarifies or changes those sections of the Agreement as indicated below. Unless
modified herein, all other terms defined in the Agreement, Amendments, and
Schedules shall have the same meaning when used in this Amendment. All terms and
conditions of the Agreement and its subsequent Amendments not otherwise
specifically amended or supplemented herein remain unchanged and in full force
and effect.
The Term of this Amendment will begin as of the date it is executed by both
Parties and will run concurrently with the Agreement. Termination provisions of
the Agreement apply to this Amendment.
Table of Contents
Section Title Page
2 Definitions, Documents and Term 1
2.1 Definitions 1
2.3 Associated Contract Documents 1
2.5 Term 1
17 General 1
2. Definitions, Documents and Term
2.1 Definitions
Section 2.1(u) is amended to read as follows:
u) "Amendment Date" means June 1, 1993.
2.3 Associated Contract Documents
Replace Section 2.3(a) with the following:
a) A Supplement #3 ("Supplement") containing the Charges, Term, and other
necessary information is a part of this Agreement. Supplement #3 amends,
replaces and restates in its entirety all previous Supplements. All
references to the Supplement contained in the Agreement and any preceding
Amendments shall be deemed to refer to Supplement #3.
2.5 Term
Replace Section 2.5 with the following:
The Term of this Amendment will begin as of 12:01 am on June 1, 1993 and will
end as of 12:00 midnight on May 31, 2003, unless earlier terminated or extended
in accordance with this Agreement (the "Term"). This Amendment extends the Term
of the Agreement by five years, eleven months and ten days.
Note:
The above is reflected in Supplement #3, a copy of which is attached hereto.
17. General
The following is in addition to Section 17 of the Agreement:
In the event of any inconsistency in the terms of the Agreement and the terms of
this Amendment, the terms of this Amendment shall apply. As amended herein, the
Agreement, the Supplement #3 and all Schedules remain in full force and effect.
May 10,1993
ISSC/Clark Confidential Amendment #3 Page 1 of 2
<PAGE> 15
THE PARTIES ACKNOWLEDGE THAT THEY HAVE READ THIS AMENDMENT, UNDERSTAND IT, AND
AGREE TO BE BOUND BY ITS TERMS AND CONDITIONS. FURTHER, THE PARTIES AGREE THAT
THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN THE PARTIES
RELATING TO THIS SUBJECT SHALL CONSIST OF 1) THE AMENDMENTS, 2) THE SUPPLEMENT
#3, 3) THE SCHEDULES, AND 4) THE MARCH 2, 1992 AGREEMENT. THIS STATEMENT OF THE
AMENDMENT SUPERSEDES ALL PROPOSALS OR OTHER PRIOR AGREEMENTS, ORAL OR WRITTEN,
AND ALL OTHER COMMUNICATIONS BETWEEN THE PARTIES RELATING TO THIS SUBJECT MATTER
DESCRIBED IN THIS AMENDMENT.
Accepted by: Accepted by:
Integrated Systems Solutions Corporation Clark Material Handling Company
By /s/ Jerry L. Granderson By /s/ Thomas G. McLouglin
------------------------------------ ------------------------------------
Authorized Signature Authorized Signature
Jerry L. Granderson 5/11/93 Thomas G. McLouglin 5/11/93
------------------------------------ ------------------------------------
Name (Type or Print) Date Name (Type or Print) Date
Project Executive Dir, Info Systems
May 10,1993
ISSC/Clark Confidential Amendment #3 Page 2 of 2
<PAGE> 16
ISSC / Clark Material Handling Company
Amendment to Agreement for Systems Operations Services
Clark Material Handling Company, having its principal place of business at 333
West Vine Street, Lexington, Kentucky 40507 ("Clark") and Integrated Systems
Solutions Corporation, a Delaware corporation, having its headquarters at 550
White Plains Road, Tarrytown, New York 10591 ("ISSC"), agree that the following
terms and conditions amend and/or supplement the Agreement for Systems
Operations Services, dated March 2, 1992, between Clark and ISSC (the
"Amendment"). ISSC acknowledges that the Agreement was assigned by Clark
Equipment Company to Clark Material Handling Company. This Amendment corrects,
clarifies or changes those sections of the Agreement as indicated below. Unless
modified herein, all other terms defined in the Agreement, Amendments, and
Schedules shall have the same meaning when used in this Amendment. All terms and
conditions of the Agreement and its subsequent Amendments not otherwise
specifically amended or supplemented herein remain unchanged and in full force
and effect.
The Term of this Amendment will begin as of the date it is executed by both
Parties and will run concurrenty with the Agreement. Termination provisions of
the Agreement apply to this Amendment.
Table of Contents
Section Title Page
2 Definitions, Documents and Term 1
2.1 Definitions 1
2.2 Services Environments 1
2.3 Associated Contract Documents 1
2.5 Term 2
2.6 Renewal and Expiration 2
3 Transition 2
3.7 Data Lines and Connections 2
3.9 Staff 2
4 ISSC Responsibilities 2
4.9 Operations, Support and Maintenance 2
4.13 Help Desk 2
5 Clark Responsibilities 3
5.5 Other Responsibilities 3
6 Charges and Expenses 3
6.2 Resource Charges and Credits 3
6.3 Excluded Resources 3
6.4 Cost of Living Adjustment 3
6.8 Extraordinary RU Decrease 3
6.10 Alternative Technology 3
7 Invoicing and Payment 4
7.2 ARC, RRC and COLA Invoices 4
10 Termination 4
10.1 Termination Upon Acquisition 4
12 Warranty 4
12.6 Claims 4
17 General 4
2. Definitions, Documents and Term
2.1 Definitions
Replace Section 2.1(h) with the following:
h) "End User Machines" means all workstations, terminals, printers, LAN
servers and associated peripheral equipment used by End Users and located
at End User Locations.
Add The following as Section 2.1(u):
u) "Amendment Date" means April 1, 1993
2.2 Services Environments
Replace Section 2.2(c) and Section 2.2(d) with the following:
c) The "Data Network" consists or all machines, associated attachments,
features and accessories, Software, data lines and cabling used to connect
and transmit data for the Data Center and Clark End User Locations to which
Clark is connected as of the Commencement Date, including, but not limited
to, communication controllers, multiplexors, lines, modems/DSUs and other
network components, but does not include PBXs and any devices used
exclusively for Voice Communications or End User Machines.
d) The "End User Locations" consist of those locations in which End Users, End
User Machines, equipment and associated software are located, which
locations are facilities or floors in facilities outside the Data Center.
2.3 Associated Contract Documents
Replace Section 2.3 with the following
a) A Supplement #2 ("Supplement") containing the Charges, Term, and other
necessary information is a part of this Agreement. Supplement #2 amends,
replaces and restates in its entirety all previous Supplements. All
references to the Supplement contained in the Agreement and any preceding
Amendments shall be deemed to refer to Supplement #2.
b) Schedules A through Q are also part of this Agreement, and will be updated
by mutual written agreement of the Parties as necessary
April 27,1993
ISSC/Clark Confidential Amendment #2 Page 1 of 5
<PAGE> 17
or appropriate during the term of this Agreement.
Note:
Pursuant to this Amendment, copies of Supplement #2, Revision #1 of the Table of
Schedules, Revision #2 of Schedule E, Revision #1 of Schedules I, J and M, and
new Schedules P and Q are attached hereto.
2.5 Term
Replace Section 2.5 with the following:
The Term of this Amendment will begin as of 12:01 am on April 1, 1993 and will
end as of 12:00 midnight on March 31, 2003, unless earlier terminated or
extended in accordance with this Agreement (the "Term"). This Amendment extends
the Term of the Agreement by five years, nine months and one week.
Note:
The above is reflected in Supplement #2.
2.6 Renewal and Expiration
Replace Section 2.6(a) with the following:
a) Extending the Term of the Agreement for an additional five years at the
charges, terms, conditions and Resource Baselines in effect for Clark in
the tenth year of this Agreement; or
3. Transition
3.7 Data Lines and Connections
Add the following as paragraph five to Section 3.7:
ISSC will assume all financial, including all cash and expense connected
thereof, and administrative responsibility for relocating the Data Network
communication lines from 333 West Vine Street, Lexington, Kentucky (The "Clark
Facility") to the Data Center, such relocation to be completed by no later than
March 31, 1994. In the interim, ISSC will manage the Data Network remotely.
Clark will designate a person who, during normal business hours, will monitor
the Data Network equipment located at the Clark Facility on a regular and as
needed basis and provide to ISSC the input reasonably required for problem
analysis and problem determination in the event of Data Network component
failure. ISSC will monitor such equipment during off-shift hours and Clark will
provide ISSC with access to the Clark Facility, as reasonably required.
3.9 Staff
Add the following as Section 3.9:
a) By no later than 30 days after the execution of this Amendment, ISSC or its
subcontractors will consider those Clark employees listed on Schedule P
(the "Affected Employees") for employment with ISSC or its subcontractors.
ISSC or its subcontractors will be solely responsible for making any hiring
decisions regarding the Affected Employees.
b) ISSC or its subcontractors will hire those Affected Employees receiving
offers who:
1) are employed by Clark as of the date the offer is made.
2) meet ISSC's or its subcontractors' customary preemployment screening
procedures for health, drug and background criteria: and
3) accept the offer of employment from ISSC or its subcontractors within
ten days from the date the offer is made.
c) Any Affected Employee remaining on Clark's payroll shall perform their
duties under the direction and control of Clark and will be treated as a
Clark employee for all purposes;
d) Each offer of employment to an Affected Employee shall include:
1) an initial base salary not less than the base salary each such
Affected Employee currently receives from Clark;
2) the benefits package available to similarly situated ISSC or
subcontractor employees; and
3) a minimum employment period of one year.
4. ISSC Responsibilities
4.9 Operations, Support and Maintenance
Add the following as Sections 4.9 (k), (l), (m), (n), (o), (p) and (q):
k) manage The Data Network, including the WAN Network, the LAN Network and the
3270 Terminal Network, as set forth in Schedule 1, and provide problem
diagnosis and coordination of vendor services to ensure problem resolution;
l) annually review Clark's Data Network facilities and services and recommend
appropriate changes for keeping the Data Network at a current level of
technology;
m) provide advice related to the implementation of new Data Network
components;
n) manage connectivity for new installations, including the Dealer Network, of
session establishment between an End User and a Clark approved application;
o) provide, on an annual basis, a mutually agreed upon listing of additional
ISSC services available to Clark, including the price of each individual
service;
p) perform Envoy administrative functions, including, but not limited to, the
following:
1) initiating new Envoy mailboxes to include phone assistance, through
the help desk, to aid new Envoy users during initial start-up;
2) updating Envoy directories;
3) managing and performing the weekly Envoy user's directory exchange;
and
4) providing data, by the tenth business day of each month, to support
Clark's Envoy billing functions and assist Clark with Envoy users'
inquiries to the extent that such inquiries pertain to the billing
data provided by ISSC.
April 27,1993
ISSC/Clark Confidential Amendment #2 Page 2 of 5
<PAGE> 18
q) update the soft copy of the Envoy User's Guide, as appropriate, and deliver
one revised hard copy annually to a designated Clark employee for
distribution to Clark's dealers;
r) provide formal training classes for Envoy users, upon Clark's request and
at an additional price to be determined by ISSC at the time of such
request, and
s) manage the Data Network by:
1) providing alert monitoring, trouble analysis (first and second level)
and problem resolution;
2) actively monitoring Data Network components;
3) placing service calls to vendors to perform corrective maintenance;
and
4) managing problems to resolution including escalating all problems that
impact Clark's business operations in accordance with established
procedures as defined in the Procedures Manual;
collectively, the above constitutes the "Network Control Center."
4.13 Help Desk
Replace Section 4.13 with the following:
ISSC will provide initial, single point-of-contact support to End Users,
including Clark's dealers and other authorized agents, to assist them with
problem determination, how-to questions, systems and Data Network status,
problem recording and reporting, problem resolution, and changes which may
affect them. Help desk support is more fully described in Schedule M.
ISSC shall provide Clark on-line access to Clark's problem management records
("PMRs") and such file shall be updated daily.
5. Clark Responsibilities
5.5 Other Responsibilities
Replace Sections 5.5(p) and 5.5(r) with the following:
p) maintain responsibility for voice communications;
r) provide ISSC with reasonable prior notice regarding any planned changes by
Clark to the Data Network or Envoy billing;
s) provide a Procedures Manual update detailing the functions necessary for
ISSC to perform and support Envoy; and
t) provide formal training classes for Envoy users.
6. Charges and Expenses
6.2 Resource Charges and Credits
Replace Section 6.2 with the following:
During the month following the Amendment Date, ISSC will review the quantity of
Resource Units utilized by Clark and calculate Additional Resource Charges
(ARCs) and/or Reduced Resource Credits (RRCs), as applicable, per Section 1.3 of
Revision #1 of Schedule J.
Commencing on or about January 1, 1994 and semiannually thereafter, ISSC will
review the quantity of Resource Units utilized by Clark during the preceding
period and calculate Additional Resource Charges (ARCs) and/or Reduced Resource
Credits (RRCs).
The Resource Unit categories, Resource Baselines, ARC Rates and RRC Rates are
described in Revision #1 of Schedule J and specified in the Supplement.
6.3 Excluded Resources
Replace Section 6.3 with the following:
In determining the amount of Resource Units used to provide the Services, ISSC
shall exclude:
a) resources used for systems overhead as determined by the resource
measurement methodology specified in Schedule J;
b) resources used by ISSC to monitor or measure the amount of resources used;
c) resources used by ISSC to perform ISSC billing functions;
d) resources used to perform reruns resulting from the fault of ISSC;
e) resources used by ISSC to manage and tune Systems Software;
f) resources used by ISSC to upgrade, test or alter Systems Software;
g) resources used to monitor and manage the Data Network; and
h) such other exclusions as detailed in Schedule J.
6.4 Cost of Living Adjustment
Replace Section 6.4 with The following
The Annual Services Charge and the ARC Rates include protection against
inflation at a rate of up to and including 3.0 percent per year compounded
annually starting with the CPI-U for December 1992 as the base year ("Protection
Index"). Clark agrees to pay ISSC a Cost of Living Adjustment ("COLA") beginning
12 months after the Amendment Date if actual cumulative inflation exceeds the
Protection Index.
The Parties agree to use the Consumer Price Index, as published by the Bureau of
Labor Statistics, U.S. Department of Labor, For All Urban Consumers, U.S. City
Average, All Items, 1982-84 = 100 ("CPI-U") for purposes of calculating actual
inflation.
The COLA will be calculated using the COLA factor specified below. The COLA is
payable on a prospective basis, i.e., the Annual Services Charge and net
ARCs/RRCs payable by Clark for the subsequent calendar year will be surcharged
by the factor as determined below, if such factor is in excess of zero. The COLA
factor will be determined as soon as practicable after the end of each calendar
year. The COLA factor is:
[(Actual Inflation - Protected Inflation) / Base Year) x .50
where:
April 27,1993
ISSC/Clark Confidential Amendment #2 Page 3 of 5
<PAGE> 19
Actual Inflation = CPI-U for the December preceding the year
for which COLA is being calculated,
Protected Inflation = the Protection Index for the year preceding the year
for which COLA is being, calculated (specified on
the Supplement), and
Base Year = CPI-U for December of the year previous to the
Amendment Date
In the event the Bureau or Labor Statistics stops publishing the CPI-U or
substantially changes its content and format, the Parties will substitute
another comparable index published at least annually by a mutually agreeable
source. If the Bureau of Labor Statistics merely redefines the base year for the
CPI-U from 1982-84 to another year, the Parties will continue to use the CPI-U,
but will convert the Protection Index to the new base year by using an
appropriate conversion formula.
6.8 Extraordinary RU Decrease
Replace Section 6.8 with the following:
In the event Clark experiences a long term reduction (minimum of three months
with such reduction anticipated to continue through the foreseeable future) in
the amount or CPU resources used to process the work of Clark and its Affiliates
and
a) the reduced CPU usage is not a result of assigning Services provided under
this Agreement to another outsourcing vendor, and
b) such reduction is not less than 35 percent of the CPU Original Baseline
then:
1) the amount or the Annual Services Charge payable to ISSC pursuant to
this Section will thereupon be lowered by the amount by which ISSC's
actual and direct expenses for performing hereunder are decreased as a
result or such change; and
2) the applicable Resource Baselines and ARC/RRC Rates will be equitably
adjusted to reflect the reduced resource utilization at that time.
The reduction of the Annual Services Charge, Resource Baselines and ARC/RRC
Rates, if any, will be retroactive to the beginning of the three month period
referenced above.
6.10 Alternative Technology
Add the following as Section 6.10:
In the event that anytime during the Term of this Agreement and any renewal
periods Clark elects to migrate a significant portion (10% or more of the
Original Baseline quantity for CPU minutes) or the host based applications and
processing provided under this Agreement to an alternative technology (e.g.,
client server) and ISSC is selected as the supplier of such alternative
technology solution, then, ISSC will reprice the Services, upon Clark's
notification that the migration is complete, at the reduced resource usage
levels using the then current pricing methodology or the pricing methodology
used to price the resources being delivered under this Amendment #2, whichever
is most beneficial to Clark.
Clark may provide up lo a maximum of 15% of the resources required to implement
the new solution subject to the following exclusions:
a) Clark may use any Clark or Clark Affiliate resource(s) (software, hardware
or personnel) that is owned, leased, licensed or on Clark s payroll as or
the Amendment date and the value of such resource(s) will not be counted
toward the 15% limitation referenced above;
b) Clark may use any Clark or Clark Affiliate resource(s) (software, hardware
or personnel) that is owned, leased, licensed or on Clark's payroll more
than 24 months prior to selecting ISSC as the solutions provider and the
value or such resource(s) will not be counted toward the 15% limitation
referenced above; and
c) Software function(s) owned or licensed by Clark or Clark Affiliate and
existing as or the Amendment Date or more than 24 months prior to selecting
ISSC as the solutions provider which can be migrated from the host
environment to the Alternative Technology platform may be included in the
solution and the value of such software function(s) will not be counted
toward the 15% limitation referenced above.
Should Clark decide to provide the services internally or select another
vendor to provide the services, then the credit for reduction in resources
would be subject to other applicable provisions of the Agreement.
7. Invoicing and Payment
7.2 ARC, RRC and COLA Invoices
Replace Section 7.2 with the following:
In the first month following the Amendment Date and each January and July
thereafter, ISSC will invoice Clark for ARCs or RRCs, if any, pursuant to
Section 1.3 of Revision # 1 of Schedule J. ISSC will invoice Clark for COLA
starting on the first anniversary of the Amendment Date and monthly thereafter
in accordance with Section 6.4.
10. Termination
10.1 Termination Upon Acquisition
Replace Section 10.1 with the following:
If substantially all of the business or assets of Clark Material Handling
Company is sold to, acquired by or merged into another entity or person and the
acquiring or other entity or person elects not to adopt or continue this
Agreement, Clark, the acquiring or other entity or person, may terminate this
Agreement within one year following such acquisition if
a) the merger, acquisition or sale is completed, and
b) there has been a minimum of one year's written notification prior to the
effective date of termination to ISSC and
April 27,1993
ISSC/Clark Confidential Amendment #2 Page 4 of 5
<PAGE> 20
c) Clark pays the termination charges to ISSC specified under Termination Upon
Acquisition in the Supplement.
Any termination charge will be prorated for the month of termination.
12. Warranty
12.6 Claims
Add the following as Section 12.6:
Clark warrants it has no knowledge and that it has not received notice of any
actual or threatened claim or action by, on behalf of or related to, any of the
Affected Employees, including, but not limited to, claims arising under the
Occupational Safety and Health Administration, Equal Employment Opportunity
Commission, National Labor Relations Board or Fair Labor Standards Act, or
other applicable state or local laws or regulations, except as claims or actions
are identified in Schedule Q.
17. General
The following is in addition to Section 17 of the Agreement:
In the event of any inconsistency in the terms of the Agreement and the terms of
this Amendment, the terms of this Amendment shall apply. As amended herein, the
Agreement, the Supplement #2 and all Schedules remain in full force and effect.
THE PARTIES ACKNOWLEDGE THAT THEY HAVE READ THIS AMENDMENT, UNDERSTAND IT, AND
AGREE TO BE BOUND BY ITS TERMS AND CONDITIONS. FURTHER, THE PARTIES AGREE THAT
THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN THE PARTIES
RELATING TO THIS SUBJECT SHALL CONSIST OF 1) THE AMENDMENTS, 2) THE SUPPLEMENT
#2, 3) THE SCHEDULES, AND 4) THE MARCH 2, 1992 AGREEMENT. THIS STATEMENT OF THE
AMENDMENT SUPERSEDES ALL PROPOSALS OR OTHER PRIOR AGREEMENTS, ORAL OR WRITTEN,
AND ALL OTHER COMMUNICATIONS BETWEEN THE PARTIES RELATING TO THIS SUBJECT MATTER
DESCRIBED IN THIS AMENDMENT.
Accepted by: Accepted by:
Integrated Systems Solutions Corporation Clark material Handling Company
By /s/ Jerry L. Granderson By /s/ James B. Bennett III
------------------------------------ ------------------------------------
Authorized Signature Authorized Signature
Jerry L. Granderson 5/3/93 James B. Bennett III 4/30/93
------------------------------------ ------------------------------------
Name (Type or Print) Date Name (Type or Print) Date
Project Executive
April 27,1993
ISSC/Clark Confidential Amendment #2 Page 5 of 5
<PAGE> 21
ISSC / Clark Material Handling Company
Amendment to Agreement for Systems Operations Services
- --------------------------------------------------------------------------------
Clark Material Handling Company, a business unit of TEREX CORPORATION, a
corporation having a place of business at 333 West Vine Street, Lexington,
Kentucky 40507 ("Clark") and Integrated Systems Solutions Corporation, a wholly
owned IBM subsidiary, having its headquarters at 560 White Plains Road,
Tarrytown, New York 10591 ("ISSC"), agree that the following terms and
conditions amend and/or supplement the Agreement for System Operations Services,
dated March 2, 1992, between Clark and ISSC (the "Amendment"). This Amendment
changes the section(s) of the Agreement as indicated below. Unless modified
herein, all other terms defined in the Agreement, Amendments, and Schedules
shall have the same meaning when used in this Amendment. All terms and
conditions of the Agreement and its subsequent Amendments not otherwise
specifically amended or supplemented herein remain unchanged and in full force
and effect.
The Term of this Amendment will begin as of the date it is executed by both
Parties and will run concurrently with the Agreement. Termination provisions of
the Agreement apply to this Amendment. Termination of this Amendment may only
be effected through termination of the Agreement, as amended.
Table of Contents
Section Title Page
2 Definitions, Documents and Term 1
2.1 Definitions 1
2.5 Term 1
3 Transition 1
3.1 Overview 1
17 General 1
2. Definitions, Documents and Term
2.1 Definitions
Section 2.1(i) is amended to read:
i) "Implementation Date" means June 22, 1992.
2.5 Term
Section 2.5 is amended to read:
The Term of this Agreement will begin at of 12:01 a m. on the Commencement Date
and will end as of 12:00 midnight on June 21, 1997 unless earlier terminated or
extended in accordance with this Agreement (the "Term" ).
Note:
The above is reflected in Revision #1 of the Supplement attached hereto.
3. Transition
3.1 Overview
Paragraph one of Section 3.1 is amended to read:
There will be a transition period beginning on the Commencement Date and
continuing through no later than June 22, 1992 (the "Transition Period"). The
Transition Period may be extended with mutual agreement of the Parties. During
the Transition Period, the Parties will commence and complete a phased
transition of the Services from the Clark Data Center to the Data Center.
17. General
The following is in addition to Section 17 of the Agreement:
In the event of any inconsistency between the terms of the Agreement, its
Amendments and the terms of this Amendment, the terms of this Amendment shall
apply.
October 9, 1993
ISSC/Clark Confidential Amendment #1 Page 1 of 2
<PAGE> 22
THE PARTIES ACKNOWLEDGE THAT THEY HAVE READ THIS AMENDMENT, UNDERSTAND IT, AND
AGREE TO BE BOUND BY ITS TERMS AND CONDITIONS. FURTHER, THE PARTIES AGREE THAT
THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN THE PARTIES
RELATING TO THIS SUBJECT SHALL CONSIST OF 1) THE AMENDMENTS 2) THE SUPPLEMENT,
3) THE SCHEDULES, AND 4) THE MARCH 2, 1992 AGREEMENT. THIS STATEMENT OF THE
AMENDMENT SUPERSEDES ALL PROPOSALS OR OTHER PRIOR AGREEMENTS, ORAL OR WRITTEN,
AND ALL OTHER COMMUNICATIONS BETWEEN THE PARTIES RELATING TO THIS SUBJECT MATTER
DESCRIBED IN THIS AMENDMENT.
Accepted by: Accepted by:
Integrated Systems Solutions Corporation Clark Material Handling Company
(a business unit of TEREX CORPORATION)
By /s/ J. L. Granderson By /s/ T. McLouglin
------------------------------------ ------------------------------------
Authorized Signature Authorized Signature
J. L. Granderson 12/14/92 T. McLouglin 12/11/92
------------------------------------ ------------------------------------
Name (Type or Print) Date Name (Type or Print) Date
October 9, 1992
ISSC/Clark Confidential Amendment #1 Page 2 of 2
<PAGE> 23
<PAGE> 1
EXHIBIT 10.16
[CLARK MATERIAL HANDLING COMPANY LOGO]
October 26, 1995
Mr. Tom Hughes, President
MANUFACTURERS DISTRIBUTION
SERVICES, INC.
491 Main Street
Branford, Connecticut 06405
Dear Mr. Hughes:
Clark Material Handling Company ("Clark") hereby appoints Manufacturers
Distribution Services, Inc. ("MDSI") as its agent solely for the limited purpose
of purchasing industrial tires (collectively, the "Products") from Maine Rubber
International ("Maine"), specified by part numbers and for prices as set forth
in Schedule 1, attached hereto and made a part hereof, and according to product
forecasts, a sample form of which is attached hereto as Schedule 2
(collectively, the "Clark Forecasts") and purchase orders, a sample form of
which is attached hereto as Schedule 3 (collectively, the "Clark POs") provided
by Clark to MDSI, with copies provided to Maine, for the purposes of the
integration of such Products with other products supplied to MDSI to produce
wheel assemblies (collectively, the "Finished Products"). It is expressly
understood that this appointment is limited to purchases from Maine which are
required to meet Clark's requirements for Finished Products from MDSI for a four
(4) week period from the date of each Clark Forecast (each such period an
"Agency Period"), as specified in the Clark Forecasts. The Clark Forecasts shall
be made on a "rolling" Agency Period; it being the intention of the parties
hereto that each Clark Forecast shall represent a request by Clark that MDSI
order from Maine that certain number of Products specified in each Clark
Forecast for delivery to Clark during the applicable Agency Period. Any orders
of Products from Maine made by MDSI which exceed Clark's requirements for
Finished Products for any particular Agency Period as set forth in the Clark
Forecasts shall be for the account of MDSI. Clark's liability to pay for
Products from Maine and Finished Products from MDSI shall be limited to those
ordered by Clark pursuant to the Clark Forecasts within the Agency Period.
Unless the
<PAGE> 2
[CLARK MATERIAL HANDLING COMPANY LOGO]
Mr. Tom Hughes, President
MANUFACTURERS DISTRIBUTION
SERVICES, INC.
October 26, 1995
Page 2
parties agree to other arrangements, Clark shall take delivery of all Finished
Products ordered by Clark as specified by the Clark Forecasts within each Agency
Period and shall pay MDSI for such Finished Products all in accordance with this
letter agreement. MDSI shall deliver Finished Products to Clark at its
Lexington, Kentucky facility (the "Clark Facility") or such other location
specified by Clark in accordance with the Clark POs.
MDSI will invoice Clark for payment of the Finished Products weekly on terms not
to exceed twenty-eight (28) days (collectively, the "MDSI Invoices"). MDSI will
remit amounts due Maine pursuant to Maine's invoices for Products (collectively,
the "Maine Invoices") and Maine shall receive such payments from MDSI within two
(2) business days of receipt of Clark's payment. In the event MDSI fails to pay
Maine for Products pursuant to the Maine Invoices other than due to a nonpayment
by Clark of amounts due to MDSI for Finished Products, Clark shall have the
right to offset against any other amounts due to MDSI by Clark, but Clark shall
remain liable to Maine for all unpaid Maine Invoices for Products ordered
pursuant to the Clark Forecasts within the Agency Period. In the event Clark
fails to pay MDSI for Finished Products delivered to Clark within the Agency
Period according to the terms hereof, MDSI shall be relieved of the obligation
to pay Maine for any and all Products made and constituting a part of the
Finished Products for which Clark has failed to make payment to MDSI.
In the event Clark fails to make any payment due MDSI for Finished Products
delivered to Clark within the Agency Period according to the terms hereof,
Maine's recourse shall be limited to: (a) with respect to amounts due Maine
pursuant to any unpaid Maine Invoice, a right of action against Clark for any
and all such amounts due Maine, and (b) the right to repossess from MDSI (or
Clark, as the case may be) Products which are the subject of any unpaid Maine
Invoice, at the sole cost and expense of Clark; it being expressly agreed and
acknowledged by Clark and Maine that under this letter agreement (i) MDSI is
acting only as an agent of Clark for purposes of obtaining Products within the
<PAGE> 3
[CLARK MATERIAL HANDLING COMPANY LOGO]
Mr. Tom Hughes, President
MANUFACTURERS DISTRIBUTION
SERVICES, INC.
October 26, 1995
Page 3
Agency Period from Maine, (ii) MDSI shall not at any time take title to Products
except such Products as may be for the account of MDSI as described above, and
(iii) MDSI shall have no obligation to pay Maine for Products except as set
forth herein.
Clark and Maine, by their execution of this letter agreement, consent to the
terms hereof and acknowledge and agree that MDSI may rely on the terms of this
letter agreement in acting as Clark's agent hereunder.
Each of MDSI and Clark may terminate MDSI's status as Clark's agent hereunder at
any time upon thirty (30) days' written notice to the other parties hereto.
Further, MDSI may immediately revoke this appointment by written notice to Clark
and Maine if Clark at any time fails to pay MDSI for amounts due hereunder
during the Agency Period. Clark may immediately revoke this appointment by
written notice to MDSI and Maine if at any time MDSI fails to timely pay Maine
for purchases of Products made by MDSI on Clark's behalf during the Agency
Period according to the terms hereof.
In connection with its appointment as Clark's agent under this Agreement, MDSI
agrees as follows: (i) to inspect all Products received from Maine for correct
shipments and defects, and reject any and all incorrect shipments or defective
Products, and (ii) risk of loss shall remain with MDSI until the applicable
Finished Products are received by Clark as herein provided. Rejected shipments
and Products shall be returned to Maine, at Maine's sole risk and expense. MDSI
shall insure all Products and Finished Products to their full value, and shall
name Clark as an additional insured, as its interests may appear. Products and
Finished Products shall be safely and securely stored, without exposure to the
elements. MDSI shall be responsible for any and all damage to Products and
Finished Products from the period of MDSI's receipt of such Products from Maine
until the Finished Products into which such Products have been integrated have
been received by Clark.
<PAGE> 4
[CLARK MATERIAL HANDLING COMPANY LOGO]
Mr. Tom Hughes, President
MANUFACTURERS DISTRIBUTION
SERVICES, INC.
October 26, 1995
Page 4
In the event of any inconsistency between the Clark POs and this letter
agreement, the terms of this letter agreement shall control.
Please acknowledge below your agreement to the terms set forth herein and return
all three (3) copies of this letter agreement, as executed. After receipt of all
signatures, we will deliver to you and Maine a fully executed original of this
letter agreement. We look forward to working together in our new relationship
for our mutual benefit.
Very truly yours,
CLARK MATERIAL HANDLING COMPANY
By: /s/
----------------------------------
Title: Vice President
-------------------------------
:ksj
Attachments (3)
Accepted and Agreed:
MANUFACTURERS DISTRIBUTION MAINE RUBBER INTERNATIONAL
SERVICES, INC.
By: /s/ By: /s/
-------------------------- ---------------------------
Title: Title:
-------------------------- ---------------------------
Date: Date:
-------------------------- ---------------------------
<PAGE> 1
THE PARTIES ACKNOWLEDGE THAT THEY HAVE READ THIS AMENDMENT, UNDERSTAND IT, AND
AGREE TO BE BOUND BY ITS TERMS AND CONDITIONS. FURTHER, THE PARTIES AGREE THAT
THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN THE PARTIES
RELATING TO THIS SUBJECT SHALL CONSIST OF 1) THE AMENDMENTS, 2) THE SUPPLEMENT
#3, 3) THE SCHEDULES, AND 4) THE MARCH 2, 1992 AGREEMENT. THIS STATEMENT OF THE
AMENDMENT SUPERSEDES ALL PROPOSALS OR OTHER PRIOR AGREEMENTS, ORAL OR WRITTEN,
AND ALL OTHER COMMUNICATIONS BETWEEN THE PARTIES RELATING TO THIS SUBJECT MATTER
DESCRIBED IN THIS AMENDMENT.
Accepted by: Accepted By
INTEGRATED SYSTEMS SOLUTIONS CORPORATION CLARK MATERIAL HANDLING COMPANY
By /s/ Jerry L. Granderson By /s/ Thomas G. McLaughlin
-------------------------- -----------------------------
Authorized Signature Authorized Signature
Jerry L. Granderson 5/11/93 Thomas G. McLaughlin 5/11/93
- ----------------------------- ------------------------------
Name (Type or Print) Date Name (Type or Print) Date
Project Executive Dir., Info Systems
May 10, 1993
ISSC/Clark Confidential Amendment #3 Page 1 of 2
<PAGE> 2
[LOGO]
ISSC / CLARK MATERIAL HANDLING COMPANY
AMENDMENT TO AGREEMENT FOR SYSTEMS OPERATIONS SERVICES [Graphic]
- --------------------------------------------------------------------------------
Clark Material Handling Company, having its principal place of business at 333
West Vine Street, Lexington, Kentucky 40507 ("Clark") and Integrated Systems
Solutions Corporation, a Delaware corporation, having its headquarters at 560
White Plains Road, Tarrytown, New York 10591 ("ISSC"), agree that the following
terms and conditions amend and/or supplement the Agreement for Systems
Operations Services, dated March 2, 1992, between Clark and ISSC (the
"Amendment"). ISSC acknowledges that the Agreement was assigned by Clark
Equipment Company to Clark Material Handling Company. This Amendment corrects,
clarifies or changes those sections of the Agreement as indicated below. Unless
modified herein, all other terms defined in the Agreement, Amendments, and
Schedules shall have the same meaning when used in this Amendment. All terms and
conditions of the Agreement and its subsequent Amendments not otherwise
specifically amended or supplemented herein remain unchanged and in full force
and effect.
The Term of this Amendment will begin as of the date it is executed by both
Parties and will run concurrently with the Agreement. Termination provisions of
the Agreement apply to this Amendment.
TABLE OF CONTENTS
SECTION TITLE PAGE
2 Definitions, Documents and Term 1
2.1 Definitions 1
2.2 Services Environments 1
2.3 Associated Contract Documents 1
2.5 Term 2
2.6 Renewal and Expiration 2
3 Transition 2
3.7 Data Lines and Connections 2
3.9 Staff 2
4 ISSC Responsibilities 2
4.9 Operations, Support and Maintenance 2
4.13 Help Desk 2
5 Clark Responsibilities 3
5.5 Other Responsibilities 3
6 Charges and Expenses 3
6.2 Resource Charges and Credits 3
6.3 Excluded Resources 3
6.4 Cost of Living Adjustment 3
6.8 Extraordinary RU Decrease 3
6.10 Alternative Technology 3
7 Invoicing and Payment 4
7.2 ARC, RRC and COLA Invoices 4
10 Termination 4
10.1 Termination Upon Acquisition 4
12 Warranty 4
12.6 Claims 4
17 General 4
2. DEFINITIONS, DOCUMENTS AND TERM
2.1 DEFINITIONS
Replace Section 2.1(h) with the following;
h) "End User Machines" means all workstations, terminals, printers, LAN
servers and associated peripheral equipment used by End Users and
located at End User Locations.
Add the following as Section 2.1(u):
u) "Amendment Date" means April 1, 1993.
2.2 SERVICES ENVIRONMENTS
Replace Section 2.2(c) and Section 2.2(d) with the following:
c) The "Data Network" consists or all machines, associated attachments,
features and accessories, Software, data lines and cabling used to
connect and transmit data for the Data Center and Clark End User
Locations to which Clark is connected as of the Commencement Date,
including, but not limited to, communication controllers, multiplexors,
lines, modems/DSUs and other network components, but does not include
PBXs and any devices used exclusively for Voice Communications or End
User Machines.
d) The "End User Locations" consist of those locations in which End Users,
End User Machines, equipment and associated software are located, which
locations are facilities or floors in facilities outside the Data
Center.
2.3 ASSOCIATED CONTRACT DOCUMENTS
Replace Section 2.3 with the following:
a) A Supplement #2 ("Supplement") containing the Charges, Term, and other
necessary information is a part of this Agreement. Supplement #2
amends, replaces and restates in its entirety all previous Supplements.
All references to the Supplement contained in the Agreement and any
preceding Amendments shall be deemed to refer to Supplement #2.
b) Schedules A through Q are also part of this Agreement, and will be
updated by mutual written agreement of the Parties as necessary
April 27, 1993
ISSC/Clark Confidential Amendment #2 Page 1 of 5
<PAGE> 3
or appropriate during the Term of this Agreement.
NOTE:
Pursuant to this Amendment, copies of Supplement #2, Revision #1 of the Table of
Schedules, Revision #2 of Schedule E, Revision #1 of Schedules I, J and M, and
new Schedules P and Q are attached hereto.
2.5 TERM
Replace Section 2.5 with the following:
The Term of this Amendment will begin as of 12:01 am on April 1, 1993 and will
end as of 12:00 midnight on March 31, 2003, unless earlier terminated or
extended in accordance with this Agreement (the "Term"). This Amendment extends
the Term of the Agreement by five years, nine months and one week.
NOTE:
The above is reflected in Supplement #2.
2.6 RENEWAL AND EXPIRATION
Replace Section 2.6(a) with the following:
a) Extending the Term of the Agreement for an additional five years at the
charges, terms, conditions and Resource Baselines in effect for Clark
in the tenth year of this Agreement; or
3. TRANSITION
3.7 DATA LINES AND CONNECTIONS
Add the following as paragraph five to Section 3.7:
ISSC will assume all financial, including all cash and expense connected
thereof, and administrative responsibility for relocating the Data Network
communication lines from 333 West Vine Street, Lexington, Kentucky (the "Clark
Facility") to the Data Center, such relocation to be completed by no later than
March 31,1994. In the interim, ISSC will manage the Data Network remotely. Clark
will designate a person who, during normal business hours, will monitor the Data
Network equipment located at the Clark Facility on a regular and as needed basis
and provide to ISSC the input reasonably required for problem analysis and
problem determination in the event of Data Network component failure. ISSC will
monitor such equipment during off-shift hours and Clark will provide ISSC with
access to the Clark Facility, as reasonably required.
3.9 STAFF
Add the following as Section 3.9:
a) By no later than 30 days after the execution of this Amendment, ISSC or
its subcontractors will consider those Clark employees listed on
Schedule P (the "Affected Employees") for employment with ISSC or its
subcontractors. ISSC or its subcontractors will be solely responsible
for making any hiring decisions regarding the Affected Employees.
b) ISSC or its subcontractors will hire those Affected Employees receiving
offers who:
1) are employed by Clark as of the date the offer is made;
2) meet ISSC's or its subcontractors' customary preemployment
screening procedures for health, drug and background
criteria; and
3) accept the offer of employment from ISSC or its subcontractors
within ten days from the date the offer is made.
c) Any Affected Employee remaining on Clark's payroll shall perform their
duties under the direction and control of Clark and will be treated as
a Clark employee for all purposes;
d) Each offer of employment to an Affected Employee shall include:
1) an initial base salary not less than the base salary each such
Affected Employee currently receives from Clark;
2) the benefits package available to similarly situated ISSC or
subcontractor employees; and
3) a minimum employment period of one year.
4. ISSC RESPONSIBILITIES
4.9 OPERATIONS, SUPPORT AND MAINTENANCE
Add the following as Sections 4.9 (k), (I), (m), (n), (o), (p) and (q):
k) manage the Data Network, including the WAN Network, the LAN Network and
the 3270 Terminal Network, as set forth in Schedule I, and provide
problem diagnosis and coordination of vendor services to ensure problem
resolution;
l) annually review Clark's Data Network facilities and services and
recommend appropriate changes for keeping the Data Network at a current
level of technology;
m) provide advice related to the implementation of new Data Network
components;
n) manage connectivity for new installations, including the Dealer
Network, of session establishment between an End User and a Clark
approved application;
o) provide, on an annual basis, a mutually agreed upon listing of
additional ISSC services available to Clark, including the price of
each individual service;
p) perform Envoy administrative functions, including, but not limited to,
the following:
1) initiating new Envoy mailboxes to include phone assistance,
through the help desk, to aid new Envoy users during initial
start-up;
2) updating Envoy directories;
3) managing and performing the weekly Envoy user's directory
exchange; and
4) providing data, by the tenth business day of each month, to
support Clark's Envoy billing functions and assist Clark with
Envoy users' inquiries to the extent that such inquiries
pertain to the billing data provided by ISSC.
April 27, 1993
ISSC/Clark Confidential Amendment #2 Page 2 of 5
<PAGE> 4
q) update the soft copy of the Envoy User's Guide, as appropriate, and
deliver one revised hard copy annually to a designated Clark employee
for distribution to Clark's dealers;
r) provide formal training classes for Envoy users, upon Clark's request
and at an additional price to be determined by ISSC at the time of such
request; and
s) manage the Data Network by:
1) providing alert monitoring, trouble analysis (first and second
level) and problem resolution;
2) actively monitoring Data Network components;
3) placing service calls to vendors to perform corrective
maintenance; and
4) managing problems to resolution including escalating all
problems that impact Clark's business operations in accordance
with established procedures as defined in the Procedures
Manual;
collectively, the above constitutes the "Network Control Center."
4.13 HELP DESK
Replace Section 4.13 with the following:
ISSC will provide initial, single point-of-contact support to End Users,
including Clark's dealers and other authorized agents, to assist them with
problem determination, how-to questions, systems and Data Network status,
problem recording and reporting, problem resolution, and changes which may
affect them. Help desk support is more fully described in Schedule M.
ISSC shall provide Clark on-line access to Clark's problem management records
("PMRs") and such file shall be updated daily.
5. CLARK RESPONSIBILITIES
5.5 OTHER RESPONSIBILITIES
Replace Sections 5.5(p) and 5.5(r) with the following:
p) maintain responsibility for voice communications;
r) provide ISSC with reasonable prior notice regarding any planned changes
by Clark to the Data Network or Envoy billing;
s) provide a Procedures Manual update detailing the functions necessary
for ISSC to perform and support Envoy; and
t) provide formal training classes for Envoy users.
6. CHARGES AND EXPENSES
6.2 RESOURCE CHARGES AND CREDITS
Replace Section 6.2 with the following:
During the month following the Amendment Date, ISSC will review the quantity of
Resource Units utilized by Clark and calculate Additional Resource Charges
(ARCs) and/or Reduced Resource Credits (RRCs), as applicable, per Section 1.3
of Revision #1 of Schedule J.
Commencing on or about January 1, 1994 and semi-annually thereafter, ISSC will
review the quantity of Resource Units utilized by Clark during the preceding
period and calculate Additional Resource Charges (ARCs) and/or Reduced Resource
Credits (RRCs).
The Resource Unit categories, Resource Baselines, ARC Rates and RRC Rates are
described in Revision #1 of Schedule J and specified in the Supplement.
6.3 EXCLUDED RESOURCES
Replace Section 6.3 with the following:
In determining the amount of Resource Units used to provide the Services, ISSC
shall exclude:
a) resources used for Systems overhead as determined by the resource
measurement methodology specified in Schedule J;
b) resources used by ISSC to monitor or measure the amount of resources
used;
c) resources used by ISSC to perform ISSC billing functions;
d) resources used to perform reruns resulting from the fault of ISSC;
e) resources used by ISSC to manage and tune Systems Software;
f) resources used by ISSC to upgrade, test or alter Systems Software;
g) resources used to monitor and manage the Data Network; and
h) such other exclusions as detailed in Schedule J.
6.4 COST OF LIVING ADJUSTMENT
Replace Section 6.4 with the following:
The Annual Services Charge and the ARC Rates include protection against
inflation at a rate of up to and including 3.0 percent per year compounded
annually starting with the CPI-U for December 1992 as the base year ("Protection
Index"). Clark agrees to pay ISSC a Cost of Living Adjustment ("COLA") beginning
12 months after the Amendment Date if actual cumulative inflation exceeds the
Protection Index.
The Parties agree to use the Consumer Price Index, as published by the Bureau of
Labor Statistics, U.S. Department of Labor, For All Urban Consumers, U.S. City
Average, All Items, 1982-84=100 ("CPI-U") for purposes of calculating actual
inflation.
The COLA will be calculated using the COLA factor specified below. The COLA is
payable on a prospective basis, i.e., the Annual Services Charge and net
ARCs/RRCs payable by Clark for the subsequent calendar year will be surcharged
by the factor as determined below, if such factor is in excess of zero. The COLA
factor will be determined as soon as practicable after the end of each calendar
year. The COLA factor is:
((ACTUAL INFLATION - PROTECTED INFLATION) + BASE YEAR) X .50
where:
April 27, 1993
ISSC/Clark Confidential Amendment #2 Page 3 of 5
<PAGE> 5
Actual Inflation = CPI-U for the December proceeding the year for which
COLA is being calculated,
Protected Inflation = the Protection Index for the year preceding the year
for which COLA is being calculated (specified on the
Supplement), and
Base Year = CPI-U for December of the year previous to the
Amendment Date
In the event the Bureau of Labor Statistics stops publishing the CPI-U or
substantially changes its content and format, the Parties will substitute
another comparable index published at least annually by a mutually agreeable
source. If the Bureau of Labor Statistics merely redefines the base year for the
CPI-U from 1982-84 to another year. the Parties will continue to use the CPI-U,
but will convert the Protection Index to the new base year by using an
appropriate conversion formula.
6.8 EXTRAORDINARY RU DECREASE
Replace Section 6.8 with the following:
In the event Clark experiences a long term reduction (minimum of three months
with such reduction anticipated to continue through the foreseeable future) in
the amount of CPU resources used to process the work of Clark and its Affiliates
and
a) the reduced CPU usage is not a result of assigning Services provided
under this Agreement to another outsourcing vendor, and
b) such reduction is not less than 35 percent of the CPU Original Baseline
then:
1) the amount of the Annual Services Charge payable to ISSC
pursuant to this Section will thereupon be towered by the
amount by which ISSC's actual and direct expenses for
performing hereunder are decreased as a result of such change;
and
2) the applicable Resource Baselines and ARC/RRC Rates will be
equitably adjusted to reflect the reduced resource utilization
at that time.
The reduction of the Annual Services Charge, Resource Baselines and ARC/RRC
Rates, if any, will be retroactive to the beginning of the three month period
referenced above.
6.10 ALTERNATIVE TECHNOLOGY
Add the following as Section 6.10:
In the event that anytime during the Term of this Agreement and any renewal
periods Clark elects to migrate a significant portion (10% or more of the
Original Baseline quantity for CPU minutes) of the host based applications and
processing provided under this Agreement to an alternative technology (e.g.,
client server) and ISSC is selected as the supplier of such alternative
technology solution, then, ISSC will reprice the Services, upon Clark's
notification that the migration is complete, at the reduced resource usage
levels using the then current pricing methodology or the pricing methodology
used to price the resources being delivered under this Amendment #2, whichever
is most beneficial to Clark.
Clark may provide up to a maximum of 15% of the resources required to implement
the new solution subject to the following exclusions:
a) Clark may use any Clark or Clark Affiliate resource(s) (software,
hardware or personnel) that is owned, leased, licensed or on Clark's
payroll as of the Amendment date and the value of such resource(s) will
not be counted toward the 15% limitation referenced above;
b) Clark may use any Clark or Clark Affiliate resource(s) (software,
hardware or personnel) that is owned, leased, licensed or on Clark's
payroll more than 24 months prior to selecting ISSC as the solutions
provider and the value of such resource(s) will not be counted toward
the 15% limitation referenced above; and
c) Software function(s) owned or licensed by Clark or Clark Affiliate and
existing as of the Amendment Date or more than 24 months prior to
selecting ISSC as the solutions provider which can be migrated from the
host environment to the Alternative Technology platform may be included
in the solution and the value of such software function(s) will not be
counted toward the 15% limitation referenced above.
Should Clark decide to provide the services internally or select
another vendor to provide the services, then the credit for reduction
in resources would be subject to other applicable provisions of the
Agreement.
7. INVOICING AND PAYMENT
7.2 ARC, RRC AND COLA INVOICES
Replace Section 7.2 with the following:
In the first month following the Amendment Date and each January and July
thereafter. ISSC will invoice Clark for ARCs or RRCs, if any, pursuant to
Section 1.3 of Revision #1 of Schedule J. ISSC will invoice Clark for COLA
starting on the first anniversary of the Amendment Date and monthly thereafter
in accordance with Section 6.4.
10. TERMINATION
10.1 TERMINATION UPON ACQUISITION
Replace Section 10.1 with the following:
If substantially all of the business or assets of Clark Material Handling
Company is sold to, acquired by or merged into another entity or person and the
acquiring or other entity or person elects not to adopt or continue this
Agreement, Clark, the acquiring or other entity or person, may terminate this
Agreement within one year following such acquisition if
a) the merger, acquisition or sale is completed, and
b) there has been a minimum of one year's written notification, prior to
the effective date of termination, to ISSC and
April 27, 1993
ISSC/Clark Confidential Amendment #2 Page 4 of 5
<PAGE> 6
c) Clark pays the termination charges to ISSC specified under Termination
Upon Acquisition in the Supplement.
Any termination charge will be prorated for the month of termination.
12. WARRANTY
12.6 CLAIMS
Add the following as Section 12.6:
Clark warrants it has no knowledge and that it has not received notice of any
actual or threatened claim or action by, on behalf of or related to, any of the
Affected Employees, including, but not limited to, claims arising under the
Occupational Safety and Health Administration, Equal Employment Opportunity
Commission, National Labor Relations Board or Fair Labor Standards Act, or other
applicable federal, state or local laws or regulations, except as such claims or
actions are identified in Schedule Q.
17. GENERAL
The following is in addition to Section 17 of the Agreement:
In the event of any inconsistency in the terms of the Agreement and the terms of
this Amendment, the terms of this Amendment shall apply. As amended herein, the
Agreement, the Supplement #2 and all Schedules remain in full force and effect.
THE PARTIES ACKNOWLEDGE THAT THEY HAVE READ THIS AMENDMENT, UNDERSTAND IT, AND
AGREE TO BE BOUND BY ITS TERMS AND CONDITIONS. FURThER, ThE PARTIES AGREE THAT
THE COMPLETE AND EXCLUSIVE STATEMENT OF ThE AGREEMENT BETWEEN ThE PARTIES
RELATING TO THIS SUBJECT SHALL CONSIST OF 1) ThE AMENDMENTS, 2) ThE SUPPLEMENT
#2, 3) ThE SCHEDULES, AND 4) THE MARCH 2, 1992 AGREEMENT. ThIS STATEMENT OF ThE
AMENDMENT SUPERSEDES ALL PROPOSALS OR OTHER PRIOR AGREEMENTS, ORAL OR WRITTEN,
AND ALL OTHER COMMUNICATIONS BETWEEN THE PARTIES RELATING TO ThIS SUBJECT MATTER
DESCRIBED IN THIS AMENDMENT.
Accepted by: Accepted By
INTEGRATED SYSTEMS SOLUTIONS CORPORATION CLARK MATERIAL HANDLING COMPANY
By /s/ Jerry L. Granderson By /s/ James B. Bennett III
-------------------------- -----------------------------
Authorized Signature Authorized Signature
Jerry L. Granderson 5/3/93 James B. Bennett III 4/30/93
- ----------------------------- ------------------------------
Name (Type or Print) Date Name (Type or Print) Date
Project Executive
April 27, 1993
ISSC/Clark Confidential Amendment #2 Page 5 of 5
<PAGE> 7
[LOGO]
ISSC / CLARK MATERIAL HANDLING COMPANY
AMENDMENT TO AGREEMENT FOR SYSTEMS OPERATIONS SERVICES [Graphic]
Clark Material Handling Company. a business unit of Terex Corporation, a
corporation having a place of business at 333 West Vine Street, Lexington,
Kentucky 40507 ("Clark") and Integrated Systems Solutions Corporation, a wholly
owned IBM subsidiary, having its headquarters at 560 White Plains Road,
Tarrytown, New York 10591 ("ISSC"), agree that the following terms and
conditions amend and/or supplement the Agreement for Systems Operations
Services, dated March 2, 1992, between Clark and ISSC (the "Amendment"). This
Amendment changes the section(s) of the Agreement as indicated below. Unless
modified herein, all other terms defined in the Agreement, Amendments, and
Schedules shall have the same meaning when used in this Amendment. All terms and
conditions of the Agreement and its subsequent Amendments not otherwise
specifically amended or supplemented herein remain unchanged and in full force
and effect.
The Term of this Amendment will begin as of the date it is executed by both
Parties and will run concurrently with the Agreement. Termination provisions of
the Agreement apply to this Amendment. Termination of this Amendment may only be
effected through termination of the Agreement, as amended.
TABLE OF CONTENTS
SECTION TITLE PAGE
2 Definitions, Documents and Term 1
2.1 Definitions 1
2.5 Term 1
3 Transition 1
3.1 Overview 1
17 General 1
2. DEFINITIONS, DOCUMENTS AND TERM
2.1 DEFINITIONS
Section 2.1(i) is amended to read:
1) "Implementation Date" means June 22, 1992.
2.5 TERM
Section 2.5 is amended to read:
The Term of this Agreement will begin as of 12:01 a.m. on the Commencement Date
and will end as of 12:00 midnight on June 21, 1997 unless earlier terminated or
extended in accordance with this Agreement (the "Term").
NOTE:
The above is reflected in Revision #1 of the Supplement attached hereto.
3. TRANSITION
3.1 OVERVIEW
Paragraph one of Section 3.1 is amended to read:
There will be a transition period beginnIng on the Commencement Date and
continuing through no later than June 22, 1992 (the "Transition Period"). The
Transition Period may be extended with mutual agreement of the Parties. During
the Transition Period, the Parties will commence and complete a phased
transition of the Services from the Clark Data Center to the Data Center.
17. GENERAL
The following is in addition to Section 17 of the Agreement:
In the event of any inconsistency between the terms of the Agreement, Its
Amendments and the terms of this Amendment. the terms of this Amendment shall
apply.
October 9, 1992
ISSC/Clark Confidential Amendment #1 Page 1 of 2
<PAGE> 8
THE PARTIES ACKNOWLEDGE ThAT ThEY HAVE READ THIS AMENDMENT. UNDERSTAND IT, AND
AGREE TO BE BOUND BY ITS TERMS AND CONDITIONS. FURTHER, THE PARTIES AGREE ThAT
THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN THE PARTIES
RELATING TO THIS SUBJECT SHALL CONSIST OF 1) ThE AMENDMENTS, 2) THE SUPPLEMENT,
3) THE SCHEDULES, AND 4) THE MARCH 2, 1992 AGREEMENT. THIS STATEMENT OF THE
AMENDMENT SUPERSEDES ALL PROPOSALS OR OTHER PRIOR AGREEMENTS, ORAL OR WRITTEN,
AND ALL OTHER COMMUNICATIONS BETWEEN THE PARTIES RELATING TO THIS SUBJECT MATTER
DESCRIBED IN THIS AMENDMENT.
Accepted by: Accepted by:
INTEGRATED SYSTEMS SOLUTIONS CORPORATION CLARK MATERIAL HANDLING COMPANY
(a business unit of Terex Corporation)
By /s/ J.L. Granderson By /s/ T. McLaughlin
- --------------------------------- --------------------------------------
Authorized Signature Authorized Signature
J.L. Granderson 12/14/92 T. McLaughlin 12/21/92
- --------------------------------- --------------------------------------
Name(Type or Print) Date Name(Type or Print) Date
October 9, 1992
ISSC/Clark Confidential Amendment #1 Page 2 of 2
<PAGE> 1
EXHIBIT 10.19
SUPPLY AGREEMENT
THIS AGREEMENT is made on 14 December, 1994, by and between CLARK
MATERIAL HANDLING COMPANY ("CLARK"), a kentucky, U.S.A. corporation, with its
principal offices at 333 West Vine Street, Lexington, Kentucky 40507, U.S.A. and
FUNK MANUFACTURING COMPANY ("'FUNK"), a Delaware corporation with its principal
offices at Industrial Park, Highway 169 N., Coffeyville, Kansas 67337.
WHEREAS, CLARK is engaged in the manufacture, distribution and sale of
various types of industrial trucks and service parts therefor;
WHEREAS, FUNK has the physical facilities and production capacity to
manufacture for CLARK certain products, components and service parts for such
industrial trucks;
WHEREAS, FUNK desires to sell to CLARK, and CLARK desires to purchase
from FUNK, certain of the aforesaid products, components and service parts
therefor; and
WHEREAS, FUNK recognizes and understands the importance CLARK places on
achieving and sustaining world competitive quality, cost and customer
satisfaction for the components and spare parts it purchases from suppliers;
NOW, THEREFORE, in consideration of the mutual agreements contained
herein, the parties agree as follows:
1. DEFINITIONS.
For the purpose of this Agreement, the following terms shall have the meanings
indicated below:
1.1 "Products" means the products specified on Exhibit 1, attached hereto
and incorporated herein, as amended from time-to-time by written
agreement of the parties, together with such improvements,
modifications and replacements as are approved or authorized from
time-to-time by CLARK.
1.2 The terms "Service Parts" and "Spare Parts" have the same meaning and
are defined as follows: Parts accessories manufactured or provided by
FUNK and used in repairing or maintaining Products, as well as complete
units of Products for aftermarket purposes.
<PAGE> 2
1.3 The terms "Component" and "Components" have the same meaning and are
defined as follows: Raw materials, components, subassemblies and other
material purchased, manufactured or provided by FUNK and used in the
production, repair or maintenance of the Products.
2. MANUFACTURE AND SALE OF PRODUCTS.
2.1 CLARK agrees to purchase from FUNK and FUNK agrees to sell and deliver
to CLARK, in accordance with the terms and conditions contained in this
Agreement, those Products and Spare Parts which are ordered by CLARK
during the term of this Agreement. The benefits and opportunities
afforded to Clark under this Agreement shall inure to the benefit of
all of CLARK's divisions, affiliates, subsidiaries and licensees.
3. ORDERS.
3.1 CLARK will order Products from FUNK by issuing a blanket purchase order
on CLARK's standard form. The blanket purchase order will be issued to
confirm the current prices and standard terms of sale. The blanket
order will not constitute an order for Products. The Supplier Planning
Schedule ("Schedule") will be the document by which specific quantities
of Products are forecasted. The Schedules will state the quantities
forecasted and the specifications for those Products established in
accordance with this Agreement. The Schedules may also be used for
planning purposes to confirm schedules for previously ordered Products
and to estimate quantities and schedules for up to a full 12-month
period. Schedules will be issued monthly for the succeeding 12-month
period. Firm requirements will be transmitted to FUNK by CLARK on the
Schedules. Upon receipt of the delivery schedule containing firm
requirements by FUNK, FUNK will deliver product to CLARK in accordance
with this Agreement.
3.2 The quantities of Products scheduled in CLARK's Schedules and/or CLARK
purchase orders are firm commitments for the following time frames:
Period A:
Quantities and dates planned in the latest Schedule become unchangeable eight
(8) weeks prior to the required ship date, with guaranteed on-time deliveries by
FUNK in such quantities and on such dates. In the event CLARK requires schedule
changes within the eight (8) week firm period, FUNK shall use its best efforts
to meet such delivery dates.
Period B:
Quantities planned in the latest Schedule for the period nine (9) weeks to
twelve (12) weeks prior to the required ship date can be changed by CLARK within
+/- 10%, with guaranteed on-time deliveries by FUNK for such changes.
All other quantities are estimates only and not guaranteed to be followed by
firm orders.
<PAGE> 3
3.3 All contracts of sale will be upon the terms and conditions set forth
in this Agreement and in CLARK's blanket purchase order, a copy of
which is attached hereto as Exhibit 2. FUNK may acknowledge each annual
blanket purchase order using FUNK's standard forms, however, no
different or additional terms or conditions set forth in such an
acknowledgment will add to or modify in any way the terms and
conditions of any contract of sale. FUNK will use its best efforts to
comply with requests by CLARK for changes in delivery schedules and for
orders for Products in excess of forecasted quantities.
4. DELIVERY OF PRODUCTS.
4.1 Within five (5) working days after receipt of CLARK's Schedule(s) for
Products, FUNK will respond to the delivery schedule specified by CLARK
with an acknowledgment. Otherwise, confirmation shall be deemed.
Delivery schedules established herein and/or in Section 3.2 hereof are
firm and may be modified only upon mutual agreement.
4.2 Deliveries will be F.O.B. FUNK's manufacturing facility to the
locations as specified by CLARK. Prices will be equitably adjusted for
special packing or shipping preparations requested by CLARK in writing.
FUNK shall purchase at least three hundred fifty (350) returnable
containers, with CLARK bearing the cost of 200 such containers at
$235.00 per container, the cost of which will be amortized over the
first 2,000 Product units purchased by CLARK under this Agreement at
$25.08 each. The cost of the balance of 150 containers shall be borne
solely by FUNK. If the parties agree that additional containers are
necessary, the cost of such additional containers will be amortized
over 2,000 Product units, unless CLARK elects to purchase such
additional containers outright. FUNK will be the owner of all
returnable containers, and shall be responsible for all maintenance,
upkeep and replacement at its sole cost and expense, except if abused
or lost by CLARK. FUNK shall not use any of the returnable containers
for any purpose other than shipping Products to CLARK.
5. INSPECTION TEST.
5.1 All Products shall be received subject to CLARK's inspection and test.
CLARK shall have the right at any time to reject any Products defective
in material or workmanship or to accept and correct the same at FUNK's
expense. Rejected Products may be returned to FUNK at FUNK's risk and
expense. If it is determined that the part is not defective, then at
Funk's option the part will be returned to CLARK at CLARK's risk and
expense. CLARK can not debit FUNK for original freight costs.
<PAGE> 4
6. CANCELLATION.
6.1 FUNK agrees that CLARK may cancel any order without liability if FUNK
is unable to deliver the Products ordered within the time limits as set
forth in Sections 4.1 and 3.2. With respect to such orders as are
canceled pursuant to this Section 6.1, CLARK agrees that FUNK may
utilize the Products involved to fulfill future orders of CLARK.
7. PRICES, PAYMENT.
7.1 For orders scheduled to be shipped on or after 1 January 1995, prices
for Products will be as stated in Exhibit 3. These prices shall be the
basis for the adjustments referenced in Section 7.2. Prices for
Products at annual purchase levels of 10,000 units or more will result
in a price reduction of $9.96 per Product retroactive for each Product
purchased in the relevant annual period. Adjustments to prices for
actual quantities purchased will be made within thirty (30) days of end
of the calendar year in question.
7.2 CLARK and FUNK shall cooperate to offset the impact of inflation upon
the prices set forth in Exhibit 3, and shall have the mutual goal of
cost containment throughout the relationship. Any increases or
decreases to cost, including freight costs, other than those exempted
by Section 7.5, exchange rate fluctuations, duties, tariffs and other
import fees will be borne equally between the parties. Any capital
investment required to reduce costs shall be borne equally by the
parties. Cost reduction/quality improvement meetings will be held at
locations designated by CLARK four times per year at quarterly
intervals. Adjustments for variances from the baseline cost as set
forth in Exhibit 4 shall be made on no more than a calendar quarterly
basis within thirty (30) days from the end of the quarter and shall be
payable within sixty (60) days of the end of the quarter. The
adjustment shall cover all shipments made during the preceding quarter.
7.3 Price changes for engineering changes agreed upon and authorized by
CLARK will be negotiated, provided, however, that such price changes
will be based on the material and labor impact on product cost. FUNK
and CLARK will mutually agree on the date the price adjustment goes
into effect.
7.4 CLARK will pay all invoices for Products and Spare Parts within sixty
(60) days from the date of invoice receipt.
7.5 CLARK and FUNK will work together to identify the lowest viable
transportation cost and transit time. Unless otherwise directed by
CLARK, FUNK shall arrange for transportation. Products shall be
suitably packed and protected for overseas and/or domestic shipment or
otherwise prepared for shipment so as to secure the lowest
transportation and insurance rates. FUNK shall be responsible for all
premium freight costs (including air transport costs) due to late
delivery, defects, mis-shipments, or other reasons directly under
FUNK's control.
7.6 Service Parts shall be priced as follows:
7.6.1 Prices for complete units of Products shall be the same as the
price of Products as stated in Exhibit 3.
<PAGE> 5
7.6.2 The price for component Spare Parts which are used in current
production Products will not exceed 1.15 times the component
cost of such Spare Parts as contained in the unit Product
price.
7.6.3 CLARK retains the right to purchase the Ready-For-Use (RFU)
components identified in Exhibit 7, directly from the RFU
suppliers. The items identified in Exhibit 7 are subject to
renegotiation between the two parties, in accordance with the
schedule for negotiating price adjustments as set forth in
Section 7.3 of this Agreement.
7.6.4 The lead time for delivery of Spare Parts is
one-hundred-twenty (120) days, excluding initial stocking
quantities. CLARK will be subject to a 5% surcharge and bear
responsibility for premium freight costs (if requested by
CLARK) incurred to satisfy emergency orders due to reasons
directly under CLARK's control. FUNK shall be responsible for
all premium freight costs (including air transport costs) for
emergency orders due to late delivery, defects, misshipments,
or other reasons under FUNK's control.
7.6.5 FUNK shall provide Spare Parts which are out of production as
to CLARK but which are being supplied to other FUNK customers,
at competitive prices (but in no event at prices which exceed
FUNK's lowest prices for comparable spare parts to other OEMs)
for a minimum period of ten (10) years after the date of
termination or expiration of this Agreement. Afterward, in the
event that FUNK wishes to discontinue supplying Spare Parts
which are out of production as to CLARK to other FUNK
customers, FUNK and CLARK will develop a transition plan for
out source, without impairing CLARK's commitment to maintain
service parts availability to its customers and dealers. No
individual part number shall be obsoleted without giving CLARK
an option of making a "last time buy" at a special negotiated
price.
<PAGE> 6
7.6.6. FUNK agrees not to sell CLARK specific parts to anyone other
than CLARK without the expressed written permission of CLARK.
In addition, FUNK agrees to use its best efforts to prevent
FUNK's suppliers from selling CLARK specific parts to anyone
other than CLARK or FUNK.
7.7 FUNK and CLARK agree to discuss the institution of performance
incentives no later than July 31, 1995. These incentives shall
relate to FUNK's delivery performance and CLARK's payment
performance.
8. WARRANTY ON PRODUCTS.
8.1 FUNK warrants that the Products will conform to the specifications,
drawings, or other descriptions which are provided by CLARK to FUNK
identified in Exhibit 5, attached and incorporated by reference herein,
and will be of good material and workmanship, and free from defects.
For purposes of this Agreement, any failure of a Product to be as
warranted is referred to as a "Defect." The warranty in this Section 8
extends to the future performance of the Products in CLARK products
into which the Products are incorporated. CLARK and FUNK agree that
CLARK may, at any time hereafter, revise or otherwise modify the
aforesaid specifications identified in Exhibit 5. CLARK shall be
responsible for all the costs of such modifications.
8.2 If any Defect as defined in Section 8.1 of this Agreement is discovered
in a Product prior to shipment from CLARK's location to a dealer or
customer, FUNK, at FUNK's option, will either supply CLARK with
repaired or replacement Product at no charge or, if the Product can be
repaired by CLARK, request CLARK to repair the Product and pay or
reimburse CLARK for replacement Parts or Products and for labor at an
initial rate of $32 per hour for CLARK to correct the defect. This rate
is subject to increase by mutual agreement of the parties. For purposes
of warranty claims on Products pursuant to this Section 8, charges for
labor performed in a calendar year will be based on CLARK's "Standard
Times Guide" for warranty labor effective as of 1 January of each
calendar year.
8.3 If any Defect as defined in Section 8.1 of this Agreement is discovered
in a Product after it has been delivered as part of an industrial truck
to a dealer within twelve (12) months after the date of delivery to the
first retail purchaser, or in the first 2,000 hours of use, whichever
occurs first, FUNK will pay or reimburse CLARK for the Spare Parts at
FUNK spare part pricing plus 20% for handling by CLARK and CLARK
dealers and labor (including any travel costs at an initial flat rate
of $64.00 per warranty claim) required to correct the defect. This rate
is subject to increase by mutual agreement of the parties. This
obligation will end eighteen (18) months after passing of risk per
Section 4.2 herein.
8.4 If any Defect as defined in Section 8.1 of this Agreement is discovered
in a Product at any time which poses a hazard which may cause personal
injury or property damage, the parties shall meet as soon as possible
to discuss such matter. CLARK and FUNK shall use good faith efforts to
estimate the total cost of the parts and labor (plus reasonable travel
costs) to correct the defect, the reasonable labor and directly related
overhead expenses to locate and repair any industrial trucks into which
the defective product has been incorporated, and costs to provide
reasonable and proper notice and
<PAGE> 7
warnings to customers, owners and users of such industrial trucks, and
allocate responsibility for all such costs and expenses. FUNK shall pay
its share of such costs and expenses to CLARK on a monthly basis based
upon completed Application for Adjustments ("AFA's") and CLARK's
documented costs and expenses.
8.5 When a written claim for warranty reimbursement is made, FUNK may,
promptly upon receipt of the claim, take the following actions:
a. FUNK may require CLARK to return the Spare Parts or Products at FUNK's
expense to FUNK's facility indicated by FUNK.
b. If FUNK determines any such Spare Parts or Products share not
defective, FUNK will provide CLARK with the data and analysis upon
which FUNK's determination is based. Otherwise, FUNK shall promptly pay
or reimburse CLARK in accordance with the applicable warranty
provision.
Warranty claims have to be submitted to FUNK within one hundred, fifty
(150) days after date of failure or repair. Any warranty claim made by
CLARK will be considered accepted by FUNK unless FUNK notifies CLARK of
its denial of the claim with a written report stating the reason for
denial within ninety (90) days after notice that the parts or Products
are received at FUNK's facility. Initial return of warranty items will
be to CLARK.
8.6 FUNK warrants that Spare Parts sold to CLARK pursuant to this Agreement
will be free of defects with the specifications provided to FUNK and
will be of good material and workmanship for a period of one hundred,
eighty (180) days after delivery to the first retail purchaser. FUNK
will not be held liable for defects caused by storage or handling
outside of FUNK'S control.
<PAGE> 8
8.7 The warranties provided by this Agreement do not apply to defects in
Products or Spare Parts caused by delivery to CLARK by parties other
than FUNK or FUNK's representatives or to defects directly attributable
to design of the Products or Spare Parts.
8.8 This warranty is in lieu of all other warranties of Product quality,
express or implied, and states FUNK's entire obligations with respect
to defects in Products or Parts. THERE ARE NO IMPLIED WARRANTIES OF
MERCHANTABILITY OR OF FITNESS FOR A PARTICULAR PURPOSE.
9. QUALITY ASSURANCE.
9.1 FUNK warrants that it will establish and maintain a quality assurance
program which conforms to the criteria stated in Exhibit 5 and,
further, warrants that each Product and Spare Part sold by FUNK to
CLARK pursuant to this Agreement will be manufactured (or if certain
parts are purchased, purchased and inspected) subject to and in
compliance with said quality assurance program.
9.2 CLARK may, at its option and expense, continuously or periodically
review and inspect FUNK's quality assurance program and Product quality
at FUNK's facilities. FUNK will provide CLARK's representatives with
good faith cooperation and such access and facilities, including
testing and inspection devices and equipment, as may reasonably be
required by CLARK's representatives to conduct such review and
inspection. CLARK will use its best efforts consistent with
accomplishing its review and inspection to avoid disruption or delay of
FUNK's operations. Inspection or review of FUNK's quality assurance
program or Products at FUNK's facilities will not constitute acceptance
of any Products and will not relieve FUNK of responsibility for any
defects in any Product.
9.3 FUNK further warrants that if FUNK at any time has reason to believe
that any defect in design or manufacture may be present in any Products
or Spare Parts sold or to be sold pursuant to this Agreement, FUNK will
immediately advise CLARK and will cooperate with CLARK to determine
whether the defect is present and, if so, will cooperate with CLARK in
good faith to correct it.
9.4 Provided the Product components supplied to CLARK hereunder meet or
exceed in all respects all CLARK specifications and requirements except
the source of supply, including but not limited to those contained in
Exhibit 5, FUNK shall have the right to determine suppliers for Product
components. FUNK shall promptly notify CLARK, in writing, of any
changes in suppliers and the effective date of the changes.
10. INSURANCE AND INDEMNIFICATION.
10.1 FUNK shall obtain and keep in effect (i) product liability insurance in
the amount of $5,000,000 per occurrence and $10,000,000 aggregate,
which shall provide protection to CLARK against claims or suits for
personal injury, death or property damage caused by (or alleged to have
been caused by) a defect in material or workmanship of the Products and
Spare Parts or portion thereof supplied by FUNK under this Agreement;
and (ii) contractual liability coverage in the amount of $5,000,000 per
occurrence and
<PAGE> 9
$10,000,000 aggregate for the hold harmless clause set forth in this
section.
10.2 (i) Independent from the existence of product liability insurance,
FUNK agrees to defend, hold harmless and indemnify CLARK
against any liability, loss, injury, claim, damage, suit or
proceeding and all expenses incident thereto (including
reasonable attorney fees and litigation costs) resulting from
claims or lawsuits commenced against CLARK by parties seeking
monetary damages for bodily injury (including death) or
property damage caused by (or alleged to have been caused by)
arising from or connected with a defect in manufacture,
assembly or workmanship of the Products and Spare Parts or
portion thereof.
(ii) FUNK's liability to CLARK under this section shall be limited
solely to claims arising in connection with any Product and
Spare Part or portion thereof supplied by FUNK pursuant to
this Agreement.
10.3 FUNK's obligations regarding indemnification shall survive the
termination or expiration of this Agreement for seven (7) years. FUNK
intends to keep in force product liability insurance for the same
period.
10.4 FUNK will furnish CLARK with a certificate from FUNK's insurance
carrier. FUNK will provide notice thirty (30) days prior to changes in
insurance coverage or cancellation by the insurance carrier.
11. PATENTS.
11.1 CLARK represents and warrants that the Products and Spare Parts ordered
pursuant to this Agreement and their sale or use, alone or in
combination, according to CLARK's specifications or recommendations, if
any, will not infringe any U.S. or foreign patents, and CLARK agrees to
defend, indemnify, hold harmless and protect FUNK, and any company
affiliated with FUNK, its successors, assigns, customers and users of
the Products and Parts, against all suits and from all damages
resulting from such alleged infringements, and CLARK agrees that CLARK
will, upon request, defend or assist in the defense at CLARK's expense
of any such suit.
12. TRADEMARKS ADVERTISING.
12.1 Each Product sold to CLARK pursuant to this Agreement will have affixed
a nameplate and one (1) or more of the trademarks specified by CLARK in
the distinctive form specified by CLARK in a suitable place to be
designated by CLARK. CLARK may also upon request specify that all or
some of the Spare Parts to be sold to CLARK by FUNK pursuant to this
Agreement will have such trademarks affixed in a suitable place to be
designated by CLARK. FUNK will not acquire rights of any kind under any
of CLARK's trademarks, except the right to use them in the manner
permitted by this section, and will in no event sell, distribute, or
otherwise dispose of any Products or Spare Parts bearing any of CLARK's
trademarks to any person, firm or corporation other than CLARK without
first removing the trademarks and obtaining CLARK's express written
consent.
<PAGE> 10
12.2 All publicity and advertising concerning the sale of Products and Parts
bearing CLARK's trademarks shall be prepared under CLARK's sole
direction and control. FUNK will not disclose the existence of this
Agreement, or any of its terms and conditions to any other person, firm
or corporation, or advertise or release any publicity concerning this
Agreement or the performance by either party without CLARK's written
consent in each instance, except as otherwise required by law.
13. REQUIRED ASSISTANCE.
13.1 CLARK will provide qualified representatives as liaisons to assist FUNK
in resolving manufacturing start-up problems and to assist FUNK's
representatives as required with respect to manufacturing changes
affected by Product modifications.
13.2 CLARK will attempt to resolve engineering or manufacturing problems by
written or telephone communications with FUNK's liaison, however, when
and as reasonably requested, FUNK will provide qualified
representatives to review and resolve problems at CLARK's location or
at the location of the Products. Each party will be responsible for its
own expenses with respect to such calls.
13.3 CLARK will also provide an engineering representative as a liaison to
approve modifications that are suggested for prospective sales of
Products and for modification of Products in the field. CLARK will
authorize and approve by written authorization to FUNK any appropriate
changes to the Product which may be required.
<PAGE> 11
14. TOOLING.
14.1 FUNK will obtain, install and pay for all tooling and holding fixtures
necessary for the manufacture, assembly and testing of Products within
FUNK.
14.2 Set forth in Exhibit 6, attached hereto and incorporated as part of
this Agreement, is a list of tooling and fixtures installed or to be
installed at supplier locations. All such tooling and fixtures have
been paid for by CLARK, and ownership and title to all such tooling and
fixtures shall remain with CLARK. FUNK agrees to execute any and all
documents requested by CLARK in order to effect such transfer of
ownership.
14.3 All tooling and fixtures obtained by FUNK and exclusively used for the
manufacture or assembly of Products shall not be used in the
production, manufacture, assembly or design of any other products
except with the expressed written consent of CLARK. Ownership rights to
Product tooling not used exclusively in the manufacture, assembly of
Products shall remain with the providing party.
FUNK agrees to maintain all such tooling and fixtures in good
condition, at its own expense.
FUNK also agrees to supply all perishable tooling required for its own
machine tools and manufacturing systems.
14.4 The parties agree that the tooling and fixture costs incurred by FUNK
in connection with its manufacture and assembly, of Products and Spare
Parts to CLARK under this Agreement is $150,000. CLARK shall pay for
such cost as follows:
The $150,000 tooling cost shall be reduced by $6.00 per Product sold to
CLARK. At such time as CLARK has purchased 25,000 Products, the
$150,000 tooling cost shall have been paid for by CLARK in full, and
the Product price shall at that time be reduced by $6.00 per Product.
In connection with the $150,000 tooling cost, in the event that CLARK
has failed to purchase 25,000 Products during the term of this
Agreement, following the expiration date of this Agreement, CLARK shall
be liable for unamortized tooling costs of $6.00 per Product for each
Product less than 25,000 purchased by CLARK.
<PAGE> 12
Upon the purchase of CLARK of the number of Products set forth above to
fully amortize the cost of tooling or upon payment by CLARK of the
unamortized tooling cost, ownership of all such tooling and fixtures
shall revert to CLARK. FUNK agrees to execute any and all documents
requested by CLARK in order to effect such transfer of ownership.
15. TERM AND TERMINATION.
15.1 The term of this Agreement shall expire 31 December 1999 and it will
continue thereafter unless terminated by either upon written notice
given at least eighteen (18) months prior to expiration of the initial
term or any time thereafter.
15.2 Either party may terminate this Agreement for failure by the other
party to perform or adhere to any material promises or obligations
undertaken pursuant to this Agreement by giving the other party sixty
(60) days' written notice within which to cure such default. If such
default is not cured within the sixty (60) day period, the party which
gave the notice may terminate this Agreement at any time thereafter
upon written notice to the other party.
15.3 Either party may terminate this Agreement immediately by written notice
to the other party if any of the following events occur:
1. Any attempted transfer or assignment of this Agreement or any
right or obligation hereunder by the other party unless the
assignment is otherwise permitted by this Agreement.
2. The filing of a voluntary petition in bankruptcy by the other
party.
3. The filing of a petition in bankruptcy by the other party.
4. The appointment of a receiver or trustee for the other party,
provided such appointment is not vacated within thirty (30)
days from the date of such appointment.
15.4 The termination of this Agreement will not affect or impair the rights,
liabilities and obligations of either party under any order issued
prior to the termination, will not relieve either party of any
obligation or liability accrued under this Agreement or pursuant to any
order issued prior to the termination, and will not relieve either
party of the continuing obligations pursuant to Section 8, Warranty on
Products, Section 9, Quality Assurance Section 10, Indemnity, Section
11, Patents, Section 7.8.5, Spare Parts, and Section 16,
Confidentiality, which obligations will survive any termination of this
Agreement.
16. CONFIDENTIALITY.
16.1 Any and all confidential information including, without limitation,
specifications, formulas, designs, drawings, trade secrets, patents,
manufacturing data, design data, engineering data, cost data and other
commercial or technical information, which one party discloses
<PAGE> 13
to the other party hereunder shall be kept secret and strictly
confidential by the other party and the other party agrees not to
utilize any such information for its own benefit or the benefit of any
third party whatsoever, nor to disclose it to any third party except
with the express and prior written consent of the disclosing party
during the term of this Agreement and for five (5) years thereafter.
16.2 All information and materials identified in Section 16.1, including all
copies thereof, shall promptly be returned by the other party to the
disclosing party upon the expiration or termination of this Agreement,
or at any time upon request of the disclosing party.
16.3 The ownership rights to the design of Products shall remain exclusively
with CLARK.
17. FORCE MAJEURE.
17.1 Should an event of force majeure prevent or delay the total or partial
performance of the obligations resulting from this Agreement, the party
claiming force majeure is obligated to inform the other affected party
within fifteen (15) days from such occurrence at the beginning, as well
as at the end, of the respective force majeure. The term "force
majeure" as used in this Section 17 is understood to mean any
unforeseen event or occurrence beyond the control of the party
affected, or if foreseen, unavoidable and arising after the effective
date hereof, preventing or delaying the performance of obligations set
forth herein, including, by way of example and not by way of
limitation, actions by any wars, acts of God, accidents, lockouts,
strikes, or other work stoppages. No liability shall exist for failure
or delay of performance of obligations during the period of force
majeure. In the event FUNK declares force majeure, CLARK shall be free
to resource any and all Products and components used in Products from
other sources, and FUNK shall provide all reasonable assistance in
connection therewith.
17.2 If FUNK is unable to deliver Products in accordance with CLARK's
schedules or releases by reason of force majeure for a period in excess
of six (6) months, then CLARK may terminate this Agreement without
liability to FUNK.
<PAGE> 14
18. GENERAL.
18.1 Notices to be given by either party will be in writing and may be delivered
by either telegram or prepaid certified mail to the following addresses:
FUNK: FUNK MANUFACTURING COMPANY
Industrial Park, Highway 169 N.
Coffeyville, Kansas 67337
Attention: Director of Sales
CLARK: CLARK MATERIAL HANDLING COMPANY
172 Trade Street
Lexington, Kentucky 40510
Attention: Director of Purchasing
With a copy to: CLARK Material Handling Company
333 West Vine Street
Lexington, Kentucky 40507
Attention: General Counsel
Either party may change its address by written notice to the other party.
18.2 This Agreement will not be assigned by either party without the written
consent of the other party, except when the assignment is made to any
subsidiary or affiliate of the parties or to a successor to all or a
substantial part of the business of either of the parties. Unless
otherwise agreed, no assignment will relieve the assigning party of any
duty to perform or any liability for breach.
18.3 This Agreement encompasses the entire agreement between the parties
respecting the sale and purchase of the Products and Parts covered by
this Agreement and supersedes any and all previous agreements,
memoranda, negotiations or other understandings of the parties with
respect thereto.
18.4 Any failure by either party hereto to enforce, at any time, any term or
condition of this Agreement will not constitute, nor will it be
construed as, a waiver of that party's right thereafter to enforce each
and every term and condition of this Agreement.
<PAGE> 15
18.5 If for any reason any provision of this Agreement is invalid, illegal,
or unenforceable, then such provision will be deemed severable from the
other provisions of this Agreement, all of which remain in full force
and effect and binding on the parties to this Agreement.
18.6 This Agreement and all purchase orders issued pursuant to this
Agreement in the United States will be governed by and construed in
accordance with the laws of the State of Kentucky, U.S.A. Any
provisions in CLARK's standard purchase order terms specifying warranty
on Products or Parts or requiring arbitration of claims arising out of
any purchase order are deleted and will be void and have no force and
effect.
18.7 Any controversy or claim which arises out of or relating to this
Agreement, and any amendments thereto or any breach thereof, shall be
maintained only in the federal or state courts of Illinois, and both
parties submit themselves to the jurisdiction of such courts for all
purposes necessary or appropriate to enforce the provisions of this
Agreement. However, any such controversy or claim shall be referred as
promptly as possible to mediation before the Mediation Center of
Kentucky, Inc. before, and as a condition precedent to, the initiation
of any adjudicative action or proceeding.
18.8 The statement herein of a right, power, privilege or remedy of either
of the parties shall be cumulative and shall not preclude any other
right, power, privilege or remedy to which either party would otherwise
be entitled under applicable law.
18.9 Under various U.S. Customs laws and regulations, CLARK may be liable
for substantial penalties and/or damages in the event false or
incomplete information is submitted to the U.S. Customs Service with
respect to merchandise imported for the account of or by CLARK. In the
event CLARK is subjected to any action for any such penalties and/or
damages based on information originating from FUNK, it is understood
and agreed by FUNK that FUNK will pay or otherwise reimburse CLARK for
the full costs of defending against such actions, as well as pay or
otherwise reimburse CLARK for any and all actual duty and penalty
payments which may be required as the result of such actions.
18.10 CLARK hereby certifies that the tangible personal property described
herein is purchased for resale or other non-taxable use and not for a
taxable use or consumption unless otherwise indicated on the purchase
order.
<PAGE> 16
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in duplicate originals by their duly authorized representatives as of the day
and year first written above.
CLARK MATERIAL HANDLING COMPANY FUNK MANUFACTURING
COMPANY
By: /s/ R.E. Clemens By: /s/ W.C. Moffitt
---------------------------- -------------------------
Name: R E Clemens Name: W.C. Moffitt
Title: President Title: V.P. & G.M.
Date: 15 December 1994 Date: 14 Dec. 1994
<PAGE> 1
EXHIBIT 10.20
ED-30 SUPPLY AGREEMENT
THIS AGREEMENT is made on 1 July 1995, by and between CLARK MATERIAL
HANDLING COMPANY ("CLARK" or "CMHC"), a Kentucky, U.S.A. corporation, with its
principal offices at 333 West Vine Street, Lexington, Kentucky 40507, U.S.A. and
FUNK MANUFACTURING COMPANY ("FUNK"), a Delaware corporation with its principal
offices at Industrial Park, Highway 169 N., Coffeyville, Kansas 67337.
WHEREAS, CLARK is engaged in the manufacture, distribution and sale of
various types of industrial trucks and service parts therefor;
WHEREAS, FUNK will, as set forth in its letter of 26 June 1995 from C.
Doerr to M. Dorio, a copy of which is attached hereto and made a part hereto as
Exhibit A1 to CMHC to provide for the physical facilities and production
capacity to manufacture for CLARK certain components and service parts for such
industrial trucks on or before December 31, 1995:
WHEREAS, FUNK shall meet, or continue to meet, each and everyone of its
obligations to CLARK under that certain supply agreement dated 14 December 1994
for the supply of TA-30 transaxles, not withstanding its entering into this ED-
30 supply agreement.
WHEREAS, FUNK desires to sell to CLARK, and CLARK desires to purchase
from FUNK, certain of the aforesaid components and service parts therefor; and
WHEREAS, FUNK recognizes and understands the importance CLARK places on
achieving and sustaining world competitive quality, cost and customer
satisfaction for the components and spare parts it purchases from suppliers;
NOW, THEREFORE, in consideration of the mutual agreements contained
herein, the parties agree as follows:
1. DEFINITIONS.
For the purpose of this Agreement, the following terms shall have the meanings
indicated below:
1.1 "Products" means the products specified on Exhibit 1, attached hereto
and incorporated herein, as amended from time-to-time by written
agreement of the parties, together with such improvements,
modifications and replacements as are approved or authorized from
time-to-time by CLARK.
1
<PAGE> 2
1.2 The terms "Service Parts" and "Spare Parts" have the same meaning and
are defined as follows: Parts accessories manufactured or provided by
FUNK and used in repairing or maintaining Products, as well as complete
units of Products for aftermarket purposes.
1.3 the terms "component" and "components" have the same meaning and are
defined as follows: raw materials, components, subassemblies and other
material purchased, manufactured or provided by Funk and used in the
production, repair or maintenance of the Products.
2. MANUFACTURE AND SALE OF PRODUCTS.
2.1 CLARK agrees to purchase from FUNK and FUNK agrees to sell and deliver
to CLARK, in accordance with the terms and conditions contained in this
Agreement, those Products and Spare Parts which are ordered by CLARK
during the term of this Agreement.
2.2 Funk agrees to provide a final assembly facility reasonably acceptable
to CLARK at a location agreeable to both parties at least two months
prior to a mutually agreed upon production start-up date for the ED-30
transmission, that is capable of producing a combined annual total of
at least 13,000 ED-30 and TA-30 products. Failure by Funk to provide
the aforementioned facility by the agreed date gives CMHC the right to
extend the terms of payment for the ED -30 product shipments from 60
days to 90 days at no penalty cost to CMHC for a period that is equal
to the number of work days that Funk has failed to provide such final
assembly facility.
2.3 Funk and its assembly subcontractor the Process Equipment Company,
agree to maintain a fully competent and sufficient workforce for
assembling the ED-30 transmission that can be adjusted to meet CMHC's
production requirements in accordance with the lead times specified for
schedule changes in Section 3.2 of this contract
3. ORDERS.
3.1 CLARK will order Products from FUNK by issuing an annual blanket
purchase order on CLARK's standard form. The annual blanket purchase
order will be issued to confirm the agreed to prices and standard terms
of sale. The blanket order will not constitute an order for Products.
The Supplier Planning Schedule ("Schedule") will be the document by
which specific quantities of Products are forecasted. The Schedules
will state the quantities forecasted and the specifications for those
Products established in accordance with this Agreement. The Schedules
may also be used for planning purposes to confirm schedules for
previously ordered Products and to estimate quantities and schedules
for up to a full 12-month period. Schedules will be issued monthly for
the succeeding 12-month period.
2
<PAGE> 3
Firm requirements will be transmitted to FUNK by CLARK on the
Schedules. Upon receipt of the delivery schedule containing firm
requirements by FUNK, FUNK will deliver product to CLARK in accordance
with this Agreement.
3.2 The quantities of Products scheduled in CLARK's Schedules and/or CLARK
purchase orders are firm commitments for the following time frames:
Period A:
Quantities and dates planned in the latest Schedule become unchangeable eight
(8) weeks prior to the required ship date, with guaranteed on-time deliveries by
FUNK in such quantities and on such dates. In the event CLARK requires
deliveries in the time frame of six (6) weeks to eight (8) weeks prior to the
required ship date, FUNK shall use its best efforts to meet such delivery dates.
Period B:
Quantities planned in the latest Schedule for the period nine (9) weeks to
twelve (12) weeks prior to the required ship date can be changed by CLARK within
+/-20%, with guaranteed on-time deliveries by FUNK for such changes.
All other quantities are estimates only and not guaranteed to be followed by
firm orders.
3.3 All contracts of sale will be upon the terms and conditions set forth
in this Agreement and in CLARK's blanket purchase order, a copy of
which is attached hereto as Exhibit 2. FUNK may acknowledge each annual
blanket purchase order using FUNK's standard forms, however, no
different or additional terms or conditions set forth in such an
acknowledgment will add to or modify in any way the terms and
conditions of any contract of sale. FUNK will use its best efforts to
comply with requests by CLARK for changes in delivery schedules and for
orders for Products in excess of forecasted quantities.
4. DELIVERY OF PRODUCTS.
4.1 Within five (5) working days after receipt of CLARK's Schedule(s) for
Products, FUNK will respond to the delivery schedule specified by CLARK
with an acknowledgment. Otherwise, confirmation shall be deemed.
Delivery schedules established herein and/or in Section 3.2 hereof are
firm and may be modified only upon mutual agreement.
4.2 Deliveries will be F.O.B. FUNK's manufacturing facility to the
locations as specified by CLARK. Prices will be equitably adjusted for
special packing or shipping preparations requested by CLARK in writing.
FUNK shall
3
<PAGE> 4
purchase at least one hundred and TWENTY (120) returnable containers,
with CLARK bearing the cost of such containers at $235.00 per
container, the cost of which will be amortized over the first 4,000
Product units purchased by CLARK under this Agreement at $7.05 each. If
the parties agree that additional containers are necessary, the cost of
such additional containers will be amortized over 4,000 Product units,
unless CLARK elects to purchase such additional containers outright.
FUNK will be the owner of all returnable containers, and shall be
responsible for all maintenance, upkeep and replacement at its sole
cost and expense, except if abused or lost by CLARK. FUNK shall not use
any of the returnable containers for any purpose other than shipping
Products to CLARK.
4.3 Deleted
4.4 Funk and Clark agree to establish a finished inventory plan at least
two months prior to the mutually agreed upon production start-up date
for the ED-30 transmission. It is agreed by both parties that this
inventory will be used to offset production interruptions that may
occur at Funk or its suppliers. Meetings to discuss revisions to the
original and subsequent plans shall be held as deemed necessary by
either party and any resulting adjustments along with a schedule for
achieving them shall be agreed upon by both parties.
5. INSPECTION TEST.
5.1 All Products shall be received subject to CLARK's inspection and test.
CLARK shall have the right at any time to reject any Products defective
in material or workmanship or to accept and correct the same at FUNK's
expense. Rejected Products may be returned to FUNK at FUNK's risk and
expense. If it is determined that the part is not defective, then at
Funk's option the part will be returned to CLARK at CLARK's risk and
expense. CLARK can not debit FUNK for original freight costs.
6. CANCELLATION.
6.1 FUNK agrees that CLARK may cancel any order without liability if FUNK
is unable to deliver the Products ordered within the time limits as set
forth in Sections 4.1 and 3.2. With respect to such orders as are
canceled pursuant to this Section 6.1, CLARK agrees that FUNK may
utilize the Products involved to fulfill future orders of CLARK.
7. PRICES, PAYMENT.
7.1 THE PRICES SHALL BE AS STATED IN EXHIBIT 3 ATTACHED TO THIS AGREEMENT.
THE BILLING PRICES WILL BE ESTABLISHED FOR
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EACH 12 MONTH PERIOD BY MUTUAL AGREEMENT OF CMHC AND FUNK THAT BEST
REPRESENTS THE FORECAST ANNUAL USAGE FOR THAT UPCOMING 12 MONTHS. THE
INITIAL 12 MONTH PERIOD SHALL BE BILLED AT THE 1000-1999 ANNUAL
QUANTITY RATE. ADJUSTMENTS FOR ACTUAL QUANTITIES PURCHASED WILL BE MADE
WITHIN 30 DAYS OF THE END OF EVERY 12 MONTH PERIOD (JULY 1 THROUGH June
30 ) AND WILL BE RETROACTIVE TO ALL QUANTITY PURCHASED IN THAT PERIOD.
7.2 ALL COST REDUCTIONS AND INCREASES SHALL BE SHARED EQUALLY BETWEEN CLARK
AND FUNK. FUNK AGREES TO PUT FORTH ITS BEST EFFORTS TO CONTAIN ANY AND
ALL INCREASES DURING THE TERM OF THIS AGREEMENT. FUNK SHALL PREPARE AND
SUBMIT ENGINEERING CHANGE PROPOSALS FOR CLARK REVIEW AND APPROVAL.
CLARK WILL IN A TIMELY FASHION REVIEW AND GIVE APPROVAL PROVIDED THE
INTEGRITY, INTERCHANGEABILITY, RELIABILITY, AND OVERALL PERFORMANCE OF
THE PRODUCT IS MAINTAINED TO CLARK'S SATISFACTION AND TECHNICAL
SPECIFICATIONS. ANY AGREED UPON ADJUSTMENTS TO PRICE WILL BE MADE AT
THE START OF EACH CALENDAR QUARTER. THE ADJUSTMENT AT THE START OF THE
QUARTER WILL INCLUDE ALL CHANGES THAT TOOK PLACE IN THE PRIOR QUARTER.
ALL CHANGES THAT OCCURRED IN THE PRIOR QUARTER WILL BE ONE TIME PRICE
ADJUSTED BASED ON ACTUAL SERIAL NUMBER IMPACT, POSITIVE OR NEGATIVE AND
SHARED EQUALLY, THEN PROPERLY REFLECTED IN THE NEW QUARTER PRICE
ADJUSTMENT FOR INVOICING FOR THE NEXT QUARTER. EXCEPT AS PERMITTED BY
THIS SECTION 7.2, PRICES SHALL NOT BE INCREASED FOR ANY REASON DURING
THE TERM OF THIS AGREEMENT.
7.3 DELETED
7.4 Clark will pay all invoices for Products and Spare Parts within sixty
(60) days from date of invoice receipt.
7.5 CLARK and FUNK will work together to identify the lowest viable
transportation cost and transit time. Unless otherwise directed by
CLARK, FUNK shall arrange for transportation. Products shall be
suitably packed and protected for overseas and/or domestic shipment or
otherwise prepared for shipment so as to secure the lowest
transportation and insurance rates. FUNK shall be responsible for all
premium freight costs (including air transport costs) due to late
delivery, defects, mis-shipments, or other reasons directly under
FUNK's control.
7.6 Service Parts shall be priced as follows:
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7.6.1 Prices for complete units of Products shall be the same as the price of
Products as stated in Exhibit 3.
7.6.2 The price for component Spare Parts which are used in current
production Products will not exceed 1.15 times the component cost of
such Spare Parts as contained in the unit Product price.
7.6.3 CLARK retains the right to purchase the Ready-For-Use (RFU) components
directly from the RFU suppliers. Such RFU parts will be identified by
CLARK 60 days after the proto type units are tested and approved and a
listing provided to FUNK for attachment to this contract.
7.6.4 The lead time for delivery of Spare Parts is one-hundred-twenty (120)
days, excluding initial stocking quantities. CLARK will be subject to a
5% surcharge and bear responsibility for premium freight costs (if
requested by CLARK) incurred to satisfy emergency orders due to reasons
directly under CLARK's control. FUNK shall be responsible for all
premium freight costs (including air transport costs) for emergency
orders due to late delivery, defects, mis-shipments, or other reasons
under FUNK's control.
7.6.5 FUNK shall provide Spare Parts which are out of production as to CLARK
but which are being supplied to other FUNK customers, at competitive
prices (but in no event at prices which exceed FUNK's lowest prices for
comparable spare parts to other OEMs) for a minimum period of ten (10)
years after the date of termination or expiration of this Agreement.
Afterward, in the event that FUNK wishes to discontinue supplying Spare
Parts which are out of production as to CLARK to other FUNK customers,
FUNK and CLARK will develop a transition plan for out source, without
impairing CLARK's commitment to maintain service parts availability to
its customers and dealers. No individual part number shall be obsoleted
without giving CLARK an option of making a "last time buy" at a special
negotiated price.
7.6.6 FUNK agrees not to sell CLARK specific parts to anyone other than CLARK
without the express written permission of CLARK. In addition, FUNK
agrees to use its best effort to prevent FUNK's suppliers from selling
CLARK specific parts to anyone other than CLARK.
8. WARRANTY ON PRODUCTS.
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8.1 FUNK warrants that the Products will conform to the specifications,
drawings, or other descriptions which are provided by CLARK to FUNK
identified in Exhibit 5, attached and incorporated by reference herein,
and will be of good material and workmanship, and free from defects.
For purposes of this Agreement, any failure of a Product to be as
warranted is referred to as a "Defect." The warranty in this Section 8
extends to the future performance of the Products in CLARK products
into which the Products are incorporated. CLARK and FUNK agree that
CLARK may, at any time hereafter, revise or otherwise modify the
aforesaid specifications identified in Exhibit 5. CLARK shall be
responsible for all the costs of such modifications.
8.2 If any Defect as defined in Section 8.1 of this Agreement is discovered
in a Product prior to shipment from CLARK's location to a dealer or
customer, FUNK, at FUNK's option, will either supply CLARK with
repaired or replacement Product at no charge or, if the Product can be
repaired by CLARK, request CLARK to repair the Product and pay or
reimburse CLARK for replacement Parts or Products and for labor at an
initial rate of $32 per hour for CLARK to correct the defect. This rate
is subject to increase by mutual agreement of the parties. For purposes
of warranty claims on Products pursuant to this Section 8, charges for
labor performed in a calendar year will be based on CLARK's "Standard
Times Guide" for warranty labor effective as of 1 January of each
calendar year.
8.3 If any Defect as defined in Section 8.1 of this Agreement is discovered
in a Product after it has been delivered as part of an industrial truck
to a dealer within twelve (12) months after the date of delivery to the
first retail purchaser, or in the first 2,000 hours of use, whichever
occurs first, FUNK will pay or reimburse CLARK for the Spare Parts at
FUNK spare part pricing plus 20% for handling by CLARK and CLARK
dealers and labor (including any travel costs at an initial flat rate
of $64.00 per warranty claim) required to correct the defect. This rate
is subject to increase by mutual agreement of the parties. This
obligation will end eighteen (18) months after passing of risk per
Section 4.2 herein.
8.4 If any Defect as defined in Section 8.1 of this Agreement is discovered
in a Product at any time which poses a hazard which may cause personal
injury or property damage, the parties shall meet as soon as possible
to discuss such matter. CLARK and FUNK shall use good faith efforts to
estimate the total cost of the parts and labor (plus reasonable travel
costs) to correct the defect, the reasonable labor and directly related
overhead expenses to locate and repair any industrial trucks into which
the defective product has been incorporated, and costs to provide
reasonable and proper notice and warnings to customers, owners and
users of such industrial trucks, and allocate responsibility for all
such costs and expenses. FUNK shall pay its share of such costs and
expenses to CLARK on a monthly basis based
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upon completed Application for Adjustments ("AFA's") and CLARK's
documented costs and expenses.
8.5 When a written claim for warranty reimbursement is made, FUNK may,
promptly upon receipt of the claim, take the following actions:
a. FUNK may require CLARK to return the Spare Parts or Products at FUNK's
expense to FUNK's facility indicated by FUNK.
b. If FUNK determines any such Spare Parts or Products are not defective,
FUNK will provide CLARK with the data and analysis upon which FUNK's
determination is based. Otherwise, FUNK shall promptly pay or reimburse
CLARK in accordance with the applicable warranty provision.
Warranty claims have to be submitted to FUNK within one hundred, fifty
(150) days after date of failure or repair. Any warranty claim made by
CLARK will be considered accepted by FUNK unless FUNK notifies CLARK of
its denial of the claim with a written report stating the reason for
denial within ninety (90) days after notice that the parts or Products
are received at FUNK's facility. Initial return of warranty items will
be to CLARK.
8.6 FUNK warrants that Spare Parts sold to CLARK pursuant to this Agreement
will be free of defects with the specifications provided to FUNK and
will be of good material and workmanship for a period of one hundred,
eighty (180) days after delivery to the first retail purchaser. FUNK
will not be held liable for defects caused by storage or handling
outside of FUNK'S control.
8.7 The warranties provided by this Agreement do not apply to defects in
Products or Spare Parts caused by delivery to CLARK by parties other
than FUNK or FUNK's representatives and/or subcontractors or to defects
directly attributable to design of the Products or Spare Parts except
to the extent of FUNK's designs of Products or Spare Parts.
8.8 This warranty is in lieu of all other warranties of Product quality,
express or implied, and states FUNK's entire obligations with respect
to defects in Products or Parts. THERE ARE NO IMPLIED WARRANTIES OF
MERCHANTABILITY OR OF FITNESS FOR A PARTICULAR PURPOSE.
9. QUALITY ASSURANCE.
9.1 FUNK warrants that it will establish and maintain a quality assurance
program which conforms to the criteria stated in Exhibit 5 and,
further, warrants that each Product and Spare Part sold by FUNK to
CLARK
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<PAGE> 9
pursuant to this Agreement will be manufactured (or if certain parts
are purchased, purchased and inspected) subject to and in compliance
with said quality assurance program.
9.2 CLARK may, at its option, continuously or periodically review and
inspect FUNK's quality assurance program and Product quality at FUNK's
facilities. FUNK will provide CLARK's representatives with good faith
cooperation and such access and facilities, including testing and
inspection devices and equipment, as may reasonably be required by
CLARK's representatives to conduct such review and inspection. CLARK
will use its best efforts consistent with accomplishing its review and
inspection to avoid disruption or delay of FUNK's operations.
Inspection or review of FUNK's quality assurance program or Products at
FUNK's facilities will not constitute acceptance of any Products and
will not relieve FUNK of responsibility for any defects in any Product.
9.3 FUNK further warrants that if FUNK at any time has reason to believe
that any defect in design or manufacture may be present in any Products
or Spare Parts sold or to be sold pursuant to this Agreement, FUNK will
immediately advise CLARK and will cooperate with CLARK to determine
whether the defect is present and, if so, will cooperate with CLARK in
good faith to correct it.
9.4 Provided the Product components supplied to CLARK hereunder meet or
exceed in all respects all CLARK specifications and requirements,
including but not limited to those contained in Exhibit 5, FUNK shall
have the right to determine suppliers for Product components. FUNK
shall promptly notify CLARK, in writing, of any changes in suppliers
and the effective date of the changes.
10. INSURANCE AND INDEMNIFICATION.
10.1 FUNK shall obtain and keep in effect (i) product liability insurance in
the amount of $5,000,000 per occurrence and $10,000,000 aggregate,
which shall provide protection to CLARK against claims or suits for
personal injury, death or property damage caused by (or alleged to have
been caused by) a defect in material or workmanship of the Products and
Spare Parts or portion thereof supplied by FUNK under this Agreement;
and (ii) contractual liability coverage in the amount of $5,000,000 per
occurrence and $10,000,000 aggregate for the hold harmless clause set
forth in this section.
10.2 (i) Independent from the existence of product liability insurance,
FUNK agrees to defend, hold harmless and indemnify CLARK
against any liability, loss, injury, claim, damage, suit or
proceeding and all expenses incident thereto (including
reasonable attorney fees and
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<PAGE> 10
litigation costs) resulting from claims or lawsuits commenced
against CLARK by parties seeking monetary damages for bodily
injury (including death) or property damage caused by (or
alleged to have been caused by) arising from or connected with
a defect in manufacture, assembly or workmanship of the
Products and Spare Parts or portion thereof.
(ii) FUNK's liability to CLARK under this section shall be limited
solely to claims arising in connection with any Product and
Spare Part or portion thereof supplied by FUNK pursuant to
this Agreement.
10.3 FUNK's obligations regarding indemnification shall survive the
termination or expiration of this Agreement for seven (7) years. FUNK
intends to keep in force product liability insurance for the same
period.
10.4 FUNK will furnish CLARK with a certificate from FUNK's insurance
carrier. FUNK will provide notice thirty (30) days prior to changes in
insurance coverage or cancellation by the insurance carrier.
11. PATENTS.
11.1 CLARK represents and warrants that the Products and Spare Parts ordered
pursuant to this Agreement and their sale or use, alone or in
combination, according to CLARK's specifications or recommendations, if
any, will not infringe any U.S. or foreign patents, and CLARK agrees to
defend, indemnify, hold harmless and protect FUNK, and any company
affiliated with FUNK, its successors, assigns, customers and users of
the Products and Parts, against all suits and from all damages
resulting from such alleged infringements, and CLARK agrees that CLARK
will, upon request, defend or assist in the defense at CLARK's expense
of any such suit.
12. TRADEMARKS ADVERTISING.
12.1 Each Product sold to CLARK pursuant to this Agreement will have affixed
a nameplate and one (1) or more of the trademarks specified by CLARK in
the distinctive form specified by CLARK in a suitable place to be
designated by CLARK. CLARK may also upon request specify that all or
some of the Spare Parts to be sold to CLARK by FUNK pursuant to this
Agreement will have such trademarks affixed in a suitable place to be
designated by CLARK. FUNK will not acquire rights of any kind under any
of CLARK's trademarks, except the right to use them in the manner
permitted by this section, and will in no event sell, distribute, or
otherwise dispose of any Products or Spare Parts bearing any of CLARK's
trademarks to any person, firm or corporation other than CLARK without
first removing the trademarks and obtaining CLARK's express written
consent.
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12.2 All publicity and advertising concerning the sale of Products and Parts
bearing CLARK's trademarks shall be prepared under CLARK's sole
direction and control. FUNK will not disclose the existence of this
Agreement, or any of its terms and conditions to any other person, firm
or corporation, or advertise or release any publicity concerning this
Agreement or the performance by either party without CLARK's written
consent in each instance, except as otherwise required by law.
13. REQUIRED ASSISTANCE.
13.1 CLARK will provide reasonable technical support to assist FUNK in
understanding engineering design issues as they may relate to
manufacturing start-up problems that FUNK incurs and to assist in
explaining design changes or product modifications that impact FUNK's
manufacturing process.
13.2 CLARK will attempt to resolve engineering problems by written or
telephone communications with FUNK's liaison, however, when and as
reasonably requested, FUNK will provide qualified representatives to
review and resolve problems at CLARK's location or at the location of
the Products. Each party will be responsible for its own expenses with
respect to such calls.
13.3 CLARK RETAINS DESIGN CONTROL OF THE PRODUCT. FUNK SHALL SUBMIT ANY AND
ALL PROPOSALS FOR DESIGN CHANGES TO CLARK FOR REVIEW AND POSSIBLE
APPROVAL. CLARK WILL PROVIDE AN ENGINEERING REPRESENTATIVE AS A LIAISON
TO REVIEW MODIFICATIONS THAT ARE SUGGESTED FOR PROSPECTIVE SALES OF
PRODUCTS AND FOR MODIFICATION OF PRODUCTS IN THE FIELD SO LONG AS THE
REQUESTS MEET ALL CLARK'S CRITERIA FOR SUCH A CHANGE. SHOULD CLARK
AUTHORIZE AND APPROVE ANY SUCH CHANGE IT WILL DO SO BY WRITTEN
AUTHORIZATION TO FUNK FOR ANY APPROPRIATE CHANGES TO THE PRODUCT WHICH
MAY BE REQUIRED.
14. TOOLING AND TEST STAND.
14.1 FUNK will obtain, install and pay for all tooling and holding fixtures
necessary for the manufacture, assembly and testing of Products within
FUNK.
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14.2 All tooling and fixtures obtained by FUNK and exclusively used for the
manufacture or assembly of Products shall not be used in the
production, manufacture, assembly or design of any other products
except with the expressed written consent of CLARK. Ownership rights to
Product tooling not used exclusively in the manufacture, assembly of
Products shall remain with the providing party.
FUNK agrees to maintain all such tooling and fixtures in good
condition, at its own expense.
FUNK also agrees to supply all perishable tooling required for its own
machine tools and manufacturing systems.
14.3 The parties agree that the tooling and fixture costs incurred by FUNK
in connection with its manufacture and assembly, of Products and Spare
Parts to CLARK under this Agreement is $228,120. CLARK shall pay for
such cost as follows:
The $228,120 tooling cost shall be charged at $57.03 per Product sold
to CLARK. At such time as CLARK has purchased 4,000 Products, the
$228,120 tooling cost shall have been paid for by CLARK in full, and
the Product price shall at that time be reduced by $57.03 per Product.
In connection with the $225,120 tooling cost, in the event that CLARK
has failed to purchase 4,000 Products during the term of this
Agreement, following the expiration date of this Agreement, CLARK shall
be liable for unamortized tooling costs of $57.03 per Product for each
Product less than 4,000 purchased by CLARK.
14.4 The parties agree that the test stand required for the ED 30 ,which is
also useable for the TA 30, shall be paid for by Funk at a cost of
$150,000. Funk agrees to cost reimbursement from CMHC AS PER the TA 30
agreement of 6 April 1995. CMHC agrees to pay for the modification of
the test stand a total amount of $13,000 to be amortized over the first
4000 units at $3.25 per unit.
14.5 Upon the purchase of CLARK of the number of Products set forth above to
fully amortize the cost of tooling and test stand modification or upon
payment by CLARK of the unamortized tooling cost and test stand
modification, ownership of all such tooling, fixtures and test stand
shall revert to CLARK. FUNK agrees to execute any and all documents
requested by CLARK in order to effect such transfer of ownership.
15. TERM AND TERMINATION.
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15.1 The term of this Agreement shall expire 30 JUNE 2000, UNLESS AN
EXTENSION IS MUTUALLY AGREED TO AT LEAST 18 MONTHS PRIOR TO EXPIRATION.
15.2 Either party may terminate this Agreement for failure by the other
party to perform or adhere to any material promises or obligations
undertaken pursuant to this Agreement by giving the other party sixty
(60) days' written notice within which to cure such default. If such
default is not cured within the sixty (60) day period, the party which
gave the notice may terminate this Agreement at any time thereafter
upon written notice to the other party.
15.3 Either party may terminate this Agreement immediately by written notice
to the other party if any of the following events occur:
1. Any attempted transfer or assignment of this Agreement or any
right or obligation hereunder by the other party unless the
assignment is otherwise permitted by this Agreement.
2. The tiling of a voluntary petition in bankruptcy by the other
party.
3. The filing of a petition in bankruptcy by the other party.
4. The appointment of a receiver or trustee for the other party,
provided such appointment is not vacated within thirty (30)
days from the date of such appointment.
15.4 The termination of this Agreement will not affect or impair the rights,
liabilities and obligations of either party under any order issued
prior to the termination, will not relieve either party of any
obligation or liability accrued under this Agreement or pursuant to any
order issued prior to the termination, and will not relieve either
party of the continuing obligations pursuant to Section 8, Warranty on
Products, Section 9, Quality Assurance, Section 10, Indemnity, Section
11, Patents, Section 7.6.5, Spare Parts, and Section 16,
Confidentiality, which obligations will survive any termination of this
Agreement.
16. CONFIDENTIALITY.
16.1 Any and all confidential information including, without limitation,
specifications, formulas, designs, drawings, trade secrets, patents,
manufacturing data, design data, engineering data, cost data and other
commercial or technical information, which one party discloses to the
other party hereunder shall be kept secret and strictly confidential by
the other
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party and the other party agrees not to utilize any such information
for its own benefit or the benefit of any third party whatsoever, nor
to disclose it to any third party except with the express and prior
written consent of the disclosing party during the term of this
Agreement and for five (5) years thereafter.
16.2 All information and materials identified in Section 16.1, including all
copies thereof, shall promptly be returned by the other party to the
disclosing party upon the expiration or termination of this Agreement,
or at any time upon request of the disclosing party.
16.3 The ownership rights to the design of Products and tooling shall remain
exclusively with CLARK.
17. FORCE MAJEURE.
17.1 Should an event of force majeure prevent or delay the total or partial
performance of the obligations resulting from this Agreement, the party
claiming force majeure is obligated to inform the other affected party
within fifteen (15) days from such occurrence at the beginning, as well
as at the end, of the respective force majeure. The term "force
majeure" as used in this Section 17 is understood to mean any
unforeseen event or occurrence beyond the control of the party
affected, or if foreseen, unavoidable and arising after the effective
date hereof, preventing or delaying the performance of obligations set
forth herein, including, by way of example and not by way of
limitation, actions by any wars, acts of God, accidents, lockouts,
strikes, or other work stoppages. No liability shall exist for failure
or delay of performance of obligations during the period of force
majeure. In the event FUNK declares force majeure, CLARK shall be free
to resource any and all Products and components used in Products from
other sources, and FUNK shall provide all reasonable assistance in
connection therewith.
17.2 If FUNK is unable to deliver Products in accordance with CLARK's
schedules or releases by reason of force majeure for a period in excess
of six (6) months, then CLARK may terminate this Agreement without
liability to FUNK.
18. PROTO TYPE DEVELOPMENT
18.1 PROJECT PLANNING - FUNK AGREES THAT WITHIN 2 WEEKS OF THE EFFECT DATE
OF THIS CONTRACT THAT IT WILL PROVIDE TO CLARK A DETAILED MILESTONE
SCHEDULE LISTING ALL ACTIVITIES REQUIRED TO SUCCESSFULLY PERFORM THE
MANUFACTURE OF 8 PROTO TYPE UNITS. THE APPROXIMATE LEAD TIME FOR THE
ENTIRE DEVELOPMENT AND MANUFACTURE OF THESE UNITS IS 20
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WEEKS. THE ACTUAL PROJECT LEAD TIME WILL BE CONFIRMED IN THE FIRST
MILESTONE REPORT 2 WEEKS AFTER ORDER ENTRY.
18.1.1 FUNK AGREES TO PREPARE MONTHLY PRE PRODUCTION REPORTS TO
REPORT ON THE STATUS OF THE PREPARATION FOR THE PRODUCTION OF
THE UNITS AFTER THE PROTO TYPES HAVE BEEN DELIVERED TO CLARK
FOR FINAL TEST AND ACCEPTANCE.
18.2 THE PRICING FOR THE PROTOTYPES AND TOOLING ASSOCIATED WITH THEM IS FIRM
FIXED PRICE PER EXHIBIT 3 ATTACHED. THE PAYMENT OF THE UNITS AND TOTAL
PROTO TYPE TOOLING WILL BE 60 DAYS FROM SHIPMENT FROM FUNK.
18.3 FUNK WILL PROVIDE EVERY FRIDAY VIA FAX A WEEKLY WRITTEN STATUS REPORT
TO CLARK THAT INCLUDES, BUT IS NOT LIMITED TO, EXACT LINE BY LINE
REPORTING OF STATUS TO THE DETAIL SCHEDULE, CONTINGENCIES PLANNING,
RECOVERY PLANS, CAUSE AND CORRECTIVE ACTION FOR ANY SCHEDULE SLIPS AND
AN OVERALL PREVIEW OF THE NEXT WEEKS ACTIVITY.
18.4 FUNK AGREES TO ASSIGN A FULL TIME DEVELOPMENTAL PROJECT MANAGER TO THE
ED 30 PROJECT. IT WILL BE THE RESPONSIBILITY OF THIS MANAGER TO INSURE
THAT ALL SCHEDULES ARE MET AND THAT THE PROJECT IS PROPERLY RESOURCED
FROM FUNKS STAFF.
18.5 DELETED
18.6 FUNK ESTIMATES THAT THE LEAD TIME FOR THE PRE PRODUCTION UNITS IS 6 TO
8 MONTHS AFTER APPROVAL OF THE PROTOTYPES. FUNK AGREES TO USE ITS BEST
EFFORTS TO IMPROVE THIS LEAD TIME AND WORK WITH CLARK TO MEET ITS
TARGETED SCHEDULE FOR IMPLEMENTATION.
18.7 FUNK AGREES TO PROVIDE ENGINEERING AND TECHNICIAN SUPPORT AT CLARK AS
TEST SUPPORT ON A 24 HOUR CALL BASIS WHILE THE PROTO TYPE UNITS ARE IN
BENCH AND C COURSE TEST.
18.8 FUNK AGREES THAT THE PROTO TYPE UNITS WILL BE CONTROLLED, MANAGED,
PROCURED, ASSEMBLED AND TESTED AT FUNK'S COFFEYVILLE, KS R & D FACILITY
AND HAVE THE FULL RESOURCES OF THE FUNK R & D STAFF IN SUPPORT.
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19. GENERAL.
19.1 Notices to be given by either party will be in writing and may be
delivered by either telegram or prepaid certified mail to the following
addresses:
FUNK: FUNK MANUFACTURING COMPANY
Industrial Park, Highway 169 N.
Coffeyville, Kansas 67337
Attention: Director of Sales
CLARK: CLARK MATERIAL HANDLING COMPANY
333 West Vine Street, Suite 1700
Lexington, Kentucky 40507
Attention: Director of Purchasing
With a copy to: CLARK Material Handling Company
333 West Vine Street
Lexington, Kentucky 40507
Attention: General Counsel
Either party may change its address by written notice to the other
party.
19.2 This Agreement will not be assigned by either party without the written
consent of the other party, except when the assignment is made to any
subsidiary or affiliate of the parties or to a successor to all or a
substantial part of the business of either of the parties. Unless
otherwise agreed, no assignment will relieve the assigning party of any
duty to perform or any liability for breach.
19.3 This Agreement encompasses the entire agreement between the parties
respecting the sale and purchase of the Products and Parts covered by
this Agreement and supersedes any and all previous agreements,
memoranda, negotiations or other understandings of the parties with
respect thereto. The supply agreement between the parties stated 14
December 1994 relative to the TA-30 shall continue to be in full force
and effect and except as expressly referenced in this agreement shall
not be affected by this agreement.
19.4 Any failure by either party hereto to enforce, at any time, any term or
condition of this Agreement will not constitute, nor will it be
construed as, a waiver of that party's right thereafter to enforce each
and every term and condition of this Agreement.
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19.5 If for any reason any provision of this Agreement is invalid, illegal,
or unenforceable, then such provision will be deemed severable from the
other provisions of this Agreement, all of which remain in full force
and effect and binding on the parties to this Agreement.
19.6 This Agreement and all purchase orders issued pursuant to this
Agreement in the United States will be governed by and construed in
accordance with the laws of the State of Kentucky, U.S.A. Any
provisions in CLARK's standard purchase order terms specifying warranty
on Products or Parts or requiring arbitration of claims arising out of
any purchase order are deleted and will be void and have no force and
effect.
19.7 Any controversy or claim which arises out of or relating to this
Agreement, and any amendments thereto or any breach thereof, shall be
maintained only in the federal or state courts of Kentucky, and both
parties submit themselves to the jurisdiction of such courts for all
purposes necessary or appropriate to enforce the provisions of this
Agreement. However, any such controversy or claim shall be referred as
promptly as possible to mediation before the Mediation Center of
Kentucky, Inc. before, and as a condition precedent to, the initiation
of any adjudicative action or proceeding.
19.8 The statement herein of a right, power, privilege or remedy of either
of the parties shall be cumulative and shall not preclude any other
right, power, privilege or remedy to which either party would otherwise
be entitled under applicable law.
19.9 Under various U.S. Customs laws and regulations, CLARK may be liable
for substantial penalties and/or damages in the event false or
incomplete information is submitted to the U.S. Customs Service with
respect to merchandise imported for the account of or by CLARK. In the
event CLARK is subjected to any action for any such penalties and/or
damages based on information originating from FUNK, it is understood
and agreed by FUNK that FUNK will pay or otherwise reimburse CLARK for
the full costs of defending against such actions, as well as pay or
otherwise reimburse CLARK for any and all actual duty and penalty
payments which may be required as the result of such actions.
19.10 CLARK hereby certifies that the tangible personal property described
herein is purchased for resale or other non-taxable use and not for a
taxable use or consumption unless otherwise indicated on the purchase
order.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in duplicate originals by their duly authorized representatives as of.the day
and year first written above.
CLARK MATERIAL HANDLING COMPANY FUNK MANUFACTURING COMPANY
By: /s/ Martin M. Dorio By:
--------------------------------------- -------------------------
Name: Martin M. Dorio Name:
--------------------------------------- -------------------------
Title: President and Chief Executive Officer Title:
--------------------------------------- -------------------------
Date: 7/19/95 Date:
--------------------------------------- -------------------------
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EXHIBIT 10.21
AGREEMENT
by and between
CLARK MATERIAL SYSTEMS TECHNOLOGY COMPANY,
a business unit of Clark Equipment Company
as Buyer
and
HYDROLECTRIC LIFT TRUCKS, INC.,
a division of the Deerfield Mfg. Company
as Seller
Effective as of January 1, 1988
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AGREEMENT
Contents
Page
----
Purpose ................................................... 1
1. Definitions ...................................... 2
2. Sale and Purchase ................................ 3
3. Term ............................................. 3
4. Prices and Price Adjustments ..................... 3
5. Payment .......................................... 7
6. Delivery ......................................... 8
7. Orders ........................................... 8
8. Supply Protection Reserve ........................ 12
9. Warranty on Products and Parts ................... 13
10. Patents .......................................... 17
11. Quality Assurance, Design changes ................ 18
12. Technical Documentation .......................... 19
13. Design Control ................................... 20
14. Tooling Ownership and Payment .................... 22
15. Force Majeure .................................... 23
16. Confidential Information ......................... 24
17. Exclusivity ...................................... 25
18. Law of Agreement ................................. 25
19. Changed Condition ................................ 25
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20. Indemnity ........................................ 26
21. Termination ...................................... 27
22. Inventory ........................................ 28
23. General Provision ................................ 29
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THIS AGREEMENT, effective as of January 1, 1988, is entered into by and between
CLARK MATERIAL SYSTEMS TECHNOLOGY COMPANY, a business unit of Clark Equipment
Company, a Delaware corporation with offices at Lexington, Kentucky, referred to
in this Agreement as "Buyer", and HYDROLECTRIC LIFT TRUCKS, INC., a division of
Deerfield Mfg. Company, an Ohio corporation with principal offices in
Wilmington, Ohio, referred to in this Agreement as "Seller".
PURPOSE
Buyer wishes to purchase from Seller, and Seller wishes to sell to Buyer,
certain Products and Parts manufactured by Seller for incorporation into certain
of Buyer's Industrial Trucks manufactured by Buyer or its affiliates in the
United States and/or Korea for use in the United States and for export.
Buyer and Seller both wish to establish a stable working relationship. Both
Parties also recognize the necessity for flexibility in addressing changes in
the business factors which may affect this arrangement and, therefore, expect
that as changed conditions arise the Parties will be able and willing to discuss
appropriate modifications to this Agreement.
This Agreement will be considered the basic agreement relating to the sale of
Seller's Products and Parts for incorporation into Buyer's Industrial Trucks.
This Agreement may be extended to cover the sale of Seller's Products and Parts
for Buyer's Industrial Trucks manufactured by Buyer or Buyer's affiliates in
other countries; however, Buyer and Seller recognize that it may be appropriate
to modify certain provisions to conform to local laws and procedures.
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The purpose of this Agreement is to establish a procedure for the sale and
purchase of the Products and Parts covered by this Agreement and to establish
the terms and conditions which will apply to sales of the Products and Parts
during the term of this Agreement and after termination.
NOW, THEREFORE, in consideration of Buyer's selection of Seller as a principal
supplier, Buyer's initial purchase of Products and Parts, and the mutual
promises set forth in this Agreement, the Parties agree as follows:
1. DEFINITIONS
1.1 Products - The term "Products" means the uprights, cylinders, carriages and
other components manufactured by Seller to Buyer's specifications as described
and specified in Exhibit 1, attached and incorporated as part of this Agreement,
together with the alterations and modifications thereto made for Buyer also
described and specified in Exhibit 1, including improvements made by Seller,
with Buyer's approval, from time to time to all such Products, together with
such modifications, replacements or additions to such components as may be
agreed upon in writing by the Parties from time to time during the term of this
Agreement.
1.2 Parts - The term "Parts" means service and replacement components, parts and
accessories for all Products purchased by Buyer pursuant to this Agreement.
1.3 Industrial Trucks - The term "Industrial Truck" means the lift trucks and
other industrial trucks manufactured by Buyer or Buyer's affiliates into which
Seller's Products are incorporated.
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1.4 Unit Price - The term "Unit Price" means the price for a single unit of the
Products and Parts. The Unit Price may be adjusted in accordance with the
provisions of the Agreement.
1.5 Base Price - The "Base Price" for Products is the initial Unit Price which
is set forth for each Product in Exhibit 2. The Base Price for parts refers to
the price for each Part set forth in the initial list price referred to in
paragraph 4.2, below.
2. SALE AND PURCHASE
During the term and subject to the terms and conditions of this Agreement, Buyer
will purchase and take from Seller and Seller will sell and deliver to Buyer the
Products and Parts ordered by Buyer in accordance with the procedures set forth
in this Agreement.
3. TERM
This Agreement will be for an initial five (5) year term effective from the date
first written above through and including December 31, 1992 and will be
automatically extended for an additional three (3) year term through and
including December 31, 1995, unless either Party elects to terminate the
Agreement at the end of the initial term by written notice to the other Party,
which notice must be given on or before July 1, 1992.
4. PRICES AND PRICE ADJUSTMENTS
4.1 The initial Unit Price for each Product will be the price stated in
Exhibit 2.
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4.2 The Unit Prices for Parts supplied by the Seller will not exceed the price
for that item in the component price of product in Exhibit 1 plus a 15% mark up
to allow for administration and packaging costs. Seller agrees to supply Buyer
with a list of components that make up the upright, with attached pricing.
Suggested price lists will be revised on an annual basis. Price adjustments for
parts will not exceed the same percent of increase as for Products as permitted
by this Agreement.
4.3 The Unit Price of any Product or Part may be increased or decreased for
mutually agreed upon design changes at any time by mutual written agreement.
Price reductions will be shared equally by the Buyer and Seller.
4.4 Subject to Section 4.3, the initial Unit Prices for Products will be
effective, without increase, for all Products shipped on or before December 31,
1988. Thereafter, Seller may, after consultation with Buyer, and in accordance
with the provisions of this Agreement, adjust the Unit Prices for Products
effective January 1, 1989, and annually on January 1 of each successive year
thereafter during the term of this Agreement ("Annual Price Adjustment"). Unless
otherwise agreed, Buyer and Seller will jointly review Unit Prices of Products
not later than October 31, 1988, and annually not later than October 31 of each
succeeding year thereafter during the term of this Agreement.
4.5 Subject to Section 4.3, the Annual Price Adjustment for Products effective
on January 1 of each year, will be effective, without increase, for all Products
shipped on or after January 1, the effective date of the price increase, and
through and including December 31.
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4.6 The Annual Price Adjustment to the Unit Price for each Product will be
determined by multiplying the unit Price for each Product which is effective on
December 31 of the then current year by the applicable price adjustment formula
set forth below. In each formula each abbreviation has the following meaning:
Pm = Unit Price after the annual adjustment
Pc = Unit Price effective on December 31
S1 = Annual price index of Table 5, Hot Rolled bars,
plates and structural shapes, product code 3312-4
from August 1 through September 31 as indicated in
the "Producer Price Indexes" in the September issue
for the calendar year in which the price adjustment
will be effective.
SO = Annual price index of Table 5, Hot Rolled bars,
plates and structural shapes, product code 3312-4
from August 1 through September 31 as indicated in
the Producer Price Indexes in the September issue for
the previous calendar year.
B1 = Annual price index of Table 5, "ball bearings,
complete" from August 1 through September 31 as
indicated in the Producer Price Indexes in the
September issue for the calendar year in which the
price adjustment will be effective.
B0 = Annual price index of Table 5, "ball bearings,
complete" from August 1 through September 31 as
indicated in the Producer Price Indexes in the
September issue for the previous calendar year.
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I1 = Annual price index of Table 6, "Industrial
Commodities" from August 1 through September 31 as
indicated in the Producer Price Indexes in the
September issue for the calendar year in which the
price adjustment will be effective.
I0 = Annual price index of Table 6, "Industrial
Commodities" from August 1 through September 31 as
indicated in the Producer Price Indexes in the
September issue for the previous calendar year.
L1 = Annual earnings by industry index of Table sic 344,
Fabricated Structural Metal Products, "Production -
Worker Average Hourly Earnings - in dollars" from
August 1 through September 31 as indicated in the
Employment and Earnings issued by the U.S. Department
of Labor, Bureau of Labor Statistics in the September
issue for the calendar year in which the price
adjustment will be effective.
LO = Annual earnings by industry index of Table sic 344,
Fabricated Structural Metal Products, "Production -
Worker Average Hourly Earnings - in dollars" from
August 1 through September 31 as indicated in the
Employment and Earnings issued by the U.S. Department
of Labor, Bureau of Labor Statistics in the September
issue for the previous calendar year.
A. The Annual Price Adjustment to the Unit Price for Products identified in
Exhibit 1 as subject to price adjustment formula A will be calculated by the
following formula:
Pm = Pc {1 + .62 [(.50) S1 + (.10) B1 + (.13) I1 + (.27) L1 -1]}
-- -- -- --
SO B0 I0 L0
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4.7 If any of the referenced indexes are discontinued or if the U.S. Department
of Labor alters its method of calculating an index (including a change in the
base period), the Parties will mutually agree upon a substitute index.
4.8 If the adjusted Unit Price is not calculated by the date established herein
for the Annual Price Adjustment, Products will be shipped at the Unit Price in
effect on the prior December 31, subject to adjustment in the price when the
Unit Price is calculated. The adjusted Unit Price will be established as soon as
possible thereafter, either in accordance with Section 4.6 hereof or by mutual
written agreement. The prices for Products delivered after January 1, but prior
to such adjustment of the Unit Price, will be retroactively adjusted and payment
of any differential in prices will be due and payable thirty (30) days after
receipt by Buyer of an appropriate invoice from Seller.
4.9 Prices for Products and Parts stated in Exhibit 1 are for Products and Parts
delivered F.O.B. from the Seller's dock. Delivery of Products and Parts will be
subject to and in accordance with the provisions set forth in Section 5 below.
5. PAYMENT
Payment for Products and Parts will be due and payable thirty (30) days after
the later of (i) delivery of Product to Buyer's location or (ii) receipt by
Buyer of Seller's invoice.
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6. DELIVERY
6.1 Products and parts will be delivered F.O.B. the Seller's dock. Delivery
frequency will be based on Buyer's schedule and will support "just in time"
delivery. Transportation will be arranged by Buyer, or Seller if Buyer so
requests. Direct transportation costs will be paid by Buyer.
6.2 Buyer, either directly or through its agent, shall have the right to inspect
and test all Products and Parts prior to delivery and within a period of thirty
(30) days following arrival at Buyer's designated manufacturing plant or parts
warehouse. All materials shall be received subject to Buyer's inspection and
rejection. Material not in accordance with specifications or other provisions of
this Agreement shall be either promptly remedied by Seller, or Buyer may reject
the Products and Parts and return them to Seller at Seller's expense. Payment
for Products and Parts prior to inspection shall not constitute an acceptance
thereof. Unless notice of nonconformity or shortage is provided within thirty
(30) days, the Products and Parts will be considered accepted by Buyer. Nothing
in this section will modify or impact in any way Buyer's rights under the
warranty provision of this Agreement.
7. ORDERS
7.1 Buyer will order Products from Seller by means of one of the following
methods:
a. by issuing an annual blanket purchase order which will be supplemented
by Supplier Delivery Authorization and Planning Schedules issued at
least monthly, or
b. under special circumstances, by issuing a separate purchase order.
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7.2 When the method identified in paragraph 7.1.a., above, is used, the annual
blanket purchase order will be used for the purpose of stating the current Unit
Prices for Products and the current mutually agreed upon specifications, but it
will not be an order for any quantity of Products. The Supplier Delivery
Authorization and Planning Schedules will be the document by which specific
quantities of Products are ordered. Each Supplier Delivery Authorization and
Planning Schedule will contain the following information:
a. The Products ordered and the delivery schedule for those Products. The
quantities of Products identified as "Firm" for the first time in this
Schedule will be the Products ordered. Orders for Products for the
first five weeks in this schedule shall be considered "firm". The month
for which the Supplier Delivery Authorization and Planning Schedule is
issued will be counted as the first month.
b. Reconfirmation of Products ordered and the delivery schedule for
Products for "firm orders" which have been ordered on previous Supplier
Delivery Authorization and Planning Schedules. Such Products will be
identified as "firm" on each Supplier Delivery Authorization and
Planning Schedule.
c. Buyer's estimate of the quantity of Products which will be ordered in
the sixth through twelfth week, which quantity may be increased or
decreased by Buyer by up to 50% up to the time when such order becomes
"firm" as per Section 7.2.L Such quantities will be identified as
"Planning".
d. Buyer's estimate of the quantities of Products which may be ordered for
a period of nine (9) months from the fourth month through the twelfth
month from the date of the Supplier Delivery Authorization and Planning
Schedule. Such quantities will also be identified as
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"Planning". Buyer agrees to use its best efforts to keep Seller
apprised of significant changes which may occur to such estimates.
Buyer will issue the Supplier Delivery Authorization and Planning Schedules
periodically as required, but will at least issue a Supplier Delivery
Authorization and Planning Schedule on or before the fifth (5th) working day of
each month during the term of this Agreement. Supplier Delivery Authorization
and Planning Schedules issued after the fifth (5th) working day of each month
through the last day of the month will be considered to be issued for the next
following month (the month in which production will be scheduled by Seller).
Seller shall acknowledge the "Firm" order in Supplier Delivery Authorization and
Planning Schedules by the tenth (10th) working day of each month. "Firm" orders
shall be deemed acknowledged if a formal acknowledgement has not been received
by Buyer within said ten (10) days.
7.3 Buyer will issue a schedule identified as HLT Upright Specification Order
Form for Products with full specifications which will be ordered by Buyer five
weeks prior to the scheduled delivery day. Orders for Products need not contain
full specifications past the five week firm specification order period. The
quantity of Products identified in "Planning" for delivery during the 6th - 12th
week may be adjusted by fifty (50%) percent. It is anticipated that orders
placed in accordance with this Section 7.3 will be issued weekly on a rolling
basis, reconfirming Products ordered and a delivery schedule for Products which
have been ordered previously.
The Supplier Delivery Authorization and Planning Schedule may be used to place
the order contemplated by this Section 7.3. If Buyer issues more than one
Supplier Delivery Authorization and Planning Schedule before the fifth (5th) day
of a month, the last Supplier Delivery
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Authorization and Planning Schedule received by Seller by the fifth (5th)
working day of the month will be controlling.
7.4 Under special circumstances Buyer may order Products by individual purchase
orders separate and apart from Supplier Delivery Authorization and Planning
Schedule system described in Section 7.1, 7.2 and 7.3 above. Special
circumstances will include orders which require special terms, special Product
specifications, or other special conditions. All such orders will be subject to
acceptance by Seller not to be unreasonably withheld and, subject to such
pricing adjustments as may be mutually agreed upon by the parties hereto.
7.5 The normal lead time for delivery of Parts will be approximately five (5)
weeks. Seller will, however, at no additional charge make every reasonable
effort to satisfy Buyer's reasonable requests for emergency delivery of Parts in
less than the normal lead time. This arrangement for emergency Parts orders will
be discussed at the request of either party after approximately one (1) year's
experience with Parts sales and purchases under this Agreement.
7.6 Buyer's liability, if any, upon cancellation of any firm order will be
limited to the actual costs incurred by Seller but not to exceed the aggregate
Unit Price for Products or Parts cancelled. Upon payment of such actual costs
and reasonable overhead costs not to exceed ten percent (10%), Seller will
deliver to Buyer, upon Buyer's request, all completed or partially completed
Products or Parts. Upon termination of this Agreement by the Buyer, for reasons
other than the breach by Seller of its obligations hereunder pursuant to Section
21.1, the Buyer shall be liable for payment of Seller's amortized cost not to
exceed $50 or the adjusted amount per Section 4.1 hereof per unit of product for
any undelivered remainder of the first 30,000 units of upright with carriage
product (less any such payments previously made to Seller).
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7.7 All sales of Products and Parts ordered during the term of this Agreement
will be subject to the terms and conditions of this Agreement together with any
different or additional terms or conditions mutually agreed upon in writing.
Buyer and Seller may use their standard forms to order and to acknowledge orders
for Products and Parts; however, unless otherwise mutually agreed in writing, no
different or additional terms contained in any such form will add to or modify
in any way the terms and conditions provided by this Agreement.
8. SUPPLY PROTECTION RESERVE
8.1 Buyer may, by written notice given before delivery or after delivery, but on
or before the date payment would be due pursuant to Section 5, "Payment",
designate certain of the Products ordered to be part of a supply protection
reserve to be held and maintained by Buyer in good condition at a suitable
location to be provided by Buyer. The quantity of Products placed in the supply
protection reserve will be a reasonable quantity determined by Buyer up to a
quantity sufficient to supply Buyer's production for approximately thirty (30)
days. Units placed in the supply protection reserve will be removed from the
reserve and made available for use in production within six (6) months after
delivery and may be replaced, as required, with new units to maintain the
established quantity of the supply protection reserve. Buyer will notify Seller
promptly when units are removed from the supply protection reserve, and the
Seller will invoice Buyer for Products which are removed from the supply
protection reserve. The Unit Price for such Products will be the Unit Price in
effect at the date Buyer designates that Products be placed in the reserve and
will be due and payable after removal from the supply protection reserve within
thirty (30) days after the date of Seller's invoice. Payment will be made in
accordance with Section 5, "Payment".
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8.2 Buyer will pay Seller a carrying charge calculated on the Unit Price of
Products held in the supply protection reserve after the date payment for such
units would otherwise be due pursuant to Section 5, "Payment". The carrying
charges will be a percentage of the Unit Price equal to simple interest per
annum at a rate equal to the prime rate of interest stated in the Wall Street
Journal plus 2 points, such rate to be determined on the last working day of
each month. Seller will invoice Buyer for the carrying charge monthly, based on
the value of the inventory on the last working day of each month, and the
carrying charge will be payable within thirty (30) days after the date Buyer
receives Seller's invoice.
9. WARRANTY ON PRODUCTS AND PARTS
9.1 Seller warrants that the Products will conform to the specifications and
descriptions identified in Exhibit 1 attached and incorporated by reference
herein, and will be merchantable, of good material and workmanship, and free
from defects. For purposes of this Agreement any failure of a Product to be as
warranted is referred to as a "Defect". This warranty extends to the performance
of the Products in Buyer's Industrial Truck Division products into which the
Products are incorporated as follows:
a. If any Defect is discovered in a Product prior to shipment of an
Industrial Truck into which it has been incorporated, Seller will pay
or reimburse Buyer for the parts and labor required to correct the
Defect and any damage to the Industrial Truck resulting from the
Defect. For purposes of this Section 9.1.a and Sections 9.1.b., 9.1.d.,
and 9.1.e. below, the term labor costs to correct a Defect shall
include, without limiting the general meaning of the term, reasonable
charges to remove the defective Product or Part from the
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Industrial Truck and to replace a repaired or replacement Product or
Part, and a reasonable allocation of Buyer's overhead costs to Buyer's
labor charges.
b. If any Defect is discovered in a Product within six (6) months after
the date of delivery to the first retail purchaser of an Industrial
Truck into which it has been incorporated or during the first 1,000
hours of use of the Industrial Truck, whichever occurs first, Seller
will pay or reimburse Buyer for the parts and labor at the rate of
$25.00 per hour, which labor rate may be increased by mutual written
agreement, or failing such agreement, at the actual rate charged by
each dealer (plus any reasonable travel costs), required to correct the
Defect and any damage to the Industrial Truck resulting from the
Defect.
c. If any Defect is discovered in a Product after the period stated in
Section 9.1.b. above, but within twelve (12) months after delivery to
the first retail purchaser of the Industrial Truck into which it is
incorporated or during the first 2,000 hours of use of the Industrial
Truck, whichever occurs first, Seller will either reimburse Buyer for a
replacement part or, at Seller's option, for the cost of repairing the
Defective part and Seller will reimburse Buyer for the cost of
repairing any damage to the Industrial Truck caused by the Defect.
d. If any latent Defect is discovered in a Product in any of the parts,
components or assemblies, which may materially affect performance of
the Industrial Truck into which it is incorporated, after the periods
stated in paragraph 9.1.c. above, but during the period indicated
below, Seller and Buy will negotiate in good faith the method of
correcting the Defect. Seller will pay or reimburse Buyer for fifty
percent (50%) of the reasonable costs incurred by Buyer to correct the
Defect and to repair any damage to the Industrial Truck caused by the
Defect. The period of warranty coverage for parts, components, or
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assemblies will be thirty-two (32) months after delivery to the first
retail purchaser or 4,000 hours, whichever occurs first.
e. If a latent Defect discovered at any time poses a hazard which may
cause personal injury or property damage, notwithstanding any other
warranty provision or warranty limitation, Seller will repay or
reimburse Buyer for the cost of parts and labor (plus reasonable travel
costs) to correct the Defect and any damage to the Industrial Truck
caused by the Defect, Buyer's reasonable labor and overhead expenses to
locate and repair any Industrial Truck into which the Defective Product
has been incorporated, and Buyer's costs to provide reasonable and
proper notice and warnings to Buyer's dealers and to owners and users
of such Industrial Trucks. Seller and Buyer will negotiate in good
faith the method of correcting the Defect.
9.2 Replacement Parts provided by Seller for Products under the warranty
provisions of this Agreement are covered by the Product warranty provisions for
the remainder of any applicable warranty period and, thereafter, are covered by
the Parts warranty to the extent that the Parts warranty period exceeds the
Product warranty period.
9.3 Seller warrants that the Parts will conform to Buyer's specifications and
descriptions together with any mutually agreed upon modifications, and will be
merchantable, of good material and workmanship, and free from defects for a
period of six (6) months from the date of sale to the first retail purchaser or
the date the Part is installed in a customer's Industrial Truck as a service or
replacement Part, whichever occurs first. For purposes of this Agreement any
failure of a Part to be as warranted is referred to as a "Defect". This warranty
extends to the performance of the Parts in Products which are incorporated in
Buyer's Industrial Truck Division Products during the
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warranty period. If any Defect is discovered within the warranty period Seller
will reimburse Buyer for the cost of the Defective Part, for the labor of
Buyer's authorized service personnel at an hourly rate of $25.00 per hour which
rate may be increased by mutual written agreement, or failing such agreement, at
the actual rate charged by each dealer, and for the cost of repairing any damage
to the Industrial Truck caused by the Defect, plus a charge of ten percent (10%)
of the current price of the Defective Parts to cover restocking and handling
fee. The amount of warranty reimbursement will be discussed upon request of
either Party after approximately one (1) year's experience with warranty claims.
9.4 When a written claim for warranty reimbursement is made Seller may take the
following actions:
a. Seller may require Buyer to return the Defective Products (or the
Defective Parts thereof) and Parts at Seller's expense to Buyer's
designated administration facility ("Warranty Facility").
b. Seller may inspect any such allegedly Defective Products and Parts at
Buyer's Warranty Facility and may further, upon prompt written notice
require Buyer to return all or any of such Products and Parts at
Seller's expense. Buyer will notify Seller when such Defective Products
and Parts are available for inspection. The notice will include a list
of the Defective Products and Parts and a brief description of the
warranty claims.
c. If Seller determines any such Products or Parts are not Defective,
Seller will provide Buyer with the data and analysis upon which
Seller's determination is based. Otherwise, Seller will promptly pay or
reimburse Buyer in accordance with the applicable warranty provision.
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Any warranty claim made by Buyer will be considered accepted, unless within
thirty (30) days after Seller's receipt of Buyer's claim Seller either notifies
Buyer in writing (i) that the claim is denied or (ii) that Seller requests an
additional thirty (30) days to review the claim, such request for additional
time to be permitted only once per warranty claim. Each such notice will include
a statement of the reason for the denial or the request for additional time.
9.5 The warranties provided by this Agreement do not apply to Defects in
Products or Parts caused after delivery to Buyer by parties other than Seller or
Seller's representatives by accident, misuse, or neglect or arising from
alterations not authorized by Seller.
9.6 The warranties provided in this Agreement are in lieu of all other
warranties of quality, express or implied, and state Seller's entire obligation
with respect to Defects in Products or Parts. THERE ARE NO IMPLIED WARRANTIES OF
MERCHANTABILITY OR OF FITNESS FOR A PARTICULAR PURPOSE. Except as stated in this
Agreement, Seller will not be liable for incidental or consequential commercial
damages for breach of this warranty.
10. PATENTS
10.1 Buyer represents and warrants that the Products and Parts ordered under
this Agreement and their sale or use, alone or in a combination specified by
Buyer, according to Buyer's specifications or recommendations, if any, will not
infringe any U.S. or foreign patents and Buyer agrees to defend, protect and
save harmless Seller, its successors, assigns, customers and users of its
products, against all suits and from all damages, claims and demands resulting
from such alleged infringements, and agrees that Buyer will, upon request,
defend or assist in the defense at Buyer's
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expense of any such suit. Provided, however, that Seller must give Buyer prompt
written notice of any such suit or claim.
10.2 Buyer and Seller agree that neither will directly or indirectly obtain or
attempt to obtain in any country or territory whatsoever, any rights, title or
interest, by registration, patent, copyright, or otherwise, in or to any
designs, improvements or inventions whatsoever of the other Party.
11. QUALITY ASSURANCE, DESIGN CHANGES
11.1 Seller represents and warrants that it has and will maintain during the
term of this Agreement a quality assurance program which conforms to criteria
stated in Exhibit 3 attached and incorporated as part of this Agreement, and
that each Product and Part delivered pursuant to this Agreement will have been
manufactured subject to Seller's quality assurance program. Seller further
warrants that it will provide Buyer with prompt notice of any Defect in Products
or Parts discovered by Seller after delivery to Buyer.
11.2 Subject to Seller's approval, which shall not be unreasonably withheld,
Buyer, for reasonable purposes, may have access to materials, work-in-progress,
and finished Products and Parts at any facilities at which such Products and
Parts are manufactured under this Agreement. Without additional charge, Seller
will provide Buyer's representatives with reasonable assistance, including
testing and inspection devices and equipment, which may be requested to allow
Buyer's representatives to safely and effectively perform their duties while at
Seller's manufacturing locations. Buyer's review or evaluation of Seller's
quality assurance program or of the quality of Products or Parts will not
constitute acceptance of any Products and will not alter in any way Seller's
warranties of the quality of Products and Parts.
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11.3 Any design changes to Products will be made only upon mutual written
agreement of the Parties (including any price adjustments, the effective date of
the engineering change, any drawings, documents or samples to be provided, and
any other matters relating to effecting the engineering change) and after proper
engineering documentation has been provided by Buyer. Seller will hold Buyer
harmless of and from any liability, damages, costs or expenses incurred by Buyer
as a result of any changes implemented by Seller without such prior written
agreement.
12. TECHNICAL DOCUMENTATION
All of the Technical Information, tangible and intangible, including but not
limited to all drawings, designs, manuals, documents, tapes, diskettes and all
other physical embodiments of the Technical Information and all copies thereof,
delivered to Seller and its Affiliates is and shall remain the exclusive
property of Buyer. Seller agrees that it and its Affiliates do not have and
shall not acquire by virtue of performance of this Agreement or otherwise: (i)
any right or interest of any kind in any of the Technical Information; or (ii)
except as provided in this Agreement, any right to manufacture or sell Products,
Components and Service Parts within or outside the United States. Seller agrees
to return all such Technical Information, including all copies thereof,
immediately upon the earlier of (i) termination of this Agreement for any
reason, or (ii) upon request from Buyer.
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13. DESIGN CONTROL
13.1 Ownership. Buyer retains ownership of all Product, Component and Service
Part designs, including the designs, deviations and new specifications referred
to in Section 16.2 hereof, and Buyer is solely responsible for determining,
establishing and approving the performance and such design specifications.
13.2 Specification Changes/Deviations. From time to time during the course of
this Agreement it will be necessary for Buyer and Seller to initiate
specification changes and/or deviations. Those specification changes and
deviations will be processed as outlined in subsections 13.2.1 and 13.2.2. They
will be processed by the Parties' mutual agreement on an urgent best efforts
basis whenever they arise out of product safety, infringement or other such
circumstances.
13.2.1 Original Product. Deviations to the original Product or
Component desired and requested by Seller will be formally submitted to Buyer by
Seller. Upon receipt Buyer will review the requested deviation for compatibility
and acceptability with Buyer's market and aftermarket and will advise Seller of
acceptance or rejection. if found acceptable by Buyer, Seller will upon receipt
of written approval from Buyer proceed with the deviation. Costs will be
negotiated on a case by case basis. Seller will not put the deviation into
commercial production prior to validation by Seller to Buyer performance
specification.
13.2.2 New Specifications Desired by Buyer. New specifications of
Product, Component or Service Part desired by Buyer will be formally submitted
to Seller. After agreeing to the design and development expenses and the
ultimate Product, Component and Service Part price, Buyer will contract with
Seller to design, develop and manufacture the Product, Component or
20
<PAGE> 24
Service Part to the new specification. If in event of failure to agree on the
development expense or unit price, Buyer may elect to obtain independent design
assistance other than from Seller, and have such model manufactured by whomever
Buyer chooses. Agreed upon costs will be borne by Buyer. Seller will not put the
Product, Component or Service Part encompassing the new specification into
commercial production prior to validation by Seller to Buyer performance
specification as outlined in Section 13.2.1.
13.2.3 New Specifications Desired by Seller. New specifications of
Product, Component or Service Part desired by Seller will be formally submitted
in writing to Buyer by Seller. Upon receipt of all relevant documentation and
information, Buyer will review the requested new specification for compatibility
and acceptability with Buyer's market and aftermarket and will advise Seller of
acceptance or rejection. If found acceptable by Buyer and after the Product,
Component or Service Part price has been mutually agreed upon, Seller will
proceed with the new specification. In the event of a failure to agree on price,
Buyer may have the new design specifications made by parties other than Seller
using the previously provided documentation and information. Costs and expenses
related to design, development and manufacturing utilizing the new
specifications will be negotiated on a case by case basis, and Buyer will own
the new specification design. Seller will have no right to use the new
specification design except as provided in this Agreement. Seller will not put
the Product, Component or Service Part encompassing the new specification into
commercial production prior to validation by Seller to Buyer performance
specification.
21
<PAGE> 25
14. TOOLING OWNERSHIP AND PAYMENT
14.1 Buyer shall consign to Seller available used tooling unique to products to
be manufactured for Buyer. Such tooling shall at all times remain the property
of Buyer. Seller shall:
A. Properly care for consigned used tooling.
B. Repair and maintain same as necessary for production use.
C. Ensure that Buyer's proprietary markings on such tooling are at all
times displayed.
D. Provide annual physical inventory evidence of same.
E. Return same in original condition (normal wear acceptable) to Buyer at
Buyer's expense upon Buyer's request or upon termination of Agreement
for any reason, provided that Buyer has paid all nondisputed invoices
from Seller in full.
14.2 Buyer to reimburse Seller for Buyer authorized new tooling unique to
product to be manufactured. Seller shall:
A. Obtain written authorization from Buyer to purchase said new tooling.
B. Provide responsible cost estimates of same prior to purchase
C. Provide proof of purchase, performance and payment of same, transfer
title of such tooling to Buyer.
D. Repair and maintain same
E. Provide annual physical inventory evidence of same
F. Return same in original condition (normal wear acceptable) to Buyer at
Buyer's expense upon Buyer's request or upon termination of this
Agreement for any reason, provided that Buyer has paid all nondisputed
invoices from Seller in full.
22
<PAGE> 26
14.3 Buyer's liability for reimbursing Seller for Buyer authorized new tooling
unique to product to be manufactured will be limited to the actual cost incurred
by Seller plus normal reasonable overhead not to exceed 10% and properly
attributable to authorized actions by the Buyer. Buyer will not be liable for
incidental, special or consequential damages resulting from this Agreement to
reimburse Seller for Buyer authorized new tooling unique to Product to be
manufactured.
15. FORCE MAJEURE
15.1 Except as otherwise provided, if either Party is temporarily unable to
perform its obligations under this Agreement because of events beyond its
control, including, but not limited to, acts of God, strikes, lockouts, or other
labor disputes, war, riot, embargo and acts of government, no liability shall
exist for failure of performance during this period of inability, nor shall
temporary inability to perform obligations be cause for termination of this
Agreement by either Party; provided the Party which is temporarily unable to
perform provides prompt notice of the commencement and the termination of the
event which temporarily causes the inability to perform. However, any such cause
for temporary inability to perform the obligations hereunder shall be remedied
with all reasonable promptness by the Party prevented from performing, to the
extent such party can take remedial action, and the Parties will promptly and
amicably discuss actions which may be taken to minimize any loss or damage which
may occur to any Party.
15.2 Notwithstanding Seller's right to invoke force majeure Buyer shall have the
right to make other reasonably necessary arrangements to buy components to
maintain Buyer's production and to complete any such arrangements after the
cause for Seller's temporary inability to perform has been eliminated. Both
Parties will use all reasonable efforts to resume normal operations under this
Agreement as soon as possible after removal of any cause for a temporary
inability to perform.
23
<PAGE> 27
16. CONFIDENTIAL INFORMATION.
16.1 During the term of this Agreement and for a period of three (3) years
thereafter, each Party will hold in confidence any confidential information
received from another Party in connection with this Agreement and (except for
mandatory disclosures to governments or to such third parties as insurers,
shippers and financial institutions whose knowledge or participation may be
essential to completion of supply arrangements) will not disclose the
confidential information to any third party without the written consent of the
Party which provided the information. A party receiving confidential information
will protect it from disclosure by handling it with the same care that the Party
normally exercises in respect of its own confidential information of similar
importance.
16.2 As used in this Agreement, confidential information means any information
held in confidence by a Party and disclosed by that Party to another Party in
connection with this Agreement; provided the information is:
a. a type of information classified as confidential by other provisions of
this Agreement;
b. information provided in a written form and clearly identified as
confidential; or
c. information provided verbally, and identified as confidential when
disclosed, if the disclosing Party promptly thereafter provides the
Party to which it is disclosed a written disclosure identified as
confidential.
d. Information referred to as Technical Information or Technical
Documentation in Section 12 hereof.
24
<PAGE> 28
16.3 Information will not be considered confidential and the obligations of this
Section 15 "Confidential Information" will not apply under the following
circumstances:
a. the information is in the public domain at the time of disclosure or
becomes part of the public domain thereafter without the fault of the
receiving Party;
b. the information is known to the receiving Party at the time of the
disclosure; or
c. the information is rightfully acquired by the receiving Party from a
third person which is not a party to this Agreement, or is
independently developed by the receiving Party.
17. EXCLUSIVITY
All Products manufactured by Seller to Buyer's design and requirements will be
for the exclusive use of Buyer or Buyer's representatives. Seller shall have no
right to manufacture Products except as provided under this Agreement.
18. LAW OF AGREEMENT
The rights and duties of the Parties to this Agreement will be
construed and enforced under the laws of the State of Kentucky, U.S.A.
19. CHANGED CONDITIONS
Either Party may by written request reopen discussion on the terms of this
Agreement in the event of extraordinary changes in business conditions, and the
Parties will attempt in good faith to address such changed conditions. If the
issues raised cannot be resolved within sixty (60) days
25
<PAGE> 29
after the written request to reopen discussions, either Party may terminate the
Agreement upon one hundred twenty (120) days prior written notice. Orders placed
prior to the termination of the Agreement will be completed in accordance with
its terms.
20. INDEMNITY.
20.1 Seller will indemnify and hold Buyer harmless from and against any and all
claims for injury to or death of persons or damage to property (including costs
of litigation and attorney's fees) in any manner caused by, arising from,
incident to, connected with, or growing out of Seller's manufacture and sale of
Products or Parts to Buyer. Seller further agrees to secure and maintain during
the term of this Agreement and for ten (10) years thereafter a public liability
policy or policies providing (a) products liability coverage protecting Buyer
with respect to claims arising from products and parts sold to Buyer pursuant to
this Agreement and (b) providing contractual liability coverage for the hold
harmless clause set forth above in this paragraph, each of such insurance
coverages to have the bodily injury and property damage limits reasonably
required by Buyer from time to time, but in each instance to have bodily injury
limits of not less than $3 million per person and $3 million per occurrence and
property damage limits of not less than $3 million per occurrence. Seller will
upon request furnish Buyer with a certificate from Seller's insurance carrier in
a form satisfactory to Buyer and will provide for thirty (30) days' prior
written notice from the insurance carrier to Buyer prior to any cancellation or
change reducing coverage. In addition, Buyer will be named as an additional
insurer as respects its interest.
20.2 Buyer will indemnify and hold Seller harmless from and against any and all
claims for injury to or death of persons or damage to property (including costs
of litigation and attorney's fees) in any manner caused by, arising from,
incident to, connected with, or growing out of Buyer's design
26
<PAGE> 30
or sale of Products and Parts, provided Seller has in all respects manufactured
the Products and Parts in strict adherence to and compliance with the design
specifications provided by Buyer and provided further that such indemnification
shall not apply as to any Product or Part for which Seller is liable under
Section 9 hereof. Buyer further agrees to secure and maintain during the term of
this Agreement and for ten (10) years thereafter a public liability policy or
policies providing (a) products liability coverage protecting Seller with
respect to claims arising from products and parts sold by Buyer and (b)
providing contractual liability coverage for the hold harmless clause set forth
above in this paragraph, each of such insurance coverages to have the bodily
injury and property damage limits reasonably required by Seller from time to
time, but in each instance to have bodily injury limits of not less than $3
million per person and $3 million per occurrence and property damage limits of
not less than $3 million per occurrence. Buyer will upon request furnish Seller
with a certificate from Buyer's insurance carrier in a form satisfactory to
Seller and will provide for thirty (30) days' prior written notice from the
insurance carrier to Seller prior to any cancellation or change reducing
coverage. In addition, Seller will be named as an additional insurer as respects
its interest.
21. TERMINATION.
21.1 Either Party may terminate this Agreement for failure by the other Party to
perform or adhere to any promises or obligations undertaken pursuant to this
Agreement by giving the other Party thirty (30) days' written notice within
which to cure such default. If such default is not cured within the thirty (30)
day period, the Party which gave the notice may terminate this Agreement at any
time thereafter upon written notice to the other Party.
27
<PAGE> 31
21.2 Either Party may terminate this Agreement immediately by written notice to
the other Party if any of the following events occur:
1. Any attempted transfer or assignment of this Agreement or any right or
obligations hereunder by the other Party unless the assignment is
otherwise permitted by this Agreement.
2. The filing of a voluntary petition in bankruptcy by the other Party.
3. The filing of a petition in bankruptcy against the other Party,
provided it is not vacated within sixty (60) days from the date of
filing.
4. The appointment of a receiver or trustee for the other Party, provided
such appointment is not vacated within sixty (60) days from the date of
such appointment.
22. INVENTORY
22.1 In the event of a termination of this Agreement at the expiration of the
initial five (5) year term or the additional three (3) year term, or pursuant to
Section 19 hereof, or by Seller pursuant to Section 21.1 hereof, Buyer agrees
that it will purchase from Seller, at Seller's option and at Seller's cost plus
ten percent (10%) for overhead, Seller's work in process for orders previously
identified by Buyer as "firm", plus raw materials and parts previously delivered
to Seller by its suppliers and identified with the manufacture of parts
specified in Exhibit 1, to the extent Seller's purchase of such raw materials
and parts was reasonable in terms of quantities and lead times.
22.2 In the event of a termination of this Agreement by Buyer pursuant to
Section 21.1 hereof, Buyer shall have the right (but not the obligation) to
purchase all or any part of Seller's work in process, raw materials or parts
identified with the manufacture of parts specified in Exhibit 1 at a price equal
to Seller's cost (without overhead).
28
<PAGE> 32
23. GENERAL PROVISION
23.1 Entire Agreement. This Agreement constitutes the entire agreement
between the Parties with respect to the purchase and sale of Products and Parts
and supersedes any and all previous agreements, memoranda, negotiations or other
understandings of the Parties with respect thereto.
23.2 The provisions of Sections 10, Patents, 16 Confidential
Information, 9 Warranty, 11 Quality Assurance, and 20 Indemnity create
continuing obligations which will survive termination of this Agreement for any
cause. Termination will not affect obligations under any orders issued prior to
termination. Termination will not relieve the Parties of obligations or
liabilities accrued prior to termination.
23.3 Products may be added from time to time, by mutual agreement of
the parties, such as Hi-Lo and Quad uprights. All conditions of the contract
will apply to the new Products. Other Products may be deleted from time to time.
23.4 This Agreement may be amended only by a writing signed by both
Parties by the representatives identified in writing by each Party from time to
time as authorized to sign such an amendment.
a. Until further notice the only representatives authorized to sign for
Buyer are its President, any Vice President of Clark Material Systems
Technology Company, or the Director of Operations.
29
<PAGE> 33
b. Until further notice the only representatives authorized to sign for
Seller are the representatives which signed this Agreement on Seller's
behalf.
23.5 Severability of Provisions. If for any reason any provision of
this Agreement is invalid, illegal or unenforceable, then such provision will be
deemed severable from the other provisions of this Agreement, all of which will
remain in full force and effect and binding on the Parties hereto.
23.6 Waiver. Any failure by either Party hereto to enforce, at any
time, any term or condition of this Agreement will not constitute, nor be
construed as, a waiver of that Party's right thereafter to enforce each and
every term and condition of this Agreement.
23.7 Notices. Notices to be given by either Party will be in writing
and may be delivered by telegram or by prepaid certified mail to the other Party
at the following addresses:
Buyer - Clark Material Systems Technology Company
333 West Vine Street, Suite 400
Lexington, Kentucky 40507-1627
Attention: Greg Dawe
cc: General Counsel
106 West Vine Street
Lexington, Kentucky 40507
Seller - Hydroelectric Lift Trucks, Inc.
P.O. Box 768
370 Davids Drive
Wilmington, Ohio 45177
Attention: Robert A. Houston
30
<PAGE> 34
Either party may change its address by written notice to the other Party.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
by their duly authorized representatives as of the day and year first written
above.
<TABLE>
<CAPTION>
<S> <C>
BUYER: SELLER:
CLARK MATERIAL SYSTEMS TECHNOLOGY HYDROLECTRIC LIFT TRUCKS, INC., a
COMPANY, a business unit of Clark Equipment division of The Deerfield Mfg. Company
Company
By: /s/ Gary D. Bello By: /s/ Robert A. Houston
------------------------- -----------------------
Gary D. Bello Robert A. Houston
Title: President Title: Vice President and General Manager
By: /s/ Louis A. Campbell THE DEERFIELD MFG. COMPANY
-------------------------
Louis A. Campbell
Title: Vice President and General Manager
Operations
By: /s/ Michael H. Norris
----------------------
Michael H. Norris
Title: President, The Deerfield Mfg. Company
</TABLE>
31
<PAGE> 1
EXHIBIT 10.22
AMENDMENT AGREEMENT
This AMENDMENT AGREEMENT is entered into this 2 day of March, 1992, by
and between CLARK MATERIAL HANDLING COMPANY, formerly known as Clark Material
Systems Technology Company, a business unit of Clark Equipment Company, a
Delaware corporation with offices at Lexington, Kentucky ("Buyer"), and
HYDROLECTRIC LIFT TRUCKS, INC., a subsidiary of The Ralph J. Stolle Co.
(formerly a division of Deerfield Manufacturing Company), an Ohio corporation
with principal offices in Wilmington, Ohio ("Seller"), and is a part of that
certain Agreement between Buyer and Seller effective as of January 1, 1988
covering the purchase and sale of products ("Agreement"), which Agreement is
hereby incorporated by reference as if set forth in full.
For and in consideration of the mutual promises hereinafter set forth,
the parties do hereby mutually agree as follows:
1. Section 1.1, line 1, add the word "pantographs," after the word
"uprights,".
2. The term (Section 3) of the Agreement shall be extended until and
including December 31, 1997, and will automatically be extended
for an additional three (3) year term through and including
December 31, 2000, unless either party elects to terminate the
Agreement at the end of the initial term by written notice to the
other party, which notice must be given on or before July 1, 1997.
3. Section 4.1 is rewritten as follows:
"The Unit Price for each Product, effective for all Products
shipped on or after January 1, 1992, will be the price stated
in Exhibit 1, attached hereto and made a part hereof."
4. The following new language is added to the beginning of Section
4.6:
"The Annual Price Adjustment to the Unit Price for each
Product will be determined by good faith negotiations and
agreement between the parties during the period of 1 September
and 31 October of each year during the term of this Agreement,
to become effective 1 January of the following year. If the
parties are unable to agree on the Annual Price Adjustment
during such period, the parties will continue to negotiate in
good faith to reach an agreement by 28 February of the
following year. Such agreed upon Annual Price Adjustment shall
be retroactive to 1 January.
<PAGE> 2
In the event the parties are unable to agree on the Annual
Price Adjustment to the Unit Price for each Product by 28
February, . . . (the)"
5. The following new language is added to the end of Section 5:
", notwithstanding any different or additional payment terms
contained in any other document or purchase order."
6. Section 7.3, line 2, the word "five" is changed to read "three and
one-half (3 1/2)". In line 3, the word "five" is changed to read
"three and one-half (3 1/2)". In line 4, the word "6th" is changed
to read "4th".
7. Section 7.5, line 1, the word "five" is changed to read "three and
one-half (3 1/2)."
8. Section 7.6, delete the last sentence on page 11, and replace it
with the following:
"Upon termination of this Agreement by the Buyer for reasons
other than the breach by Seller of its obligations hereunder
pursuant to Section 21.1, the Buyer shall be liable for
payment of Seller's undepreciated cost using the straight line
method over a life of nine and one-half (9 1/2) years of the
capital equipment purchased by Seller to the extent used by
Seller in the production of Products for Buyer (based upon the
ratio of the number of hours such capital equipment is used to
produce Products for Buyer versus the number of hours such
capital equipment is used to produce products for parties
other than Buyer), but in no event shall Buyer's liability
hereunder exceed $50.00 per unit of Product for any
undelivered remainder of the first 42,800 units of upright
with carriage product (less any such payments previously made
to Seller)."
9. The following new Section 7.7 is hereby added to the Agreement:
"While Buyer has no obligation to purchase a minimum number of
Products during the term of this Agreement or during any year
this Agreement is in effect, and Buyer will incur no liability
if it fails to purchase a minimum
-2-
<PAGE> 3
number of Products during the term of this Agreement or during
any year this Agreement is in effect, Buyer will make a good
faith effort to purchase 42,800 units of Products during the
term of this Agreement, with annual purchases consistent with
the purchase of 42,800 units of Products, subject to market
and financial conditions."
10. Section 11.1, line 2, add the following after the word "criteria":
"(SQA-01 dated 1-1-89, revised 2-22-91)".
11. Section 23.7, all Notices given to Buyer shall hereinafter be
given to the attention of the Director of Purchasing; all notices
given to Seller shall hereinafter be given to the attention of the
General Manager.
12. Section 23, add the following new subsection:
"23.8 Assignment. This Agreement shall be binding upon and
shall be deemed automatically assigned to any person, firm or
corporation which hereafter acquires substantially all of the
assets of Buyer or which hereafter succeeds to all or a
substantial part of the business of Buyer."
13. The following new Subsections to Section 14 are added to the
Agreement:
"14.4 Seller shall purchase and install, no later than 1 May
1992, at its sole expense, the following tooling and equipment
to support Buyer's pantograph and M1060 projects:
Pantograph Project Estimated Investment Cost
------------------ -------------------------
Horizontal Machine
Center $380,000
Welders 7,600
Gas Lines 4,000
Two (2) Overhead Cranes 25,000
Electric Equipment 3,000
Testing Equipment 3,000
Assembly Dollies 3,000
Enerpac 8,000
--------
Sub-Total: $433,600
(Cont.)
-3-
<PAGE> 4
M1060 Project Estimated Investment Cost
------------- -------------------------
Welders $ 7,600
Forklift 15,000
Enerpac 8,000
--------
Sub-Total: $ 30,600
Total Pantograph & M1060 Project: $464,200
Interest (Calculated at 8%): $175,905
--------
TOTAL: $640,105
Buyer's sole responsibility, liability and obligation in
connection with this investment by Seller is to increase the
number of units from which Buyer's liability for payment of
Seller's undepreciated cost of capital equipment will be
determined in the case of a termination of this Agreement by
Buyer for reasons other than the breach by Seller of its
obligation under the Agreement pursuant to Section 21.1.
Provided this new investment is completed and installed by
Seller, the number of units will be increased from 30,000 to
42,800. If for any reason this new investment is not
completed, the number of units will remain 30,000 and Section
7 of this Amendment Agreement shall be automatically modified
accordingly."
"14.5 Buyer shall have the option, with Seller's consent, to
purchase the tooling and equipment in connection with the
pantograph project, as described in Section 14.4 of this
Agreement, for a purchase price determined as follows:
$401,600 for the pantograph project equipment (does
not include cranes, gas lines and electric equipment)
less $62.75 for each pantograph product produced by
Seller using the pantograph project equipment
plus 8% per annum."
14. All references in the Agreement to Clark Material Systems
Technology Company are hereby changed to Clark Material Handling
Company.
-4-
<PAGE> 5
15. Unless defined in this Amendment Agreement, capitalized terms
shall have the same meaning afforded to them in the Agreement.
16. Except as herein specifically amended, the terms and conditions of
the Agreement shall remain unchanged and in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized representative to execute this Amendment Agreement as of the date
first set forth above.
BUYER: SELLER:
CLARK MATERIAL HANDLING COMPANY, HYDROLECTRIC LIFT TRUCKS, INC.
A Business Unit of
CLARK EQUIPMENT COMPANY
By: /s/ Gary D. Bello By: /s/ Robert A. Houston
------------------------ ------------------------------
Title: President Title: Vice President-General Manager
------------------------ ------------------------------
Acknowledged and Agreed:
THE RALPH J. STOLLE CO.
By: /s/ Ralph J. Stolle
-----------------------------
Title: President
-----------------------------
-5-
<PAGE> 1
EXHIBIT 10.23
SECOND AMENDMENT AGREEMENT
This SECOND AMENDMENT AGREEMENT is entered into as of the 30th day of September
1992, by and between CLARK MATERIAL HANDLING COMPANY, a Kentucky corporation
with offices at Lexington, Kentucky, formerly known as Clark Material Handling
Company, a business unit of Clark Equipment Company ("Buyer") and HYDROLECTRIC
LIFT TRUCKS, INC., a subsidiary of The Ralph J. Stolle Co., an Ohio corporation
with offices at Wilmington, Ohio ("Seller"), and is a part of that certain
Agreement between Buyer and Seller effective as of January 1, 1988 covering the
purchase and sale of products ("Agreement") and Amendment Agreement between
Buyer and Seller entered into the 2nd day of March, 1992 amending the Agreement
("Amendment Agreement"), which Agreement and Amendment Agreement are hereby
incorporated by reference as if set forth in full.
For and in consideration of the mutual promises hereinafter set forth, the
parties do hereby mutually agree as follows:
1. Paragraph 8 of the Amendment Agreement is amended by deleting "42,800
units" from the third to the last line of paragraph 8 and replacing it with
"59,400 units."
2. Paragraph 9 of the Amendment Agreement is amended by deleting "42,800
units" from the fourth and seventh lines at the top of page 3 and replacing
them with "59,400 units."
3. The following new Subsection to Section 14 is added to the Agreement:
"14.6 Seller shall purchase and install, no later than December 31, 1992,
at its sole expense, the following tooling to support Buyer's fork
bar project:
Horizontal Machine Center $830,000 Total
Investment Cost
Buyer's sole responsibility, liability and obligation in connection
with this investment by Seller is to increase the number of units
from which Buyer's liability for payment of Seller's undepreciated
cost of capital equipment will be determined in the case of a
termination of this Agreement by Buyer for reasons other than the
breach by Seller of its obligations under the Agreement pursuant to
Section 21.1. Provided this new investment is completed and installed
by Seller, the number of units will be increased from 42,800 to
59,400. If for any reason this new investment is not completed, the
number of units will remain 42,800 and Paragraph 8 of this Second
<PAGE> 2
Amendment Agreement shall be automatically modified accordingly."
4. All references in the Agreement and Amendment Agreement to Clark Material
Handling Company, a business unit of Clark Equipment Company, are hereby
changed to Clark Material Handling Company, a Kentucky corporation.
5. Unless defined in this Second Amendment Agreement, capitalized terms shall
have the same meaning afforded to them in the Amendment Agreement and
Agreement.
6. Except as herein specifically amended, the terms and conditions of the
Amendment Agreement and the Agreement shall remain unchanged and in full
force and effect.
IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
representative to execute this Second Amendment Agreement as of the date first
set forth above.
BUYER: SELLER:
CLARK MATERIAL HANDLING COMPANY HYDROLECTRIC LIFT TRUCKS, INC.
By: By:
------------------------ ------------------------------
Title: President Title: Vice President-General Manager
Acknowledged and Agreed to:
THE RALPH J. STOLLE CO.
By:
------------------------------
Title: Vice President
<PAGE> 3
[CLARK LOGO]
ADDENDUM
NAME CHANGE OF A PARTY TO THE AGREEMENT
The party to this Agreement identified as CLARK MATERIAL SYSTEMS
TECHNOLOGY COMPANY (CMST) is by change of name now known as CLARK MATERIAL
HANDLING COMPANY (CMH). All corresponding references in the Agreement are hereby
changed effective with the date of the Agreement.
<PAGE> 1
EXHIBIT 10.24
================================================================================
AGREEMENT BY AND BETWEEN CLARK EQUIPMENT COMPANY
AS BUYER
AND
MITSUBISHI CORPORATION, MITSUBISHI HEAVY INDUSTRIES, LTD.
AND MITSUBISHI MOTORS CORPORATION
AS SELLER
EFFECTIVE AS OF JUNE 1, 1983
================================================================================
<PAGE> 2
AGREEMENT
Contents
PURPOSE PAGE
- ------- ----
1. Definitions ......................................... 2
2. Sale and Purchase ................................... 3
3. Term ................................................ 3
4. Prices and Price Adjustments ........................ 3
5. Payment, Exchange Rates ............................. 8
6. Delivery ............................................ 11
7. Orders .............................................. 13
8. Supply Protection Reserve ........................... 16
9. Warranty ............................................ 17
10. Patents ............................................. 21
11. Quality Assurance, Design Changes ................... 21
12. Technical Documentation ............................. 22
13. Force Majeure ....................................... 23
14. Confidentiality ..................................... 23
15. Exchange of Market Information ...................... 25
16. Documentation for Duty Drawback Rights .............. 25
17. Antidumping and Countervailing Duties ............... 25
18. Law of Agreement .................................... 25
19. Arbitration ......................................... 25
20. Changed Conditions .................................. 26
21. Product Liability ................................... 26
22. General Provisions .................................. 27
Exhibit 1 (Specifications)
Exhibit 2 (Quality Guidelines)
Exhibit 3 (Warranty)
<PAGE> 3
THIS AGREEMENT, effective as of June 1, 1983, is entered into by and between
CLARK EQUIPMENT COMPANY, a Delaware corporation with principal offices at
Buchanan, Michigan, U.S.A., referred to in this Agreement as "Buyer", and
MITSUBISHI CORPORATION ("MC"), MITSUBISHI HEAVY INDUSTRIES, LTD. ("MHI") and
MITSUBISHI MOTORS CORPORATION ("MMC"), separate Japanese companies each with
offices in Tokyo, Japan, contracting jointly and severally as sellers and/or
manufacturers and referred to in this Agreement as "Seller".
PURPOSE
Buyer wishes to purchase certain Products and Parts manufactured or sold by
Seller for incorporation into certain of Buyer's Industrial Trucks manufactured
by Buyer in the United States for use in the United States and for export.
Buyer and Seller both wish to establish a stable working relationship. Both
Parties also recognize the necessity for flexibility in addressing changes in
the business factors which may affect this arrangement and, therefore, expect
that as changed conditions arise the Parties will be able and willing to discuss
appropriate modifications to this Agreement.
This Agreement will he considered the basic agreement relating to the sale of
Seller's Products and Parts for incorporation into Buyer's Industrial Trucks.
This Agreement may be extended to cover the sale of Seller's Products and Parts
for Buyer's Industrial Trucks manufactured by Buyer or Buyer's subsidiaries In
other countries; however, Buyer and Seller recognize that it may be appropriate
to modify certain provisions to conform to local laws and procedures.
The purpose of this Agreement is to establish a procedure for the sale and
purchase of the Products and Parts covered by this Agreement and to establish
the terms and conditions which will apply to sales of the Products and Parts
during the term of this Agreement.
1
<PAGE> 4
NOW, THEREFORE, in consideration of Buyer's selection of Seller as a principal
supplier, Buyer's initial purchase of Products and Parts, and the mutual
promises set forth in this Agreement, the Parties agree as follows:
1. DEFINITIONS
1.1. PRODUCTS - The term "Products" means the engines, transmissions, axles and
other components manufactured by the Parties contracting as Seller to their
specifications together with the alterations or modifications thereto made for
Buyer as described and specified in Exhibit 1, attached and incorporated as a
part of this Agreement, together with such modifications, replacements or
additions to such components as may be agreed upon by the Parties from time to
time during the term of this Agreement.
1.2. PARTS - The term "Parts" means service and replacement components, parts
and accessories for all Products purchased by Buyer pursuant to this Agreement.
1.3. INDUSTRIAL TRUCKS - The term "Industrial Truck" means the lift trucks and
other industrial trucks manufactured by Buyer or Buyer's subsidiaries into which
Seller's Products are incorporated. Initially this will be Buyer's "base truck"
series cushion and pneumatic lift trucks In the two (2) to three (3) metric ton
capacity range, as described In Exhibit 1.
1.4. UNIT PRICE - The term "Unit Price" means the price for a single unit of the
Products and Parts. The Unit Price may be adjusted in accordance with the
provisions of the Agreement.
1.5. BASE PRICE - The base price for Products is the initial Unit Price which is
set forth for each Product in Exhibit 1. The base price for Parts refers to the
price for each Party) set forth in the initial applicable MHI or MMC factory
suggested list price referred to in paragraph 4.2, below.
2
<PAGE> 5
2. SALE AND PURCHASE
During the term and subject to the terms and conditions of this
Agreement, Buyer will purchase and take from Seller and Seller will sell and
deliver to Buyer the Products and Parts ordered by Buyer in accordance with the
procedures set forth in this Agreement.
3. TERM
This Agreement will be for an initial five (5) year term effective from
the date first written above through and including May 31, 1988, and will be
automatically extended for an additional five (5) year term through and
including May 31' 1993, unless either Party elects to terminate the Agreement at
the end of the initial term by written notice to the other Party, which notice
must be given on or before January 1, 1988.
4. PRICES AND PRICE ADJUSTMENTS
4.1 The initial Unit Price for each Product will be the price stated in
Japanese yen set forth in Exhibit 1.
4.2 The Unit Prices for Parts supplied by MHI will be 43.75% of the
prices stated in US dollars set forth for each Part in MHI's suggested retail
price list. Unit Prices for Parts supplied by MMC will be 65% of the prices
stated in Japanese yen set forth for each Part in MMC's suggested dealer price
lists. Suggested price lists will generally be revised by MHI or MMC on an
annual basis. Revised suggested price lists will be effective for shipments made
after the effective date of the price list.
4.3 The Unit Price of any Product or Party) may be increased or
decreased at any time by mutual agreement ("Interim Price Adjustment"). Such
Interim Price Adjustments will be made for mutually agreed upon design changes.
3
<PAGE> 6
4.4 Subject to Interim Price Adjustments, the initial Unit Prices for
Products will be effective, without increase, for all Products shipped on or
before May 31, 1984. Thereafter, Seller may, after consultation with Buyer,
adjust the Unit Prices for Products effective June 1, 1984, and annually on June
1 of each successive year thereafter during the term of this Agreement ("Annual
Price Adjustment"). Unless otherwise agreed, Buyer and Seller will jointly
review Unit Prices of Products not later than April 30, 1984, and annually not
later than April 30 of each succeeding year thereafter during the term of this
Agreement.
4.5 Subject to Interim Price Adjustments, the Annual Price Adjustment
for Products effective on June 1 of each year, will be effective, without
increase, for all Products shipped on or after June 1, the effective date of the
price increase, and through and including May 31 of the following year.
4.6 The Annual Price Adjustment to the Unit Price for each Product will
be determined by multiplying the Unit Price for each Product which is effective
on May 31 by the applicable price adjustment formula set forth below. In each
formula each abbreviation has the following meaning:
Pm = Unit Price after the annual adjustment
PC = Unit Price effective on May 31
A1 = annual price index of "Aluminum casting for
machinery" in the "Nonferrous metal castings"
commodity class of the "Nonferrous Metal
Castings and Diecastings" subgroup from January
1st through December 31st as indicated in the
"Price Indexes Annual" in the April issue for
the calendar year in which the price adjustment
will be effective.
Ao = annual price index of "Aluminum casting for
machinery' in the "Nonferrous metal castings"
commodity class of the "Nonferrous Metal
Castings and Diecastings" subgroup from January
1st through December 31st as indicated in the
"Price Indexes Annual" in the April issue for
the previous calendar year
4
<PAGE> 7
C1 = annual price index of "Iron casting" in the
"Cast iron products" commodity class of the
"Miscellaneous Iron and Steel Products" subgroup
from January 1st through December 31st indicated
in the "Price Indexes Annual" in the April issue
for the year in which the price adjustment is to
be effective
Co = annual price index of "Iron castings" in the
"Cast iron products" commodity class of the
"Miscellaneous Iron and Steel Products" subgroup
from January 1st through December 31st indicated
in the "Price Indexes Annual" in the April issue
of the previous calendar year
E1 = annual price index of "Other electrical
machinery" in the "Other Electrical Machinery"
subgroup from January 1st through December 31st
indicated in the "Price Indexes Annual" in the
April issue of the year in which the price
increase is to be effective
Eo = annual price index of "Other electrical
machinery" in the "Other Electrical Machinery"
subgroup from January 1st through December 31st
indicated in the "Price Indexes Annual" in the
April issue of the previous calendar year
F1 = annual price index of "Closed and open die
forgings" in the "Miscellaneous Iron and Steel
Products" subgroup from January 1st through
December 31st indicated in the "Price Indexes
Annual" in the April issue of the year in which
the price adjustment is to be effective
Fo = annual price index of "Closed and open die
forgings" in the "Miscellaneous Iron and Steel
Products" subgroup from January 1st through
December 31st indicated in the "Price Indexes
Annual" in the April issue of the previous
calendar year
5
<PAGE> 8
L1 = annual price index of "Cash Earning Indexes of
Regular Workers, Transportation and
Communication - nominal from January 1st through
December 31st indicated in the "Economic
Statistic Annual" issued by the Research and
Statistics Department of the Bank of Japan (the
"Economic Statistic Annual") in the March issue
of the calendar year in which the price
adjustment is to be effective
Lo = annual price index of "Cash Earning Indexes of
Regular Workers, Transportation and
Communication - nominal" from January 1st
through December 31st indicated in the "Economic
Statistic Annual" issued by the Research and
Statistics Department of the Bank of Japan (the
"Economic Statistic Annual") in the March issue
of the previous calendar year
M1 = annual price index of "Manufacturing Industry
Products" in the "Indexes for Industries"
subgroup from January 1st through December 31st
indicated in the "Price Indexes Annual" in the
April issue of the calendar year in which the
price adjustment is to be effective
Mo = annual price index of "Manufacturing Industry
Products" in the "Indexes for Industries"
subgroup from January 1st through December 31st
indicated in the "Price Indexes Annual" in the
April issue of the previous calendar year
S1 = annual price index of "Ordinary Steel Products"
from January 1st through December 31st indicated
in the "Price Indexes Annual" in the April issue
of the calendar year in which the price
adjustment is to be effective
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<PAGE> 9
So = annual price index of "Ordinary Steel Products"
from January 1st through December 31st indicated
in the "Price Indexes Annual" in the April issue
of the previous calendar year
Sections of the Price Indexes Annual referred to in the preceding
definitions may be found in the Price Indexes Annual, Wholesale
Price Indexes, Export and Import Price Indexes, Input-Output Price
Indexes of Manufacturing Industry by Sector, published by the
Research and Statistics Department of the Bank of Japan.
A. The Annual Price Adjustment to the Unit Price for Products identified
in Exhibit 1 as subject to price adjustment formula A will be calculated
by the following formula:
S1 C1 A1
Pm = Pc{1 + .55 [(.10) -- + (.14) -- + (.03) -- +
S0 C0 A0
F1 E1 L1
(.12) -- + (.05) -- + (.56) -- - 1]}
F0 E0 L0
B. The Annual Price Adjustment to the Unit Price for Products identified
in Exhibit 1 as subject to price adjustment formula B will be calculated
by the following formula;
S1 C1
Pm = Pc{1 + .55 [(.07) -- + (.17) -- +
S0 C0
F1 L1
(.18) -- + (.02) -- + (.56) -- -1]}
M0 F0 L0
C. The Annual Price Adjustment to the Unit Price for Products identified in
Exhibit 1 as subject to price adjustment formula C will be calculated pursuant
to the following formula:
S1 C1
Pm = Pc{1 + .55 [(.18) -- + (.16) -- +
S0 C0
A1 L1
(.10) -- + (.56) -- - 1]}
A0 L0
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<PAGE> 10
4.7 If any of the referenced indexes are discontinued or if the Bank of
Japan alters its method of calculating an index (including a change in the base
period), the Parties will mutually agree upon a substitute index.
4.8 If the Unit Price is not calculated by the data for the Annual
Price Adjustment, Products will be shipped at the Unit Price in effect on May
31, subject to adjustment in the price when the Unit Price is calculated. The
Unit Price will be calculated as soon as possible thereafter, or the parties
will mutually agree upon the Annual Price Adjustment. The prices for Products
delivered after June 1, but prior to calculation of the Unit Price or agreement
upon the Annual Price Adjustment, will be retroactively adjusted and payment of
any differential in prices will be due and payable in accordance with the
payment terms of this Agreement thirty (30) days after receipt by Buyer of an
appropriate invoice from Seller.
4.9 Prices for Products and Parts stated in Exhibit 1 are for Products
and Parts delivered F.O.B. from a suitable Japanese port. Delivery of Products
and Parts will be subject to and in accordance with the provisions set forth in
Section 6 below.
5. PAYMENT, EXCHANGE RATES
5.1 Payment for Products and Parts will be due and payable thirty (30)
days plus the average transport time after delivery at Chicago and receipt by
Buyer of Seller's invoice. The average transport time will be the number of days
mutually agreed upon by the Parties which are normally required by Buyer to
process the Products or Parts through U.S. Customs and to transport them to the
appropriate U.S.
manufacturing plant or parts warehouse.
5.2 The currency of payment for Parts supplied by MHI and MMC will be
US dollars. The MMC price stated in Japanese yen will be converted to a payment
amount stated in US dollars on each invoice at
8
<PAGE> 11
the rate of exchange established by this paragraph (the "MMC Exchange Rate").
The initial MMC Exchange Rate will be equal to the average at-sight buying rate
of the Mitsubishi Bank, Ltd., Tokyo, Japan (the "Bank") for buying US dollars
with Japanese yen for a period of two (2) months beginning three (3) months
prior to the first Shipment, the date of which will be mutually agreed upon.
when invoices for Parts are prepared (approximately one (1) week to ten (10)
days prior to shipment) the average at-sight buying rate of the Bank for US
dollars during the preceding seven (7) business days will be calculated and
compared with the MMC Exchange Rate. If the average rate varies from the MMC
Exchange Rate by more than five (5) Japanese yen, the MMC Exchange Rate will be
adjusted to equal the average rate and will apply to all subsequent shipments of
Parts until a further change is made in accordance with this paragraph. The
method used to calculate the exchange will be discussed at the request of either
Party after approximately one (1) year's experience with the method provided by
this paragraph.
5.3 The currency of payment for Products will be either Japanese yen or
U.S. dollars. The currency of payment for Products will be Japanese yen for
Products shipped in the period beginning on June 1, 1983 through and including
May 31, 1984. Thereafter, Buyer may select the currency of payment at Buyer's
option, twice each year by written notice to Seller on or before May 1, 1984,
and November 1, 1984, and on or before May 1 and November 1 of each successive
year thereafter during the term of this Agreement. The currency of payment
selected on May 1 will apply to payments for Products shipped on June 1 and
through and including November 30, and the currency selected on November 1 will
apply to payments for Products shipped on December 1 and through and including
May 31. If Buyer fails to notify Seller of its selection of the currency for
payment within 10 days after the applicable date for selection, the currency of
payment then in effect will continue until the next period for which Buyer has
the option to change the currency of payment.
5.4 Payments In Japanese yen will be mad. by check, bank draft, or
other suitable method in Tokyo, Japan at a bank designated by
9
<PAGE> 12
Seller. Payments in U.S. dollars will be made by check, bank draft, or other
suitable method in Chicago, Illinois, U.S.A., at a bank designated by Seller.
5.5 When the currency of payment selected by Buyer for a period is U.S.
dollars, the prices of Products which are stated In Japanese yen will be
converted to a U.S. dollar payment amount at the currency exchange rate
established for that period in the manner described below.
(a) An exchange rate will be calculated to correspond with the periods
during which Buyer may select the currency of payment regardless of the
currency selected. The first exchange rate will be calculated on April
27, 1983, for the period from June 1, 1983 through and including
November 30, 1983. The second exchange rate will be calculated on
October 26, 1983, for the period from December 1, 1983 through and
including May 31, 1984. Thereafter, the exchange rate will be
calculated on the fourth Wednesday in each April and October during the
term of this Agreement and the exchange rates calculated will be
applicable for the periods from June 1 through and including November
30 and from December 1 through and including May 31, respectively.
(b) The exchange rate will be determined on the basis of the average of
the forward exchange buying rates quoted by the Bank of Tokyo on the
calculation date for the first business day in each of the fourth
through and including the ninth months following the date the exchange
rate is calculated (including the month the rate is calculated as the
first month following such date). The applicable exchange rate for the
first period will be the average of such forward rates. Thereafter, the
applicable exchange rate will be determined as follows:
(i) if the average of the forward rates varies by not more
than 10% from the previous applicable exchange rate, the
exchange rate will be equal to the previous applicable
10
<PAGE> 13
exchange rate adjusted to reflect one-half of the amount
by which the average of the forward rates varies from the
previous applicable exchange rate.
(ii) If the average of the forward rates varies by more than
10% from the previous applicable exchange rate, the
Parties will negotiate in good faith and on or before
five days preceding the date on which Buyer must make its
currency selection will agree upon the applicable
exchange rate.
6. DELIVERY
6.1 Products and Parts will be delivered cost and freight (C&F), from
any suitable port in Japan to Chicago, Illinois, USA, in accordance with the
definition of the C&F delivery term set forth in the International Chamber of
Commerce publication entitled "INCOTERMS", 1980 edition, modified as follows:
a. Seller will contract and pay for the carriage of the Products and
Parts to Chicago, Illinois, USA, in U.S. dollars in accordance with the
INCOTERM C&F definition, paragraph A2, but Buyer will reimburse Seller
for such actual costs and expenses, including reasonable charges for
handling the transportation arrangements. Seller's invoices for such
charges will be in U.S. dollars, will separately identify such charges,
and will be due and payable by Buyer by check, bank draft, or other
suitable method in Chicago, Illinois, USA, at a bank designated by
Seller.
b. Seller will bear all risks of the Products and Parts until such time
as they have been delivered to Chicago, Illinois, USA, the carrier has
notified Buyer's customs agent of the arrival of the Products or Parts,
and Buyer has received all necessary
11
<PAGE> 14
documents from Seller required to clear customs and take possession of the
Products and Parts. Buyer shall bear all risks of the Products and Parts
thereafter. Title will pass with the risk of loss. This provision supersedes
paragraphs A5 and B3 of the INCOTERM C&F definition.
c. Buyer will maintain, at its cost and expense, a marine open cargo
insurance policy to cover each shipment subject to this Agreement at
110% of the invoice price of the Shipment for the protection of Buyer
and Seller as their interests may appear with the following policy
limits:
$3,500,000 per vessel under deck
$ 100,000 per aircraft
$1,000,000 per truck or rail car
$ 1,500 per package - mail or parcel post
Upon request Buyer will provide Seller a certificate of insurance from
Buyer's insurance carrier evidencing said coverage and providing for
the insurance carrier to give Seller with at least ten (10) days' prior
notice of termination or reduction in coverage.
6.2 Buyer may elect to expedite transportation and may select alternate
methods of transportation, including air transport when reasonably required.
Except as otherwise provided below, Buyer will reimburse Seller for any
additional costs or expenses incurred by Seller in connection with the expedited
transportation. If at any time delivery of Products or Parts is significantly
delayed due to any failure by Seller to perform its obligations under this
Agreement, Seller will pay, or reimburse Buyer, for any additional costs
resulting from such alternate methods of transportation. Seller shall not, in
any event, be responsible for any such additional costs which are due solely to
Buyer's failure and negligence with respect to any obligations relating to
Buyer's purchasing of such Products or Parts pursuant to this Agreement. If the
cause of the requirement for expedited transportation is not the responsibility
of either Party, the Parties will negotiate the allocation of such costs in good
faith.
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<PAGE> 15
6.3 All Products and Parts will be received subject to Buyer's
inspection and test. Buyer will inspect Products and Parts as soon as possible
by audit at Buyer's designated manufacturing plant or parts warehouse and in any
event within four weeks after their arrival. Unless notice of nonconformity or
shortage is provided within four weeks, the Products and Parts will be
considered accepted by Buyer. Nothing in this provision will modify or impair in
any way Buyer's rights under the warranty provisions of this Agreement. If
written notice is provided by Buyer within four (4) weeks after the arrival of
said Products or Parts at the manufacturing plant or parts warehouse, or within
three (3) months after delivery at Chicago in accordance with Section 6.1 above
whichever comes earlier, and if such nonconformity or shortage is attributable
to a failure by Seller to perform any of its contract obligations, Seller shall
either promptly remedy the nonconformity or shortage or Buyer may reject the
Products or Parts and return them to Seller at Seller's expense.
7. ORDERS
7.1 Buyer will order Products from Seller by means of one of the
following methods:
a. by issuing an annual blanket purchase order which will be
supplemented by Supplier Delivery Authorization and Planning Schedules
("Monthly Schedules") issued at least monthly, or
b. under special circumstances, by issuing a separate purchase order.
7.2 When the method identified in paragraph 7.1.a., above, is used, the
annual blanket purchase order will be used for the purpose of stating the
current Unit Prices for Products and the current mutually agreed upon
specifications, but it will not be an order for any quantity of Products. The
Monthly Schedule will be the document by which specific quantities of Products
are ordered. Each Monthly Schedule will contain the following information:
13
<PAGE> 16
a. The Products ordered by the Monthly Schedule and the delivery
schedule for those Products. In each Monthly Schedule the quantities of
Products identified as "Firm" for the first time in that Monthly
Schedule will be the Products ordered by that Monthly Schedule.
b. Reconfirmation of Products ordered and the delivery schedule for
Products which have been ordered on previous Monthly Schedules. Such
Products will be identified as "Firm" on each Monthly Schedule.
c. Buyer's estimate of the quantity of Products which will be ordered
in the following month, which quantity may be increased or decreased by
Buyer by up to 50% when the Products are ordered. Such quantities will
be identified as "Planning".
d. Buyer's estimate of the quantities of Products which may be ordered
for a period of six (6) months from the seventh month through the
twelfth month from the date of the Monthly Schedule (the month for
which the Monthly Schedule is issued will be counted as the first
month). Such quantities will also be identified as "Planning".
Buyer will issue the Monthly Schedules periodically as required, but
will at least issue a Monthly Schedule on or before January 5, 1984, and on or
before the fifth (5th) working day of each month thereafter during the term of
this Agreement. Monthly Schedules issued after the fifth (5th) working day of
each month through the last day of the month will be considered to be issued for
the next following month (the month in which production will be scheduled by
Seller). Seller will acknowledge the "Firm" order in Monthly Schedules by the
fifteenth (15th) working day of each month.
7.3 Products ordered on or before the fifth (5th) working day of each
month will be scheduled for delivery after the first (1st) day of the fifth
(5th) month after the month for which the Monthly Schedule is issued. (The month
for which the Monthly Schedule is issued will be counted as the first month of
the five (5) month period.) The quantity of Products identified as "Planning"
for delivery during the sixth (6th) month after the month for which Monthly
Schedule is issued (counting the month for which the Monthly Schedule is issued
as the first month of the six (6) month period) may be adjusted by only 50%,
increase or decrease,
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<PAGE> 17
in orders for the following month. If Buyer issues more than one Monthly
Schedule before the fifth (5th) working day of a month, the last Monthly
Schedule received by Seller by the fifth (5th) working day of a month will be
controlling.
7.4 Under special circumstances Buyer may order Products by individual
purchase orders separate and apart from the Monthly Schedule system described in
Section 7.1, 7.2 and 7.3 above. Special circumstances will include orders which
require special terms, special Product specifications, or other special
conditions. All such orders will be subject to acceptance by Seller.
7.5 The normal lead time for delivery of Parts will be approximately
three (3) months. Seller will, however, at no additional charge make every
reasonable effort to satisfy Buyer's reasonable requests for emergency delivery
of Parts in less than the normal lead time. This arrangement for emergency Parts
orders will be discussed at the request of either party after approximately one
(1) year's experience with Parts sales and purchases under this Agreement.
7.6 Buyer's liability, if any, upon cancellation of any order will be
limited to the actual costs incurred by Seller and properly attributable to the
cancelled portion of any orders, but not to exceed the aggregate Unit Price for
Products or Parts cancelled plus delivery charges incurred. Buyer will not be
liable for incidental, special or consequential damages.
7.7 All sales of Products and Parts ordered during the term of this
Agreement will be subject to the terms and conditions of this Agreement together
with any different or additional terms or conditions mutually agreed upon in
writing. Buyer and Seller may use their standard forms to order and to
acknowledge orders for Products and Parts; however, unless otherwise mutually
agreed in writing, no different or additional terms contained in any such form
will add to or modify in any way the terms and Conditions provided by this
Agreement.
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<PAGE> 18
7.8 Buyer estimates that the quantities of Industrial Trucks for which
Seller's Products will be purchased will be approximately as follows:
<TABLE>
<CAPTION>
CALENDAR YEAR WORLDWIDE QUANTITY OF "BASE TRUCK" SERIES INDUSTRIAL TRUCKS
------------- -----------------------------------------------------------
<S> <C>
1985 5,100
1986 6,300
1987 6,800
1988 5,700
1989 5,500
</TABLE>
8. SUPPLY PROTECTION RESERVE
8.1 Buyer may, by written notice given before delivery or after
delivery, but on or before the date payment would be due pursuant to Section 5,
"Payment, Exchange Rates", designate certain of the Products ordered to be part
of a supply protection reserve to be held and maintained by Buyer in good
condition at a suitable location to be provided by Buyer. Title will transfer
from Seller to Buyer in accordance with Section 6, "Delivery". The quantity of
Products placed in the supply protection reserve will be a reasonable quantity
determined by Buyer up to a quantity sufficient to supply Buyer's production for
approximately thirty (30) days. Units placed in the supply protection reserve
will be removed from the reserve and made available for use in production within
six (6) months after delivery and may be replaced, as required, with new units
to maintain the established quantity of the supply protection reserve. Buyer
will notify Seller promptly when units are removed from the supply protection
reserve, and Seller will invoice Buyer for Products which are removed from the
supply protection reserve. The Unit Price for such products will be due and
payable after removal from the supply protection reserve within thirty (30) days
after the date of Seller's invoice. Payment will be made in accordance with
Section 5, "Payment, Exchange Rates", in the currency of payment selected by
Buyer as of the Invoice date.
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<PAGE> 19
8.2 Buyer will pay Seller a carrying charge calculated on the Unit
Price of Products held in the supply protection reserve after the date payment
for such units would otherwise be due Pursuant to Section 5, "Payment, Exchange
Rates". The carrying charges will be a percentage of the Unit Price equal to
simple interest per annum at a rate equal to the prime rate of interest offered
by the Bank of Tokyo, Tokyo, Japan, to its largest Japanese business customers
in effect on the first day of each month. Seller will Invoice Buyer for the
carrying charge periodically, but not more frequently than quarterly, and the
carrying charge will be payable in Japanese yen thirty (30) days after the date
of Seller's invoice by check, bank draft, or other suitable method in Tokyo,
Japan, at a bank designated by Seller.
9. WARRANTY ON PRODUCTS AND PARTS
9.1 Seller warrants that the Products will conform to the
specifications identified in Exhibit 1 attached and incorporated by reference
herein, and will be merchantable and sufficient for the purpose intended, of
good material and workmanship, and free from defects. For purposes of this
Agreement any failure of a Product to be as warranted is referred to as a
"Defect". This warranty extends to the performance of the Products in Buyer's
Industrial Truck Division produCts into which the Products are incorporated as
follows:
a. If any Defect is discovered in a Product prior to shipment of an
Industrial Truck into which it has been Incorporated, Seller will pay or
reimburse Buyer for the parts and labor required to correct the Defect and any
damage to the Industrial Truck resulting from the Defect. For purposes of this
Section 9.1a and Sections 9.1b, 9.1d, and 9.1e below, the term labor costs to
correct a Defect shall include, without limiting the general meaning of the
term, reasonable charges to remove the Defective Product or Part from the
Industrial Truck and to replace a repaired or replacement Product or Part, and a
reasonable allocation of Buyer's overhead costs to Buyer's labor charges.
b. If any Defect is discovered in a Product within six (6) months after
the date of delivery to the first retail purchaser of an
17
<PAGE> 20
Industrial Truck into which it has been incorporated or during the first 1000
hours of use of the Industrial Truck, whichever occurs first, Seller will pay or
reimburse Buyer for the parts and labor (plus any reasonable travel costs)
required to correct the Defect and any damage to the Industrial Truck resulting
from the Defect.
c. If any Defect is discovered in a Product after the period stated in
Section 9.1b above, but within twelve months after delivery to the first retail
purchaser of the Industrial Truck into which it is incorporated or during the
first 2000 hours of use of the Industrial Truck, whichever occurs first, Seller
will either reimburse Buyer for a replacement part or, at Seller's option, for
the cost of repairing the Defective part and Seller will reimburse Buyer for the
cost of repairing any damage to the Industrial Truck caused by the Defect.
d. If any latent Defect is discovered in a Product In any of the parts,
components, or assemblies set forth in Exhibit 3, attached and incorporated as
part of this Agreement, which may materially affect performance of the
Industrial Truck into which it is incorporated, after the periods stated in
paragraph 9.1c above, but during the period indicated below, Seller and Buyer
will negotiate in good faith the method of correcting the Defect. Seller will
pay or reimburse Buyer for fifty percent (50%) of the reasonable costs incurred
by Buyer to correct the Defect and to repair any damage to the Industrial Truck
caused by the Defect. The period of warranty coverage for parts, components, or
assemblies identified in Exhibit 3 as "Category A" will be thirty two (32)
months after delivery to the first retail purchaser or 4,000 hours, whichever
occurs first. The period of warranty coverage for parts, components or
assemblies identified in Exhibit 3 as "Category B" will be twenty one (21)
months after delivery to the first retail purchaser or 3,000 hours, whichever
occurs first.
e. If a latent Defect discovered at any time poses a hazard which may
cause personal injury or property damage, notwithstanding any other warranty
provision or warranty limitation, Seller will repay
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or reimburse Buyer for the cost of parts and labor (plus reasonable travel
costs) to correct the Defect and any damage to the Industrial Truck caused by
the Defect, Buyer's reasonable labor and overhead expenses to locate and repair
any Industrial Truck into which the Defective Product has been incorporated, and
Buyer's costs to provide reasonable and proper notice and warnings to Buyer's
dealers and to owners and users of such Industrial Trucks. Seller and Buyer will
negotiate In good faith the method of correcting the Defect.
9.2 Replacement Parts provided by Seller for Products under the
warranty provisions of this Agreement are covered by the Product warranty
provisions for the remainder of any applicable warranty period and, thereafter,
are covered by the Parts warranty to the extent that the Parts warranty period
exceeds the Product warranty period.
9.3 Seller warrants that the Parts will conform to Seller's
specifications and descriptions together with any mutually agreed upon
modification and will be merchantable, satisfactory and sufficient for the
purpose intended, of good quality and workmanship, and free from defects for a
period of six (6) months from the date of sale to the first retail purchaser or
the date the Part is installed in a customer's Industrial Truck as a service or
replacement Part, whichever occurs first. For purposes of this Agreement any
failure of a Part to be as warranted is referred to as a "Defect". This warranty
extends to the performance of the Parts during the warranty period. If any
Defect is discovered within the warranty period Seller will reimburse Buyer for
the cost of the Defective Part, for the labor of Buyer's authorized service
personnel at an hourly rate equal to Buyer's national average cost, and for the
cost of repairing any damage to the Industrial Truck caused by the Defect, plus
a charge of twenty-five (25%) percent of the current price of the Defective
Parts to cover restocking and handling fee. The amount of warranty reimbursement
will be discussed upon request of either Party after approximately one (1)
year's experience with warranty claims.
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9.4 When a written claim for warranty reimbursement is made Seller may
take the following actions:
a. Seller may require Buyer to return the Defective Products (or the
Defective Parts thereof) and Parts at Seller's expense to Buyer's designated
administration facility ("Warranty Facility").
b. Seller may inspect any such allegedly Defective Products and Parts
at Buyer's Warranty Facility and may further, upon prompt written notice require
Buyer to return all or any of such Products and Parts at Seller's expense. Buyer
will notify Seller when such Defective Products and Parts are available for
inspection. The notice will include a list of the Defective Products and Parts
and a brief description of the warranty claims.
c. If Seller determines any such Products or Parts are not Defective,
Seller will provide Buyer with the data and analysis upon which Seller's
determination is based. Otherwise, Seller will promptly pay or reimburse Buyer
in accordance with the applicable warranty provision.
Any warranty claim made by Buyer will be considered accepted, unless within
thirty (30) days after Seller's receipt of Buyer's claim Seller either notifies
Buyer in writing (i) that the claim is denied or (ii) that Seller requests
additional time to review the claim. Every such notice will include a statement
of the reasons for the denial or the request for additional time.
9.5 The warranties provided by this Section 9, "Warranties", will not
apply to Products which are incorporated into Industrial Trucks which have not
been approved by Seller for use with that Product.
9.6 The warranties provided by this Agreement do not apply to Defects
in Products or Parts caused after delivery to Buyer by parties other than Seller
or Seller's representatives by accident, misuse, or neglect or arising from
alterations not authorized by Seller. These warranties do not cover normal
service replacement of normal service items such as tune-up parts, filters and
fan belts.
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9.7 The warranties provided in this Agreement are in lieu of all other
warranties of quality, express or implied, and state Seller's entire obligation
with respect to Defects in Products or Parts. THERE ARE NO IMPLIED WARRANTIES OF
MERCHANTABILITY OR OF FITNESS FOR A PARTICULAR PURPOSE. Except as stated in this
Agreement, Seller will not be liable for incidental or consequential commercial
damages for breach of this warranty.
10. PATENTS
10.1 Seller represents and warrants that the Products and Parts ordered
under this Agreement and their sale or use, alone or in a combination specified
by Seller, according to Seller's specifications or recommendations, if any, will
not infringe any U.S. or foreign patents and Seller agrees to defend, protect
and save harmless Buyer, its successors, assigns, customers and users of its
products, against all suits and from all damages, claims and demands resulting
from such alleged infringements, and agrees that Seller will, upon request,
defend or assist in the defense at Seller's expense of any such suit.
10.2 Buyer and Seller agree that neither will directly or indirectly
obtain or attempt to obtain in any country or territory whatsoever, any rights,
title or interest, by registration, patent, copyright or otherwise, in or to any
designs, improvements or inventions whatsoever of the other Party.
11. QUALITY ASSURANCE, DESIGN CHANGES
11.1 Seller represents and warrants that it has and will maintain
during the term of this Agreement a quality assurance program using as a
guideline the quality assurance program set forth in Exhibit 2 attached and
incorporated as part of this Agreement, and that each Product and Part delivered
pursuant to this Agreement will have been manufactured subject to Seller's
quality assurance program. Seller further warrants that it will provide Buyer
with prompt notice of any Defect in Products or Parts discovered by Seller after
delivery to Buyer.
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11.2 Subject to Seller's approval, Buyer, for reasonable purposes, may
have access to materials, work-in-process, and finished Products and Parts at
any facilities at which such Products and Parts are manufactured under this
Agreement. Without additional charge, Seller will provide Buyer's
representatives with reasonable assistance, including testing and inspection
devices and equipment, which may be requested to allow Buyer's representatives
to safely and effectively perform their duties while at Seller's manufacturing
locations. Buyer's review or evaluation of Seller's quality assurance program or
of the quality of Products or Parts will not constitute acceptance of any
Products and will not alter in any way Seller's warranties of the quality of
Products and Parts.
11.3 Design changes to Products which may affect mountability,
performance or serviceability of a Product will be made only upon mutual
agreement of the Parties (including any price adjustments) the effective date of
the engineering change, any drawings, documents or samples to be provided, and
any other matters relating to effecting the engineering change) and after proper
engineering documentation has been provided to Buyer. Seller will hold Buyer
harmless of and from any liability, damages, costs or expenses incurred by Buyer
as a result of any substantial changes implemented by Seller without prior
agreement. Seller will promptly notify Buyer of any other design changes made to
Products and will provide appropriate engineering documentation.
12. TECHNICAL DOCUMENTATION
Seller will provide Buyer with layouts and drawings on either 35mm
microfilm cards or legible white prints and parts lists for all Products and all
components or assemblies for Products with appropriate descriptions and
illustrations; reasonably required for Buyer to service or provide service
information on all Products covered by this Agreement. The technical
documentation will be provided in English. Buyer may reprint or copy any
information provided for this purpose.
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13. FORCE MAJEURE
13.1 Except as otherwise provided, if either Party is temporarily
unable to perform its obligations under this Agreement because of events beyond
its control, including, but not limited to, acts of God, strikes, lockouts, or
other labor disputes, war, riot, embargo and acts of government, no liability
shall exist for failure of performance during this period of inability, nor
shall temporary inability to perform obligations be cause for termination of
this Agreement by either Party; provided the Party which is temporarily unable
to perform provides prompt notice of the commencement and the termination of the
event which temporarily causes the inability to perform. however, any such cause
for temporary inability to perform the obligations hereunder shall be remedied
with all reasonable promptness by the Party prevented from performing, to the
extent such Party can take remedial action, and the Parties will promptly and
amicably discuss actions which may be taken to minimize any loss or damage which
may occur to any Party.
13.2 Notwithstanding Seller's right to invoke force majeure Buyer shall
have the right to make other reasonably necessary arrangements to buy components
to maintain Buyer's production and to complete any such arrangements after the
cause for Seller's temporary inability to perform has been eliminated. Both
Parties will use all reasonable efforts to resume normal operations under this
Agreement as soon as possible after removal of any cause for a temporary
inability to perform.
14. CONFIDENTIAL INFORMATION
14.1 During the term of this Agreement and for a period of two (2)
years thereafter, each Party will hold in confidence any confidential
information received from another Party in connection with this Agreement and
(except for mandatory disclosures to governments or to such third parties as
insurers, shippers and financial institutions whose knowledge
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or participation may be essential to completion of supply arrangements) will not
disclose the confidential information to any third party without the written
consent of the Party which provided the information. A Party receiving
confidential information will protect it from disclosure by handling it with the
same care that the Party normally exercises in respect of its own confidential
information of similar importance.
14.2 As used in this Agreement, confidential information means any
information held in confidence by a Party and disclosed by that Party to another
Party in connection with this Agreement; provided the information is:
(a) a type of information classified as confidential by other
provisions of this Agreement;
(b) information provided in a written form and clearly
identified as confidential; or
(c) information provided verbally, and identified as
confidential when disclosed, if the disclosing Party promptly
thereafter provides the Party to which it is disclosed a
written disclosure identified as confidential.
14.3 Information will not be considered confidential and the
obligations of this Section 14 "Confidential Information" will not apply under
the following circumstances:
(a) the information is In the public domain at the time of
disclosure or becomes part of the public domain thereafter
without the fault of the receiving Party;
(b) the information is known to the receiving Party at the
time of the disclosure; or
(c) the information is rightfully acquired by the receiving
Party from a third person which is not a party to this
Agreement, or is independently developed by the receiving
Party.
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15. EXCHANGE OF MARKET INFORMATION
Upon Seller's request Buyer will provide market information which Buyer
has available on Products, unless in Buyer's opinion such information prejudices
Buyer's interests. To the extent such information includes market information
about Buyer's lift truck markets or customers the information will be considered
confidential information.
16. DOCUMENTATION FOR DUTY DRAWBACK RIGHTS
Seller agrees to provide Buyer with a certificate of delivery,
U.S. Customs Form No. 7543, for any Products or Parts which have been
imported for resale for export, either as a service or replacement
part or incorporated in an Industrial Truck Division product, and with
any other reasonable documentation in addition to or which may replace
U.S. Customs Form No. 7343 to enable Buyer to obtain appropriate duty
drawback rights.
17. ANTIDUMPING AND COUNTERVAILING DUTIES
Seller represents and warrants that the importation by Buyer into the
United States of America of Products arid Parts pursuant to this Agreement will
not cause Buyer to incur antidumping or countervailing duties under the laws of
the United States of America. The Parties will share equally any antidumping
duties assessed against Buyer.
18. LAW OF AGREEMENT
The rights and duties of the Parties to this Agreement will be
construed and enforced under the laws of the State of Illinois, U.S.A.
19. ARBITRATION
Any dispute, controversy or claim arising out of or relating to
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this Agreement, or the breach, termination, or invalidity thereof, will be
settled by arbitration in accordance with the UNCITRAL Arbitration Rules in
effect on the date of this Agreement. The appointing authority will be the
American Arbitration Association. The case will be administered by the American
Arbitration Association in accordance with its procedures for cases under the
UNCITRAL Arbitration Rules. The number of arbitrators for each case will be
three. Unless otherwise agreed by the Parties upon submission of a claim, the
arbitration will be held in Chicago, Illinois, U.S.A. Arbitration proceedings
will be in English and Japanese by means of simultaneous translation. The
Parties will share equally the cost of any translations reasonably requested by
either Party or the arbitrators in connection with any proceeding. The award of
arbitration will be binding and final and a judgment upon that award may be
entered in any court having jurisdiction.
20. CHANGED CONDITIONS
Either Party may by written request reopen discussion on the terms of
this Agreement any time business conditions change, and the Parties will attempt
in good faith to address the changed conditions. If the issues raised cannot be
resolved within 60 days after the written request to reopen discussions, either
Party may terminate the Agreement upon 120 days prior written notice. Orders
placed prior to the termination of the Agreement will be completed in accordance
with its terms.
21. PRODUCT LIABILITY INSURANCE
All of the Parties hereto will carry product liability insurance or
otherwise provide for similar protection at their own cost and expense
respectively. No Party will be responsible for insuring any other Party.
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22. GENERAL PROVISIONS
22.1 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the Parties with respect to the purchase and sale of Products and Parts
and supersedes any and all previous agreements, memoranda, negotiations or other
understandings of the Parties with respect thereto.
22.2 This Agreement may be amended only by a writing signed by both
Parties by the representatives identified in writing by each Party from time to
time as authorized to sign such an amendment.
a. Until further notice the only representatives authorized to sign for
Buyer are its President, any Vice President of Clark Equipment Company,
or the Industrial Truck Division Manager of Purchasing.
b. Until further notice the only representatives authorized to sign for
MC, NHI, and MMC, respectively are the representatives which sign this
Agreement.
22.3 SEPARABILITY OF PROVISIONS. If for any reason any provision of
this Agreement is invalid, illegal or unenforceable, then such provision will be
deemed severable from the other provisions of this Agreement, all of which will
remain in full force and effect and binding on the Parties hereto.
22.4 WAIVER. Any failure by either Party hereto to enforce, at any
time, any term or condition of this Agreement will not constitute, nor be
construed as, a waiver of that Party's right thereafter to enforce each and
every term and condition of this Agreement.
22.5 NOTICES. Notices to be given by either Party will be in writing
and may be delivered by telegram or by prepaid certified mail to the other Party
at the following addresses:
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Seller: Mitsubishi Corporation
Mitsubishi Heavy Industries, Ltd.
Mitsubishi Motors Corporation
c/o Mitsubishi International Corporation
Chicago, Illinois USA
Attention: Manager, Machinery Division
Buyer: Clark Equipment Company
Industrial Truck Division
525 N. 24th Street
Battle Creek, Michigan 49016 USA
Attention: Manager, Purchasing Department
Either Party may change its address by written notice to the other
Party.
22.6 The provisions of Sections 10, "Patents": 14, "Confidential
Information"; and 19, "Arbitration", create continuing obligations which
will survive termination of this Agreement for any cause.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
written above.
SELLER: BUYER:
MITSUBISHI CORPORATION (MC) CLARK EQUIPMENT COMPANY
/s/ Y. Morita /s/ G. Krause
- --------------------------------------- ---------------------------------
Y. Morita G. Krause
Managing Director Group Vice President
MITSUBISHI HEAVY INDUSTRIES, LTD. (MHI) /s/ E. Schott
---------------------------------
/s/ N. Kunimura E. Schott
- --------------------------------------- Vice President
N. Kunimura
Managing Director
MITSUBISHI MOTORS CORPORATION (MMC)
/s/ T. Tate WITNESSED BY:
- --------------------------------------- MITSUBISHI INTERNATIONAL
T. Tate CORPORATION (MIC)
Managing Director
/s/ H. Okada
----------------------------------
for T. Kagawa
Sr. Vice President and General
Manager, Chicago Branch
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<PAGE> 1
EXHIBIT 10.25
MASTER CONTRACT FOR PURCHASE AND SALE
This Master Contract, dated as of the 17 day of July, 1995, constitutes
an agreement by and between the parties, CLARK MATERIAL HANDLING COMPANY, a
Kentucky corporation with offices at 333 West Vine Street, Lexington, Kentucky
40507 ("Clark") and CUSTOM TOOL AND MANUFACTURING COMPANY, a Kentucky
corporation, with offices at 1052 Whipple Court, Lexington, Kentucky 40511, and
production facilities at 200 Lenwell Drive, Lawrenceburg, Kentucky 40342 and
1031 Industry Road, Lawrenceburg, Kentucky 40342 ("Custom") for purchase by
Clark and sale by Custom of all products identified in the Appendix(es) hereto,
pursuant to the terms of this Master Contract and all Appendix(es) and Exhibits
("Master Contract").
NOW, THEREFORE, for and in consideration of the mutual covenants set
forth herein and in any and all Appendix(es) hereto, the parties hereto agree as
follows:
1. PURPOSE
1.1 To cause Clark to contract for the manufacturing expertise and
production capabilities of Custom such that subject to the terms
of this Master Contract Custom shall be the preferred manufacturer
for Clark of
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products (and/or their replacements, modifications and additions
as may be agreed by the parties from time-to-time) identified in
the Appendix(es) hereto (hereinafter referred to as "product" or
"products"). As used herein, the term "parts" means service and
replacement components, parts and accessories for all products
purchased by Clark pursuant to this Master Contract.
1.2 Custom agrees to sell to Clark products ordered by Clark pursuant
to the terms of this Master Contract.
1.3 Clark has selected Custom, because of its historical record of
producing and delivering quality products on a timely basis,
responding to volume adjustments and responsiveness to Clark's
requests and provided Custom continues to provide quality products
on a timely basis, respond to volume adjustments and respond to
Clark's reasonable requests as contemplated by the terms of this
Master Contract as its preferred producer of products. Custom
understands that Clark intends to utilize products in its
production of lift trucks for sale in the United States and
elsewhere in the world.
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1.4 The purpose of this Master Contract is to set forth the terms and
conditions applicable to the sale by Custom to Clark and the
purchase from Custom of products for use in Clark's lift truck.
1.5 This Master Contract replaces and supercedes the Master Contract
For Purchase And Sale between the parties dated August 31, 1992
and applies to all transactions contemplated by this Master
Contract on and after its execution date, and Clark's July 11,
1995 production schedule which have not been completed before the
execution date of the Master Contract.
2. TERM
2.1 The term of this Master Contract shall begin on the date first set
forth hereinabove for an initial period of five (5) years, and
will automatically be extended for an additional three (3) year
period thereafter unless terminated by either party upon 360 days'
prior written notice prior to expiration of the initial term.
3. SALE AND PURCHASE
3.1 During the Term of this Master Contract, and any extensions
thereto, Custom shall sell and deliver to Clark, those products,
accessories
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and parts to which this Master Contract applies, which are ordered
by Clark during the term of this Master Contract, subject to the
terms and conditions of this Master Contract and in the quantities
as ordered by Clark.
4. WARRANTY PROVISIONS
4.1 Custom expressly warrants that the products sold pursuant to this
Master Contract will conform to Clark's engineering
specifications, drawings, samples and other descriptions furnished
or specified by Clark, except as provided in Section 6.4. Custom
also expressly warrants the design of all tooling, fixtures, dies
and patterns used by Custom to produce products for Clark under
this Master Contract. Custom assumes all responsibility and
warrants the products for component specifications, workmanship,
materials and construction as set forth hereinbelow from the date
of initial purchase of the lift truck for a period of three (3)
years or 4,000 hours. This warranty period shall commence upon
delivery of the lift truck to its purchaser as defined in Clark's
Warranty information forms for the specific lift truck itself. In
the case of a leased lift truck, the warranty period shall
commence upon delivery to
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the lessor/owner of the lift truck.
4.2 Custom assumes no responsibility for defects in product design or
engineering to the extent such product design or engineering is
provided by Clark. In the event any product design or engineering
is provided by Custom, the warranty provisions of this Section 4
shall apply in full. Custom assumes responsibility for the design
of all tooling, fixtures, dies and patterns used by Custom to
produce products for Clark under this Master Contract, and the
warranty provisions of this Section shall apply in full thereto.
4.3 Custom warrants, pursuant to the warranty parameters set forth
herein, that products sold hereunder will be merchantable and
sufficient for the purpose intended, of good material and
workmanship and free from defects.
4.4 Replacement parts provided by Custom for products under the
warranty provisions of this Master Contract are covered by the
warranty provisions herein for the remainder of any applicable
warranty period and, thereafter, are covered by the parts warranty
to the extent that the parts warranty exceeds the initial product
warranty period.
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4.5 The warranty set forth in this Section 4 extends to the
performance of the products as follows:
(a) If any defect in material or workmanship or nonconformity with
Clark's specifications, drawings, samples or other
descriptions is discovered in a product prior to shipment from
Clark's location to a dealer or customer, Custom will pay or
reimburse Clark for the parts and labor required to correct
the defect and any damage to the forklift truck resulting from
the defect. This warranty shall apply to design to the extent
product design or engineering is provided by Custom.
(b) If any defect in material or workmanship or nonconformity with
Clark's specifications, drawings, samples or other
descriptions is discovered in a product within twelve (12)
months after the date of delivery of the forklift truck
incorporating the product to the first ultimate user of the
industrial truck (provided the lift truck has not exceeded
4,000 hours of use), Custom will pay or
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reimburse Clark for the part and labor (plus any reasonable
travel costs) required to correct the defect or any damage to
the forklift truck resulting from the defect. This warranty
shall apply to design to the extent product design or
engineering is provided by Custom.
(c) If any defect in material or workmanship or nonconformity with
Clark's specifications, drawings, samples or other
descriptions is discovered in a product after the period
stated in b. above but within thirty-six (36) months after the
date of delivery of the forklift truck incorporating product
to the first ultimate user of the industrial truck (provided
the lift truck has not exceeded 4,000 hours of use), Custom
will pay or reimburse Clark for the parts required to correct
the defect and any damage to the forklift truck resulting from
the defect. This warranty shall apply to design to the extent
product design or engineering is provided by Custom.
4.6 For purposes of this Master Contract, the term
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labor costs to correct a defect shall include, without limiting
the general meaning of the term, reasonable charges to remove the
defective product or part thereof from the forklift truck and to
replace a repaired or replacement product or part thereof.
4.7 For purposes of this Master Contract, any failure of a product or
part to be as warranted is referred to as a "defect." This
warranty extends to the performance of the parts during the
warranty period.
4.8 Upon mutual written agreement of the parties, the amount of
warranty reimbursement may be changed after one (1) year of
experience with warranty claims.
4.9 If a defect in material or workmanship or non-conformity with
Clark's specifications, drawings, samples or other descriptions is
discovered at any time which poses a hazard which may cause
personal injury or property damage, the parties shall meet as soon
as possible to discuss such matter. Clark will use good faith
efforts to estimate the total cost of the parts and labor (plus
reasonable travel costs) to correct the defect and any damage to
the forklift truck caused by the
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defect, the reasonable labor and directly related overhead
expenses to locate and repair any forklift trucks into which the
defective product has been incorporated, and costs to provide
reasonable and proper notice and warnings to customers, owners and
users of such forklift trucks, and allocate responsibility for all
such costs and expenses. Custom shall pay its allocated share of
such costs and expenses to Clark on a monthly basis based upon
completed Application for Adjustments ("AFAs") and Clark's
documented costs and expenses. This Section 4.9 shall apply to
product design defects only to the extent product design or
engineering is provided by Custom.
4.10 If a defect in material or workmanship or non-conformity with
Clark's specifications,drawings, samples or other descriptions is
discovered at any time which affects products in a significant
number of forklift trucks, notwithstanding any other warranty
provision or warranty limitation, the parties shall undertake
their best efforts to agree to a reasonable allocation of costs to
remedy such defect. The costs of remedying the defect or
non-conformity set forth in this Section 4.10 shall
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<PAGE> 10
not be included in any calculations associated with base price
reductions set forth in Section 7. In the absence of such
agreement, the parties agree to share all such costs equally. This
Section 4.10 shall apply to design defects to the extent product
design or engineering is provided by Custom.
4.11 Custom warrants that parts will conform to the specifications and
descriptions and will be merchantable, satisfactory and sufficient
for the purposes intended, of good quality and workmanship, and
free from defects for a period of twelve (12) months from the date
of sale to the first retail purchaser or the date the part is
installed in customer's equipment as a service or replacement
part, whichever occurs first. If any defect is discovered within
the warranty period, Custom will reimburse Clark for the cost of
the defective part, for the labor of Clark's authorized dealer
personnel at an hourly rate equal to the dealer national average,
and for the cost of repairing any damage to the product into which
the part has been incorporated caused by the defect.
4.12 When a written claim for warranty reimbursement is made by Clark
to Custom, subject to Section
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4.13 below, Custom may, within thirty (30) days of receipt of such
written claim, require Clark to return the defective product or
parts thereof and/or the defective replacement products or parts
thereof at Custom's expense to Clark's designated warranty claims
facility. Custom may inspect any and all allegedly defective
products and/or parts at the warranty facility and may further,
within thirty (30) days of receipt of written claim from Clark,
requires Clark to return all or any of such products and/or parts
at Custom's expense. Clark will notify Custom when such defective
products and/or parts are available for inspection and provide a
brief description of the warranty claims. Should Custom determine,
in the exercise of its best business judgement, after inspection
as provided herein that any such products or parts are in fact not
defective, Custom will provide Clark with the data and analysis
upon which its determination is based. Otherwise, Custom will
promptly pay or reimburse Clark in accordance with the applicable
warranty provision.
4.13 Notwithstanding Section . 4.12 above, all warranty claims made by Clark
shall be
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considered accepted unless within thirty (30) days after Custom's
receipt of Clark's claim, Custom either notifies Clark in writing: (a)
that the claim is denied, or (b) that Custom requests additional time
to review the claim. Each such notice by Custom shall include a
statement of the reasons for the denial or the requests for additional
time.
4.14 The warranties provided by this Master Contract do not apply to defects
in product or parts caused after delivery to Clark by parties other
than Custom or Custom's representatives, by accident, misuse, or
neglect arising from alterations not authorized by Custom.
4.15 The warranties provided in this Master Contract are in lieu of all
other warranties of quality, expressed or implied, and state Custom's
entire obligations with respect to product defects or replacement
parts. THIS MASTER CONTRACT CONTAINS NO IMPLIED WARRANTIES OF
MERCHANTABILITY OR OF FITNESS FOR A PARTICULAR PURPOSE. EXCEPT AS
OTHERWISE STATED PURSUANT TO THIS CONTRACT, CUSTOM WILL NOT BE LIABLE
FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY TYPE FOR BREACH OF THIS
WARRANTY.
5. INDEMNITY
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5.1 Custom will defend, indemnify and hold Clark harmless from and against
any and all claims for injury or death of persons or damage to property
(including costs of litigation and attorneys' fees) in any manner
caused by, arising from, incident to, connected with, or growing out of
the manufacture of products and parts by Custom, sale of products and
parts by Custom to Clark, and design of tooling, fixtures, dies and
patterns used by Custom to produce products for Clark under this Master
Contract. Custom further agrees to secure and maintain during the term
of this Master Contract for five (5) years thereafter a public
liability policy providing (a) products liability coverage with a broad
form vendor's endorsement protecting Clark with respect to this Master
Contract, and (b) providing contractual liability coverage for the hold
harmless clause set forth above in this paragraph, each of such
insurance coverages to have the bodily injury and property damage
limits reasonably required by Clark from time-to-time, but in each
instance to have bodily injury limits of not less than $1 Million per
person and $1 Million per occurrence and
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property damage limits of not less than $1 Million per occurrence, with
an umbrella or excess liability policy of an additional $2 Million per
person and $2 Million per occurrence for bodily injury and an
additional $2 Million per occurrence for property damage. Custom will
upon request furnish Clark with a certificate from Custom's insurance
carrier in a form satisfactory to Clark and will provide for thirty
(30) days' prior written notice from the insurance carrier to Clark
prior to any cancellation or change reducing coverage.
5.2 Clark will defend, indemnify and hold Custom harmless from and against
any and all claims for injury or death of persons or damage to property
(including costs of litigation and attorneys' fees) to the extent
caused by, arising from, incident to, connected with, or growing out of
the design and/or engineering of products by Clark, or Clark's election
to utilize components provided by a Clark designated single source
supplier in products manufactured by Custom, which pursuant to Section
6.4 have been determined to be defective or not in compliance with
Clark's specifications; provided, however, Custom has
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duly notified Clark in writing.
Clark further agrees to secure and maintain during the term of this
Master Contract and for five (5) years thereafter a public liability
policy providing (a) products liability coverage with a broad form
vendor's endorsement protecting Custom with respect to this Master
Contract, and (b) providing contractual liability coverage for the hold
harmless clause set forth above in this paragraph, each of such
insurance coverages to have the bodily injury and property damage
limits reasonably required by Custom from time-to-time, but in each
instance to have bodily injury limits of not less than $3 Million per
person and $3 Million per occurrence and property damage limits of not
less than $3 Million per occurrence, Clark will upon request furnish
Custom with a certificate from Clark's insurance carrier in a form
satisfactory to Custom and will provide for thirty (30) days' prior
written notice from the insurance carrier to Custom prior to any
cancellation or change reducing coverage. Upon written notice to
Custom, Clark may, in lieu of carrying insurance as set forth herein,
self-insure the indemnity obligations set forth in
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this Section 5.2.
6. BASE PRICING AND PRICING ADJUSTMENTS
6.1 The base price for each product and part will be that per unit price
set forth in the Appendix(es) for each particular product type.
6.2 The base price of any product or part thereof may be increased or
decreased at any time by mutual written agreement of the parties
(INTERIM PRICE ADJUSTMENT). Such interim price adjustments will be made
for mutually agreed upon design changes and under other appropriate
circumstances as the parties may agree. Provided, however, for design
changes which result in an increase in the base price, the amount of
the increase shall not be included in any calculations associated with
base price reductions set forth in Section 7.
6.3 Subject to the interim price adjustments, the initial base prices for
products will be effective without increase, for all products ordered
on or before June 30, 1996 for delivery on or before August 31, 1996.
Thereafter Custom may, after consultation and written agreement with
Clark, adjust the base prices for products effective July 1, 1996 for
all products ordered on or after July 1, 1996, and
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<PAGE> 17
annually on July 1, of each successive year thereafter during the term
of this Agreement and any extensions thereto for all products ordered
on or after July 1 of each successive year up to a maximum amount as
determined by the Formula set forth in the Appendix for that specific
product (ANNUAL PRICE ADJUSTMENT). Prices for products ordered on or
before June 30 of each successive year for delivery on or before August
31 of each successive year shall be the price in effect on June 30 and
shall not be subject to any July 1 price adjustment.
6.4 Unless otherwise agreed, Clark and Custom shall, on an annual basis,
jointly review base prices of products no later than thirty (30) days
prior to the effective date for annual price adjustments. In addition,
the parties will also review the data produced by the Formulas set
forth in the Appendix for each specific product for computation of the
maximum annual price adjustments as a guide in determining the annual
price adjustments. The parties may use these computations in order to
negotiate a price adjustment of lesser amount than the annual price
adjustment Formulas in the Appendix(es) call for, and are in no way
17
<PAGE> 18
precluded from negotiating such a lesser base price increase. The
parties are not precluded from agreeing to a price adjustment which
exceeds the maximum annual price adjustment provided (i) extraordinary
circumstances have arisen regarding availability and/or price increases
involving Clark-designated single source component suppliers to Custom
and (ii) the parties agree in writing to such a price adjustment. The
parties also agree that should a Clark-designated single source
supplier, for reasons not caused by Custom, be unable or unwilling to
supply components, or supply components deemed defective or not in
compliance with Clark specifications by Clark to Custom for production
of products under the Master Contract, the parties shall cooperate to
attempt to correct the situation. In addition, Custom shall notify
Clark in writing in the event Custom determines, in the exercise of its
best business judgment, that components provided by a Clark-designated
single source supplier are defective or not in compliance with Clark
specifications. Each such notice by Custom shall include a statement of
the reasons for Custom's determination that such components are
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<PAGE> 19
defective or not in compliance with Clark specifications, and shall
include all substantiation relied upon by Custom to back up Custom's
determination. If, after such written notice and a joint determination
that such component is defective or not in compliance with Clark's
specifications, Clark elects to utilize said components in the
manufacturing of products by Custom, Clark hereby acknowledges and
agrees that it assumes all warranties of Custom as set forth in Section
4 solely to the extent directly related to such defective or
noncompliant component and waives all indemnity rights from Custom
pursuant to Section 5 of this Master Contract solely to the extent
directly related to such component. Further, Clark will indemnify
Custom to the extent provided by Section 5.2 hereof from all claims
arising solely and directly to such component. If the situation cannot
be corrected in a timely fashion, the parties shall cooperate to select
an alternate source component supplier as soon as practical. If the
parties cannot reach a joint determination that such component is
defective or not in compliance with Clark's specifications, the parties
will submit the
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issue to a mutually acceptable independent third party or, in the event
the parties are unable to agree on a third party, to the Dean of the
University of Kentucky College of Engineering or his/her designate for
determination. Should the determination result in a finding that the
component is defective or not in compliance with Clark's specifications
and Clark elects to utilize the component(s), it assumes all warranties
of Custom set forth in Section 4 as mentioned hereinabove and waives
all indemnity rights from Custom pursuant to Section 5 as set forth
hereinabove.
6.5 Unless the parties mutually agree to a lesser base price increase, the
maximum annual price adjustment to the base price for each product will
be determined by multiplying the base price for each product which is
effective on June 30th by the applicable annual price adjustment
Formula set forth in the Appendix(es) for each specific product.
6.6 For annual price adjustments permitted under this Contract, the change
in the various Appendix(es) Formulas' indexes will be measured from the
indexes for March of the prior year, to the indexes for the month of
March in the
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succeeding year which immediately precedes the July annual price
adjustment. If the March index is not available by June 1 prior to the
effective date of the annual price adjustment, the most recent
available index may be used in its place.
6.7 Notwithstanding the foregoing, the parties agree to utilize joint
efforts and to cooperate to achieve and sustain subject to the terms of
this Master Contract base price reductions of at least five percent
(5%) from initial base prices for the World Truck a/k/a Global Truck
a/k/a Genesis Truck products (Genesis). To achieve such price
reductions, the parties each agree, for a period of six (6) months or
longer if mutually agreed from the execution date hereof, to assign
engineering/design support to work together.
7. PAYMENT TERMS
7.1 Immediately upon achieving the base price reduction of five percent
(5%) on Genesis Truck products, and so long as such reductions are
sustained subject to the terms of this Master Contract, the payment
terms shall be as follows: Clark shall remit payment to Custom on all
invoices for products shipped by Custom and
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<PAGE> 22
ordered by Clark within thirty (30) days of receipt of invoice from
Custom of the ordered products.
7.2 Until the five percent (5%) base price reduction on Genesis Truck
products is achieved, the parties agree to the following schedule of
payment terms:
a. For the period from the date of this Master Contract
through the end of 1995, Clark shall remit payment to
Custom on all invoices for products shipped by Custom
and ordered by Clark for German production within
forty five (45) days of receipt of invoice from
Custom of the ordered products; and within forty days
(40) of receipt of invoice for all other products
ordered by Clark.
b. For the period from January 1, 1996 through March 31,
1996, (First Quarter 1996), Clark shall remit payment
to Custom on all invoices for all products shipped by
Custom and ordered by Clark within forty (40) days of
receipt of invoice
22
<PAGE> 23
from Custom of the ordered products. If at the end of
this period the parties are unsuccessful in achieving
or sustaining the base price reduction of five
percent (5%) on Genesis Truck products subject to the
terms of this Master Contract, the first quarter
payment terms shall remain in effect unless otherwise
mutually agreed.
7.3 Prior to Custom committing to build tooling, Clark shall issue purchase
orders and remit payment as mutually agreed for all tooling necessary
for Custom to manufacture products pursuant to the Master Contract.
7.4 Clark shall establish within 10 business days from the execution of
this Master Contract, an escrow account and/or post a letter of credit
or any combination of both in Custom's favor in a total amount equal to
(i) for the period through December 31, 1995, eight (8) weeks of the
dollar amount of Custom's component inventory for products covered by
this Master Contract and (ii) for the period January 1, 1996 through
March 31, 1996, six (6) weeks of the dollar
23
<PAGE> 24
amount of Custom's component inventory for products covered by this
Master Contract. The initial total amount to be covered by the escrow
account and letter of credit shall be $868,616.00. Such amount shall be
validated and adjusted as necessary each month based upon actual
schedules. The amount shall be payable to Custom if any of the
following events occurs: (i) the filing of a voluntary petition in
bankruptcy by Clark; or (ii) the filing of a petition of bankruptcy
against Clark, unless vacated within thirty (30) days from the filing
date; in the case of either (i) or (ii) above, to the extent that
Custom suffers actual financial loss for component purchases it has
made for products covered by this Master Contract, net of all
recoveries. The parties shall meet on or before March 31, 1996, to
discuss in good faith the reduction or elimination of the requirements
of this Section 7.4, with the expectation that the requirements of this
Section 7.4 shall be reduced or eliminated if Clark has met its payment
obligations under this Section 7 and Clark has achieved operating
profits. Promptly upon establishing the escrow account and/or letter of
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<PAGE> 25
credit and/or combination of both as referenced herein, Clark shall
duly notify Custom in writing of the names and addresses of all
financial institutions, the account numbers, the amounts deposited in
each and all other applicable information relating to the provisions of
this section reasonably requested by Custom.
7.5 Invoices shall, at Custom's options, be dispatched by Custom to Clark
by telefax transmissions and/or by first class U.S. Mail, postage
prepaid.
8. DELIVERY
8.1 Custom will deliver the ordered products to Clark freight prepaid,
pursuant to Clark's order schedule with a maximum variance of minus
three (3) days per delivery. In addition, Custom will undertake its
best efforts to successfully respond to any and all unforeseen delivery
requirements of Clark on an as-needed basis. Deliveries will be C.I.F.
Lexington, Kentucky or such other locations as directed by Clark. All
freight costs to Lexington, Kentucky shall be borne by Custom. Freight
costs to any other location shall be subject to agreement between the
parties.
25
<PAGE> 26
9. SCHEDULING
9.1 Each thirty (30) days, Clark shall deliver to Custom a Supplier
Delivery Schedule containing released orders of products for the
ensuing four (4) month period and forecasted orders for eight (8)
months thereafter. Said Schedule shall set forth released orders for
the first four (4) months of the scheduled period and forecasted orders
to be placed by Clark during the following eight (8) calendar months.
The eight (8) month rolling forecast will not constitute an order for
products, and Clark does not assume any obligation to purchase all or
any portion of the forecasted quantities; However, solely with respect
to long lead time component inventory identified and substantiated by
Custom from time to time, Clark shall have the option to purchase or
pay required penalties in connection with such long lead time component
inventory which is not cancellable without penalty based upon the first
two (2) months of the eight (8) month rolling forecast should the
forecast not be implemented. Clark will pay a ten percent (10%)
handling fee to Custom in the event such component inventory has to be
returned. The parties agree that the
26
<PAGE> 27
quantity of products for delivery for the first thirty (30) days after
the Supplier Delivery Schedule is issued is firm. The parties further
agree that Clark's ratio of actual-to-projected orders may vary +/- 10%
over the period from 31- 60 days from the date of the Schedule, +/- 20%
over the period from 61-90 days from the date of the Schedule, and +/-
20% over the period from 91-120 days from the date of the Schedule.
Notwithstanding the above, if notice is given by Clark to Custom within
twenty (20) days after the date of the Supplier Delivery Schedule,
during the period from 90-120 days from the date of Schedule, Clark may
make unlimited changes to the mix of products.
10. CANCELLATION OR DELAY
10.1 Clark may, without charge, at any time upon written notice, up to sixty
(60) days prior to the scheduled delivery date, delay delivery of all
or any portion of an order for up to ninety (90) days.
11. INSPECTION
11.1 All material shall be received subject to Clark's inspection and
rejection. Material not in accordance with specifications shall be held
for Custom's review and disposition at Custom's
27
<PAGE> 28
risk and, if Custom directs, the material will be returned at Custom's
expense. Payment for material prior to inspection shall not constitute
an acceptance thereof. Inspection of material by Clark will not
constitute acceptance of any products and will not relieve Custom of
responsibility for any defect or nonconformity in any product.
12. TERMINATION
12.1 Either party may terminate this Master Contract for failure by the
other party to perform or adhere to any promises or obligations
undertaken pursuant to this Master Contract by giving the other party
thirty (30) days' written notice within which to cure such default. If
such default is not cured within the thirty (30) day period (cure
period), the party which gave the notice may terminate this Master
Contract at any time thereafter upon written notice to the other party.
In the event that it is not possible to cure such default within the
cure period, provided the defaulting party has demonstrated due
diligence in its prompt efforts to cure such default, such cure period
may be extended for one (1) additional thirty (30) day period (extended
cure period). The
28
<PAGE> 29
above provision with regard to the cure and extended cure periods shall
not apply to the payment terms in Section 7. In the event Clark fails
to make a payment to Custom within seven (7) days of its due date in
accordance with the payment terms in Section 7, Custom shall have the
right, at its election, but with notice to Clark, to immediately refuse
shipment of products to Clark. Upon cure of such payment default by
Clark, Custom shall immediately resume shipment of products to Clark on
a C.O.D. basis.
12.2 Either party may terminate this Master Contract immediately by written
notice to the other party if any of the following events occur:
(a) Any attempted transfer of assignment of this Master Contract
or any right or obligation hereunder by the other party unless
the assignment is otherwise permitted by this Master Contract.
(b) The filing of a voluntary petition in bankruptcy by the other
party.
(c) The filing of a petition of bankruptcy against the other
party, provided it is not vacated thirty (30) days from the
date of such appointment.
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<PAGE> 30
12.3 The termination of this Master Contract will not affect or impair the
rights, liabilities and obligations of either party under any order
prior to the termination, will not relieve either party of any
obligation or liability accrued under this Master Contract or pursuant
to any order issued prior to the termination, and will not relieve
either party or the continuing obligations pursuant to Section 4,
Warranty; Section 13, Quality Assurance; Section 5, Indemnity; Section
14, Confidential Information; Section 15, Design Rights; and Section
17.7, Replacement Parts, which obligations will survive any termination
of this Master Contract.
13. QUALITY ASSURANCE
13.1 Custom warrants that it will establish and maintain a quality assurance
program which conforms to the criteria stated in Exhibit 1 and which is
satisfactory to Clark, and, further, warrants that each product and
part sold by Custom to Clark pursuant to this Master Contract will be
manufactured (or if certain parts are purchased, purchased and
inspected) subject to and in compliance with said quality assurance
program.
30
<PAGE> 31
13.2 Clark may, at its option and expense, continuously or periodically
review and inspect Custom's quality assurance program and product
quality at Custom's facilities. Custom will provide Clark's
representatives with good faith cooperation and such access and
facilities as may be reasonably be required by Clark's representatives
to conduct such review and inspection. Clark will use its best efforts
consistent with accomplishing its review and inspection to avoid
disruption or delay of Custom's operations. Inspection or review of
Custom's quality assurance program or products at Custom's facilities
will not constitute acceptance of any products and will not relieve
Custom of responsibility for any defect or nonconformity in any
product.
13.3 Custom further warrants that if Custom at any time has reason to
believe that any defect in design or manufacture or any nonconformity
may be present in any products or parts sold or to be sold pursuant to
this Master Contract, Custom will immediately advise Clark and will
cooperate with Clark to determine whether the defect or nonconformity
is present and, if so, will cooperate promptly with Clark in good
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<PAGE> 32
faith to correct it. This provision will not be construed to expand
Custom's warranty to Clark or to relieve Custom of its responsibility
for the consequences of any such defect or nonconformity.
14. CONFIDENTIAL INFORMATION
14.1 During the term of this Master Contract and for a period of three (3)
years thereafter, each party will hold in confidence any confidential
information received from another party in connection with this Master
Contract and (except for mandatory disclosures to governments) will not
disclose the confidential information to any third party or reproduce
or reverse engineer products using the confidential information without
the written consent of the party which provided the information. A
party receiving confidential information will protect it from
disclosure by handling it with the same care that the party normally
exercises in respect of its own confidential information of similar
importance.
14.2 As used in this Master Contract, confidential information means any
information held in confidence by a party and disclosed by that party
and disclosed by that party to another
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<PAGE> 33
party in connection with this Master Contract; provided the information
is:
(a) a type of information classified as confidential by other
provisions of this Master Contract;
(b) information provided in a written form and identified as
confidential; or
(c) information provided verbally, and identified as confidential
when disclosed.
14.3 Information will not be considered confidential and the obligations of
this Section 14 "Confidential Information" will not apply under the
following circumstances:
(a) the information is in the public domain at the time of
disclosure or become part of the public domain thereafter
without the fault of the receiving party;
(b) the information is known to the receiving party at the time of
the disclosure; or
(c) the information is rightfully acquired by the receiving party
from a third person which is not a party to this Master
Contract, or is independently developed by the receiving
party.
15. DESIGN RIGHTS
15.1 The design rights to the design of products,
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<PAGE> 34
drawings, specifications, tools, dies, patterns, fixtures and other
materials and information provided or designed by Clark or designed by
Custom and paid for by Clark shall remain in Clark. All drawings,
specifications, tools, dies, patterns, fixtures and other materials and
information provided to Custom (or provided or designed by Custom and
paid for by Clark) to enable Custom to produce products and parts for
Clark belong to Clark and shall be considered confidential, and shall
promptly be returned to Clark upon termination of this Master Agreement
for any reason, along with all copies thereof. Custom shall have no
right to use any of such drawings, specifications, tools, patterns,
dies, fixtures or other materials and information provided to Custom
for any purpose other than producing products and parts for Clark under
this Master Contract. All such tools, dies, fixtures and other
materials shall bear legends to the effect that they are the property
of Clark. During the term of this Master Contract, Custom agrees that
if it provides or offers to provide to any other customer products
which are similar to products covered by this Master Contract, it
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shall give Clark prior written notification. Notwithstanding the prior
sentence, Custom shall not use any of the drawings, specifications,
tools, dies, patterns, fixtures or other materials or other information
identified in this Section 15.1 to produce products and parts for any
one other than Clark.
16. NOTICES
16.1 All notices required or permitted hereunder shall be in writing and
shall be deemed duly given when personally delivered or sent by
ordinary, registered or certified mail, postage prepaid, or by telefax,
confirmed by letter as aforesaid, addressed as follows:
Custom: Custom Tool and Manufacturing Company
Production Machining Plant
1031 Industry Road
Lawrenceburg, Kentucky 40342
Attention: President
Clark: Clark Material Handling Company
333 West Vine Street, Suite 700
Lexington, Kentucky 40507
Attention: President
or to such other address as either party may hereafter designate in
writing by like notice.
17. MISCELLANEOUS PROVISIONS
17.1 This Master Contract hereto shall enure to the benefit of and be
binding upon the parties hereto and their successors and assigns. The
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<PAGE> 36
parties further agree that this Master Contract shall not be assignable
by either party without consent of the other party, such consent not to
be unreasonably withheld, except that Clark may assign this Master
Contract to any subsidiary or affiliate of Clark or to a successor to
substantially all of the business of Clark.
17.2 This Master Contract hereto encompasses the entire agreement by and
between Custom and Clark respecting the sale and purchase of products
identified in the Appendix(es) hereto covered by this Agreement and
supercedes any and all previous agreements, memoranda, negotiations, or
understandings of the parties with respect thereto. No addition to,
deletion from or modification of any of the provisions of this Master
Contract shall be binding upon the parties unless made in writing and
signed by a duly authorized representative of each party. Any such
additions, deletions or modifications shall refer specifically to this
Master Contract and shall also state that it is an amendment thereof.
17.3 Any failure by Clark or Custom to enforce, at any time any term or
condition of this Master Contract shall not constitute, nor shall it be
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construed as, a waiver of that party's right to enforce each and every
term and condition hereof.
17.4 If, for any reason any provision of this Master Contract is deemed
invalid, illegal, or unenforceable, then such provision will be deemed
severable from the other provisions hereof, all of which shall remain
in full force and effect and binding on Clark and Custom pursuant to
the Master Contract.
17.5 This Master Contract and all purchase orders issued pursuant hereto
shall be governed by and construed in accordance with the laws of the
Commonwealth of Kentucky.
17.6 The titles and headings herein are used for convenience of reference
only and shall not be deemed part of this Agreement for purposes of
interpretation.
17.7 Service Replacement Parts: Custom agrees to provide replacement parts
for a minimum period of seven (7) years after the date of termination
or expiration of this Master Contract. Components and/or complete
assemblies will be provided to Clark's aftermarket parts organization
at OEM price levels, as long as the ordered components
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and/or complete assemblies are in production at the time the order is
placed. If not, pricing will be negotiated on a case-by-case basis.
Custom will furnish Clark with a complete list of replacement parts,
all requested technical information and documentation in connection
with replacement parts, and appropriate descriptions and illustrations
required to service replacement parts.
IN WITNESS WHEREOF, the parties have caused this Master Contract for
Purchase and Sale to be executed in duplicate originals by their duly authorized
representative as of this 17 day of July, 1995.
CLARK MATERIAL HANDLING COMPANY
By: /s/
---------------------------------
Title: President
------------------------------
Date: 17 July 95
------------------------------
CUSTOM TOOL AND MANUFACTURING COMPANY
By: /s/ Rodney N. Cunningham
---------------------------------
Title: President
------------------------------
Date: 7/18/95
------------------------------
38
<PAGE> 1
EXHIBIT 10.26
AGREEMENT BY AND BETWEEN
CLARK MATERIAL HANDLING COMPANY
A Business Unit of Clark Equipment Company
as CLARK
and
DIXSON, INC.
For the Instrument Pod for the World Truck
Effective: ____________________________
<PAGE> 2
TABLE OF CONTENTS
PAGE
PART I. DESIGN AND DEVELOPMENT SERVICES .................................... 3
Articles
1. STATEMENT OF WORK .................................................. 3
2. DEFINITIONS ........................................................ 4
3. (Intentionally Left Blank) ......................................... 5
4. PROJECT STAFFING ................................................... 5
5. DEVELOPMENT MILESTONES ............................................. 6
6. TARGET COST ........................................................ 7
7. CHANGES IN THE SCOPE OF WORK ....................................... 8
8. PAYMENT FOR DEVELOPMENT COSTS ......................................10
9. OWNERSHIP OF TOOLING AND PAYMENT SCHEDULE ..........................11
10. PROTOTYPE AND PREPRODUCTION PROTOTYPES .............................15
11. NON-DISCLOSURE .....................................................16
12. ACCEPTANCE .........................................................18
13. (Intentionally Left Blank) .........................................19
14. CANCELLATION .......................................................19
15. (Intentionally Left Blank) .........................................19
16. (Intentionally Left Blank) .........................................19
PART II. PRODUCT MANUFACTURING AND SALE .....................................19
17. COMMENCEMENT OF MANUFACTURING ......................................19
18. FORECASTING AND ORDERING ...........................................20
19. TERMS OF DELIVERY ..................................................22
20. PRICING ............................................................23
21. PRICE CHANGES ......................................................24
22. (Intentionally Left Blank) .........................................26
23. PROTECTION FROM LABOR DISPUTES .....................................26
24. QUALITY ASSURANCE ..................................................28
25. WARRANTY ON INSTRUMENT PODS AND PARTS ..............................29
26. WARRANTY CLAIMS ....................................................31
27. PRODUCT LIABILITY INSURANCE ........................................33
28. INDEMNIFICATION ....................................................34
29. PARTS AVAILABILITY AND WARRANTY ....................................34
30. STANDARD TERMS OF SALES ............................................35
31. TERM AND TERMINATION ...............................................36
32. GENERAL PROVISIONS .................................................37
EXHIBITS
1. Clark Material Handling Company Design Specifications,
Instrument Pod for World Truck, of 28 November 1990
2. Functional Specifications
3. Clark Form - Certificate of Acceptance
4. Pricing Schedule
5. Clark Quality Assurance Program SQA1
<PAGE> 3
CLARK MATERIAL HANDLING COMPANY
THIS AGREEMENT, made and entered into this _____ day of _______, 1991 by and
between CLARK MATERIAL HANDLING COMPANY, having its principal offices at 333 W.
Vine Street, Lexington, Kentucky 40507, a business unit of Clark Equipment
Company, a Delaware corporation (hereinafter referred to as "CLARK") and DIXSON,
INC., a Colorado corporation with its principal office and place of business
located at 287 27 Road, Grand Junction, Colorado 81503 (hereinafter referred to
as "SUPPLIER").
This agreement is in two parts. The successful completion of the first part,
Part I, the design and development services portion, is a prerequisite for the
initiation of the second part, Part II, the product manufacturing and sale
portion.
PART I. DESIGN AND DEVELOPMENT SERVICES
ARTICLE 1. STATEMENT OF WORK
The SUPPLIER hereby agrees to design, develop, test and fabricate mockup,
prototype and preproduction electronic instrumentation and display packages
(collectively hereinafter referred to as Instrument Pods) to operate on a 12 or
24-volt DC electrical system for liquid propane (LPG), gasoline and
diesel-powered counterbalanced rider lift trucks in accordance with, and in
satisfaction of, the CLARK design and performance requirements set forth in the
Clark Material Handling Company Design Specifications,
<PAGE> 4
Instrument Pod for World Truck, 35 pages, of 28 November 1990 which is a
Contract Document attached hereto as Exhibit 1 and made a part hereof.
ARTICLE 2. DEFINITIONS
The definitions below apply to both Part I and Part II of the Agreement unless
otherwise indicated within a definition:
2.1 The Contract Documents are a part of this Agreement, and consist of this
Agreement and the Exhibits attached thereto.
2.2 The term "Work" with respect to the SUPPLIER includes labor, materials and
services used in the performance of Part I of this Agreement.
2.3 The term "World Truck" as used in the Contract Documents shall mean an
internal combustion (IC) rider, counterbalanced industrial truck,
corresponding to Classes IV and V of the United States Industrial Truck
Association classification system with all auxiliary systems, attachments,
and accessories specified by CLARK for use therewith manufactured or
assembled by or for CLARK for its affiliates in or outside the U.S. for
sale and use worldwide.
2.4 "Instrument Pod" means electronic instrumentation and displayed package
functionally adapted to the 1.25-5.0 ton IC World Truck according to
specifications set forth in Exhibit 1, as amended from time to time by
agreement of the parties as provided for under Article 32.4 hereof.
2.5 "Affiliate" means any domestic or foreign plant or facility which by
contract, license, or permission from CLARK has the
-2-
<PAGE> 5
authority to manufacture models similar to the World Truck.
ARTICLE 3. INTENTIONALLY LEFT BLANK
ARTICLE 4. PROJECT STAFFING
The SUPPLIER will staff the project with sufficient personnel to reach agreed
upon milestones by the completion dates set forth in Article 5 below.
ARTICLE 5. CONTRACT PRICE, DEVELOPMENT MILESTONES, PAYMENT
SCHEDULE, AND COMPLETION DATES
The SUPPLIER will design, develop, build, test and deliver to CLARK the
prototype Instrument Pods and the documentation relevant thereto for their
manufacturer as specified in Exhibit 1 for the Contract Price of $97,000.00,
twenty percent (20%), or $19,400 of which has been paid to SUPPLIER in advance
of entering into this Agreement, leaving the balance of $77,600 to be paid by
CLARK to SUPPLIER as progress payments after reaching agreed upon Milestones as
set forth in the schedule below:
PROGRESS PAYMENT SCHEDULE
<TABLE>
<CAPTION>
DOLLAR COMPLETION
MILESTONES PERCENT AMOUNT DATE
- ---------- ------- ------ ----------
<S> <C> <C> <C>
i) Completion of three (3) 40% $38,800 October 4, 1991
prototypes
ii) Environmental Electrical 20% $19,400 January 5, 1992
iii) Life Testing 10% $ 9,700 January 15, 1992
iv) Receipt of Documentation 10% $ 9,700 August 15, 1992
TOTAL: $77,600
</TABLE>
-3-
<PAGE> 6
ARTICLE 6. TARGET COST
6.1 The SUPPLIER agrees to work in a cooperative manner with CLARK to design
each Instrument Pod to Achieve a Target Cost on a manufactured basis set
forth in 6.3 below.
6.2 The SUPPLIER shall maintain an up-to-date bill of material (BOM) based on
SUPPLIER'S standard costs of materials and labor for each version of the
Instrument Pod including assembly labor. The BOM for each Instrument Pod
shall be available for CLARK'S inspection upon request. CLARK and SUPPLIER
shall conduct a cost review of each BOM upon the completion of the
prototype Milestone set forth in Article 5 (i).
6.3 Each cost review in 6.2 is an early warning indicator of whether future
production costs will be reduced on a per-unit basis to be at or below
Target Cost. At each cost review, CLARK shall decide whether to continue
the development of the existing designs, revise the design specifications
to further reduce the projected unit cost, terminate one or more of the
Instrument Pod developments, in whole or in part, without terminating the
others, or terminate the Agreement because in the opinion of CLARK, the
SUPPLIER will be unable to meet the Target Cost for one or more of the
Instrument Pods. The Target Costs for each Instrument Pod design for the
applicable truck chassis are as follows:
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<PAGE> 7
<TABLE>
<CAPTION>
DESIGN TARGET TARGET TARGET
VERSION COST (1) COST (2) COST (3)
- ------- -------- -------- --------
(Per Pod) (Per Pod) (Per Pod)
<S> <C> <C> <C>
Diesel $99.75 $95.00 $92.15
Gas $99.75 $95.00 $92.15
LPG $93.45 $89.00 $86.33
</TABLE>
Target Cost: (1) up to 12,110 units; (2) from 12,111 to 17,300 units; and (3)
from 17,301 to 22,490 units of production of all design versions for 12 calendar
months.
6.4 The Target Cost does not include the incremental cost of optional rocker
switches, or connector interfaces, which upon approval by CLARK, shall be
added to the applicable Target Cost.
ARTICLE 7. CHANGES IN THE SCOPE OF WORK
7.1 CLARK shall have the right at any time to require alterations in, additions
to and deductions from the Design Specification (Exhibit 1) or the
Functional Specification (Exhibit 2) without rendering void the Contract.
All changes shall be completed within the Milestones set forth in Article
5.
When changes are requested, CLARK shall furnish SUPPLIER with a Change
Request describing the change as prepared by CLARK's engineering
department. A Change Request is a request for quotation. SUPPLIER shall not
proceed with the work described in the Change Request until the work is
authorized by an amendment to this Agreement pursuant to Article 32.4.
7.2 A Change Request may affect product development costs including design
verification testing and tooling costs.
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<PAGE> 8
If the Design Specifications are revised at the request of CLARK after the
approval of the Functional Specification, resulting in additions to or
deletions from incremental costs, such costs shall be added to or
subtracted from the Target Cost set forth in Article 6.3 of the applicable
pod design.
The Functional Specification is the basis of the definition of the scope of
Work. Upon acceptance by CLARK of the Functional Specifications, all
changes in the scope of Work will result in changes in the Functional
Specification. CLARK shall not accept any SUPPLIER proposed increased costs
once the Functional Specification is approved by CLARK.
7.3 When a Change Request is made that will not be reflected by a change in the
Target Cost of the applicable pod design, SUPPLIER will submit a quotation
for changes in the Work to be performed on an estimated cost plus
percentage fee basis within twenty-one (21) calendar days from date of the
Change Request unless otherwise stated in the Request.
Each quotation shall be submitted in sufficient detail together with
adequate supporting information to facilitate checking by CLARK as follows:
(a) Estimated labor and material costs and expenses itemized to include:
(1) Engineering, drafting and testing labor using
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<PAGE> 9
SUPPLIER's standard hourly rates as set forth in Article 7.5
(2) Material costs
(3) Transportation
(4) The use of tools or equipment having an original cost basis of
more than $1,500.00 per unit.
(b) Percentage fee for the Work to be performed by SUPPLIER
(c) Subcontract work and applicable handling fee as defined in Article 7.6
(d) Production tooling and manufacturing tooling.
Where changes involve both additions and deductions, the estimated costs of
the Work added and deducted shall be balanced against each other and the
percentage fees shall be applied to the net result.
CLARK shall authorize SUPPLIER to proceed on the basis of the quotation by
a written authorization within ten (10) days of receipt of the quotation.
Absent such authorization, SUPPLIER'S quotation is rejected and the Work
will not be performed until a revised quotation is accepted by CLARK.
Items of cost shall not include the expense of making good any damage or
replacement of materials rejected by CLARK as failing to conform with the
requirements of the Functional Specification.
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<PAGE> 10
Should CLARK authorize the SUPPLIER to proceed with changes in the Work
pending submission of a quotation based on estimated cost plus percentage
fees, the SUPPLIER shall proceed on the basis of the estimate for the Work
involved, however, within ten (10) days of being authorized to proceed by
CLARK, SUPPLIER will submit a definitive quotation, which if not rejected
by CLARK within ten (10) days thereafter, shall be accepted. If rejected,
SUPPLIER may cease the work involved and CLARK will reimburse SUPPLIER for
the work up to the date of rejection on the basis of the estimate.
7.4 Should the SUPPLIER perform any work or should the SUPPLIER proceed in any
manner which the SUPPLIER may subsequently allege has caused the SUPPLIER
increased cost, damage or loss, purporting to have acted upon verbal
instruction or with tacit consent or acceptance or approval, the SUPPLIER
shall be held to have done so at its own peril and the SUPPLIER shall have
no claim against CLARK on account of the alleged increased cost, damage or
loss.
7.5 SUPPLIER STANDARD LABOR RATES
For Work performed pursuant to Article 7.3, SUPPLIER's standard labor rates
are as follows:
RATE
SERVICE ($/Man-Hr.)
------- -----------
Electronic Design Engineering $46.26
Mechanical Design Engineering $46.26
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<PAGE> 11
Printed Circuit Board Design $30.51
Design Validation Testing $30.51
Engineering Technician $22.93
Project Administration $66.13
Documentation & Testing $22.93
7.6 HANDLING FEES FOR OUTSIDE SERVICES
A handling fee of 10% will be paid SUPPLIER on the invoice amount of
subcontracted Work identified in a quotation under Article 7.3 to be
performed as an outside service, net the cost of materials, any discounts,
freight, taxes, insurance and other charges by the subcontractor.
7.7 In the event of termination by CLARK at any time prior to the completion of
the Milestones set forth in the schedule of Article 5, CLARK shall be
responsible for SUPPLIER's cost incurred up to the effective date of
cancellation, which costs shall not exceed the sum of the progress payments
made up to the date of cancellation, plus the noncancellable tooling orders
incurred under Article 9.
SUPPLIER shall provide CLARK with a record of man-hours and material
invoices paid or incurred by SUPPLIER prior to termination. All drawings,
sketches, tooling and any design related material shall be delivered to
CLARK within 14 calendar days of a written notice to terminate.
-9-
<PAGE> 12
ARTICLE 8. PAYMENT FOR DEVELOPMENT COSTS
8.1 The SUPPLIER shall be paid by CLARK for successful completion of the Work
by the Milestones set forth in Article 5 according to the percentages of
the Contract Price applicable at each Milestone, the sum of which shall not
exceed the Contract Price.
8.2 The Milestones are applicable to all Instrument Pods and no progress
payment will be due from CLARK for any Instrument Pod until the Milestones
have been completed for all Instrument Pods covered by the Functional
Specifications (Exhibit 2).
8.3 SUPPLIER will issue an invoice to CLARK for the applicable progress payment
upon satisfactory completion of the percentage of Work set forth in the
Progress Payment Schedule in Article 5. Subject to verification by CLARK,
CLARK will pay the invoice within thirty (30) days of receipt.
ARTICLE 9. OWNERSHIP OF TOOLING AND PAYMENT SCHEDULE
9.1 PAYMENT STRUCTURE FOR TOOLING COST
The SUPPLIER will place tooling orders when released in writing by CLARK
and CLARK will pay SUPPLIER: (i) forty (40) percent of the total tooling
cost estimates of $75,300 set forth in Article 9.2 when the dollar value of
tooling ordered exceeds forth (40) percent or $30,120 of the total; (ii)
forty (40) percent or $30,120 upon delivery to SUPPLIER of tooling
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<PAGE> 13
Fuel Gauge 0
Gasket 300
Other 11,000
Light Pipe Mold 1,800
Scale Plates (2 types) 400
Connector Gasket 4,500
Connector Terminal 0
-------
Subtotal: $58,800
The items of Manufacturing Tooling to be ordered by SUPPLIER are
identified as follows:
MANUFACTURING TOOLING ESTIMATED COST
Burn-in Fixtures $ 3,000
Pointering Fixture 2,000
Conformal Fixturing 500
Connector Fixture 3,500
Heat Insert Fixture 1,500
PCB Test Fixture 6,000
--------
Subtotal: $ 16,500
TOTAL FOR TOOLING: $ 75,300
9.3 The actual Production and Manufacturing Tooling cost will not exceed
$84,525 based on the SUPPLIER'S experience that complex tool costs can have
a +/- 20% error potential and simple tool costs, a +/- 5% error potential.
CLARK will pay SUPPLIER the
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<PAGE> 14
ordered in (i) above and (iii) twenty (20) percent or $15,060 upon delivery of
all the production and manufacturing tooling. SUPPLIER will invoice CLARK upon a
showing of satisfactory completion of i. ii and iii above, and CLARK will pay
SUPPLIER's invoices within thirty (30) days after receipt. SUPPLIER will provide
CLARK with the names and addresses of tooling vendors and copies of their paid
invoices showing that they have been paid by SUPPLIER before SUPPLIER'S final
invoice under iii above will be paid by CLARK. Payment of any of SUPPLIER's
invoices for tooling will be subject to proof of all tooling vendors having been
paid by SUPPLIER, failing which CLARK may have a set-off for the value of such
unpaid tooling against any other open payable or charge under this Agreement.
9.2 The estimated cost for both the Production and Manufacturing Tooling is set
forth below:
PRODUCTION TOOLING ESTIMATED COST
------------------ --------------
Upper Housing $ 17,000
Lower Housing 18,000
Lens 0
Indicator Overlay (3 types) 5,300
Indicator Light Divider 0
Printed Circuit Board 500
Temperature Gauge 0
-11-
<PAGE> 15
total of $75,300 as the total cost of the tooling ordered under Article
9.2, unless SUPPLIER can substantiate by invoices received from tooling
vendors that the exceed in actual cost over the estimated cost was
justified and that SUPPLIER has paid the higher price, but in no event will
CLARK be responsible for tooling costs, which exceeds $84,525, unless
changes are made by CLARK to the Specifications (Exhibits 1 and 2)
requiring changes in the tooling, in which case any incremental tooling
cost will be reflected in the quotation to a Change Request and accepted
under Article 7.
9.4 The Production and Manufacturing Tooling ordered by SUPPLIER, together with
the technical data embodied therein, shall be the sole property of CLARK
upon delivery and acceptance by SUPPLIER of each tooling item identified in
Article 9.2 and SUPPLIER will mark or otherwise identify each tooling item
as being the property of CLARK by affixing a permanent label thereto
stating, "PROPERTY OF CLARK EQUIPMENT COMPANY" as a notice to third parties
that SUPPLIER is in possession of the tooling as a bailee solely for the
purpose of performance of this Agreement.
9.5 SUPPLIER will maintain, preserve, and repair the tooling, returning all or
any portion thereof to CLARK upon request, damage or breakage to be at
SUPPLIER's expense, normal wear and tear excepted, shipping to CLARK, or
other destination of
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<PAGE> 16
the tooling to be at CLARK's expense. SUPPLIER will ship the tooling within
fourteen (14) days of a written request from CLARK for any or all of the
tooling items identified in Article 9.2. Shipments will be prepaid by
SUPPLIER and reimbursed by CLARK upon receipt of the tooling subject to
verification of its condition. SUPPLIER will be obligated to obtain
insurance for such shipments naming CLARK as the insured.
ARTICLE 10. PROTOTYPE AND PREPRODUCTION PROTOTYPES
10.1 CLARK will pay SUPPLIER $1000 for each prototype delivered for endurance
testing and design validation testing in accordance with the Specifications
(Exhibit 1 and 2).
10.2 CLARK will also pay SUPPLIER $285 for each preproduction prototype diesel
and gasoline pod design, and $267 for each preproduction prototype LPG pod
design made using the tooling listed in Article 9.2, the quantities of such
preproduction prototypes to be decided by CLARK, but not to exceed fifty
(50) prototypes.
10.3 SUPPLIER will invoice CLARK for the prototypes upon completion and delivery
for test and CLARK will pay the invoices thirty (30) days after receipt of
the invoices.
10.4 The prototypes shall become the sole and exclusive property of CLARK upon
completion by SUPPLIER and payment by CLARK. Possession of prototypes by
SUPPLIER shall be solely for the
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<PAGE> 17
purpose of testing and upon being requested to do so, SUPPLIER will return
all the prototypes to CLARK within fourteen (14) days of such request, any
damage or breakage to be at SUPPLIER's expense, normal wear and tear from
testing excepted. SUPPLIER will prepay the freight to the destination
provided by CLARK in the request and insure the shipment against damage or
breakage at its expense naming CLARK as the insured.
ARTICLE 11. NON-DISCLOSURE
11.1 All technical information furnished by CLARK to SUPPLIER will be solely for
SUPPLIER's use in performing its obligations in accordance with this
Agreement. Such technical information shall not be disclosed to a third
party, except as necessary for Work performance under this Agreement. All
right, title and interest shall reside in CLARK to all drawings, test data,
documentation, test reports, material specifications and all models,
mock-ups, prototypes and tooling made, fabricated or produced under this
Agreement. All such materials shall be returned to CLARK when requested and
no technical information, or derivatives thereof, shall be used by
SUPPLIER, its affiliates, or any entity under its control thereafter.
11.2 All materials identified in 11.1 will be for SUPPLIER's use only in
performing the Work under Part I and production under Part II and shall not
be disclosed to third parties without
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<PAGE> 18
CLARK's prior written consent, and upon completion or termination of the
Agreement, SUPPLIER shall return all such material to CLARK or make such
other disposition thereof as may be directed or approved by CLARK, and
refrain from manufacturing or selling any similar pods that would be ;used
on trucks in competition to the CLARK World Truck for three (3) years
thereafter.
11.3 SUPPLIER agrees to maintain all contractual and business information
pertaining to this Agreement confidential and not to disclose such
information without the prior written consent of CLARK.
11.4 SUPPLIER agrees that CLARK shall own all rights, title and interest
worldwide to any inventions, discoveries, or design improvements made
hereunder and will promptly disclose the same to CLARK so that it can file
patent applications thereon and SUPPLIER's employees working on this
project shall cooperate with CLARK in assigning such inventions,
discoveries, or design improvements to CLARK and in assisting patent
counsel in preparing, filing and prosecuting such patent applications in
the United States and abroad.
ARTICLE 12. ACCEPTANCE
12.1 Upon approval for production by CLARK, each Instrument Pod design accepted
for production will receive a Certificate of Acceptance in the form
attached hereto and made a part hereof as Exhibit 3.
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<PAGE> 19
12.2 Any Instrument Pod design which fails to receive a Certificate of
Acceptance pursuant to 12.1 shall be rejected. CLARK may, at its option,
either terminate the Agreement or cancel that portion that pertains to the
rejected Instrument Pod design. The cause of rejection must be a material
inability of SUPPLIER to satisfy the Specifications of Exhibits 1 and 2.
The percentage of the rejected design costs bear to the total development
costs in Article 5 shall be used to reduce the Contract Price. SUPPLIER
shall reimburse CLARK, or CLARK may have a set-off against the cost for
developing other Instrument Pod designs which are accepted, or against
production units purchased under Part II.
ARTICLE 13. INTENTIONALLY LEFT BLANK
ARTICLE 14. CANCELLATION
CLARK shall have the right to cancel during Part I upon thirty (30) days
written notice to the SUPPLIER. It is understood that in case of such
cancellation, a cancellation charge computed in accordance with Article 7.7
will be paid by CLARK.
ARTICLE 15. INTENTIONALLY LEFT BLANK
ARTICLE 16. INTENTIONALLY LEFT BLANK
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<PAGE> 20
PART II PRODUCT MANUFACTURING AND SALE
ARTICLE 17. COMMENCEMENT OF MANUFACTURING FOR EXCLUSIVE SALE TO
CLARK AND TERM OF AGREEMENT.
17.1 Upon CLARK issuing a Certificate of Acceptance, as provided for in Article
12.1, Part II of this Agreement shall become applicable to the Instrument
Pod designs accepted.
17.2 Under Part II, the SUPPLIER agrees to manufacture and sell to CLARK, and to
no one else during the term of this Agreement, which shall be for three (3)
calendar years following the year in which the latest Certificate of
Acceptance is issued, or not beyond the end of calendar year 1996,
whichever is later.
17.3 SUPPLIER will sell to CLARK, or its affiliates, commercial quantities of
merchantable quality Instrument Pods packaged and delivered in lots ordered
by CLARK, and its affiliates, to destinations specified in each order or
release coordinated with the separate production lines for assembly of the
Instrument Pods into the applicable World Truck chassis.
ARTICLE 18 FORECASTING AND ORDERING
18.1 CLARK and its affiliates will provide twelve (12) calendar month rolling
forecasts of their anticipated production needs based on their individual
factory build schedules for domestic and foreign plants manufacturing the
World Truck in which the Instrument Pods are to be assembled.
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<PAGE> 21
18.2 Forecasts shall be issued by CLARK and its affiliates each calendar month
for each Instrument Pod beginning no sooner than with the calendar month
following the month in which a Certificate of Acceptance is issued for such
Instrument Pod, but not later than the month prior to the month in which
start-up of production occurs.
18.3 Each forecast shall cover fifty-two (52) calendar weeks of chassis build
quantities at the factory location issuing the forecast, the first eight
(8) consecutive calendar weeks of which SUPPLIER will deliver the ordered
quantities to the factory destination no earlier than three (3) days prior,
nor one (1) day after the specified delivery date. The first four (4) weeks
of the schedule will constitute a firm order period against which orders or
releases are issued by CLARK or its affiliates. Contracts of sale occur
only upon orders or releases issued for scheduled quantities during the
firm order period. CLARK or an affiliate may vary the scheduled quantities
plus or minus 15% from the fifth (5th) through the eighth (8th) week, and
thereafter, the factory issuing the forecast may change the forecasted
quantities and delivery dates as market conditions or other factors
require.
18.4 Orders or releases are issued against quantities specified during the firm
period which are deemed accepted by SUPPLIER unless alternate quantities
and dates are promptly proposed by SELLER within three (3) days of receipt
of the order or release, and such alternate quantities and delivery dates
are
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<PAGE> 22
accepted in writing by the factory destination issuing the order or
release.
18.5 SUPPLIER acknowledges that its contract deliveries must be coordinated to
arrive at the factory destination specified in the order or release,
domestic or foreign, timed for assembly with the chassis build on which the
rolling forecasts at that location was based and such contract for
deliveries is a part of each contract of sale.
18.6 Quantities ordered which do not arrive at the factory destination within
the time allowed in 18.3 may be rejected as not conforming to the contract
of sale. SUPPLIER will be responsible for air shipping any order to its
destination and paying the difference in shipping charges between air and
surface transportation if it will be unable to meet the delivery commitment
in 18.3 and 18.5.
18.7 All contracts of sale will be upon the terms and conditions set forth in
this Agreement. While the parties may use their standard purchase
order/acknowledgement forms to place or acknowledge orders, no different or
additional terms or conditions set forth in such purchase
orders/acknowledgements will add to or modify in any way the terms and
conditions of any contract of sale.
ARTICLE 19. TERMS OF DELIVERY.
19.1 Orders or releases pursuant to Article 18.3 shall b&shipped from SUPPLIER'S
dock FOB in Grand Junction, Colorado to the
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<PAGE> 23
factory destination specified in the order or release. SUPPLIER may be
asked to arrange for carriage to a transport center designated by CLARK
within the U.S. for trans-shipment to a factory destination. SUPPLIER may
be requested to arrange for documentation and shall do so at the request
and expense of the factory destination. Transportation charges, insurance,
financing fees, VAT (value added taxes) and other taxes, duties or levies
including costs for loading and unloading to the destination for each
shipment, if prepaid by SUPPLIER, shall be for the account of the factory
destination which charges shall be itemized and shown separately on the
commercial invoice. Risk of loss and legal title will pass when each
shipment is handed over to the first carrier at SUPPLIER's dock. When
requested, SUPPLIER shall arrange for bills of lading and commercial
invoices to be prepared in sets of duplicate originals, and sent as
necessary to enable representatives of CLARK or its affiliates at the
factory destination to take possession of the shipment upon arrival cleared
through customs of the country of importation to the factory destination,
and it shall be SUPPLIER's further obligation, when requested, to arrange
for all transport documentation to be accompanied by certifications of
governmental authorities, customs clearances, entry summary requirements
and port clearances to enable the factory destination to take possession
and free of all charges upon arrival, including value added taxes, ad
valorem taxes, port
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<PAGE> 24
charges and duties including antidumping or countervailing duties. SUPPLIER
and CLARK or an affiliate may arrange to communicate the information
otherwise contained in a negotiable transport document by equivalent
electronic data interchange (EDI) messages provided the factory destination
acknowledges to SUPPLIER that such EDI messages are interchangeable with
negotiable transport documents and CLARK or its affiliate remain with the
same legal rights as if the shipment were handled otherwise by ordinary
negotiable transport documents.
ARTICLE 20. PRICING.
20.1 Orders or releases will be accepted by SUPPLIER for the quantities
identified therein and sold to CLARK or its affiliates by SUPPLIER for an
initial Unit Price established for each Pod as set forth in a Pricing
Schedule, attached hereto as Exhibit 4 and incorporated herein by
reference. The initial Unit Prices will be the same as the Target Cost for
each Instrument Pod as set forth in Article 6. Thereafter, Unit Prices may
vary according to annual adjustments as provided in Article 21 to determine
the current Unit Price, as set forth in the revised Pricing Schedules,
which when initialed by the parties and attached to the Agreement, becomes
effective and supersede the previous Pricing Schedule (Exhibit 4).
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<PAGE> 25
20.2 The SUPPLIER and CLARK shall cooperate in an attempt to offset the impact
of inflation and other input costs on the SUPPLIER'S marginal cost in
producing the Instrument Pods with the goal of maintaining the Unit Prices
at or below the Target Cost during the term of this Agreement. Any cost
reduction in material, labor, variable overhead, fixed costs, or other
sources of costs to SUPPLIER's operations shall first be applied so as to
reduce the Unit Price below the Target Cost prior to making any economic
price adjustments as provided in Article 21.
ARTICLE 21. PRICE CHANGES DUE TO ECONOMIC ADJUSTMENTS
21.1 The parties recognize that independent economic factors influence prices
apart from the cost factors deemed to be partially under the control of the
SUPPLIER referred to in
20.2. After application of the cost factors for reduction of the Unit Price as
provided in 20.2, the independent economic factors may be applied to
determine the current Unit Price, as provided in 21.2.
21.2 The Unit Prices will be established as provided in 20.1 from the effective
date of each Certificate of Acceptance through the end of the first full
calendar year following the calendar year in which such effective date
occurs. The current Unit Prices in subsequent calendar years may be
adjusted annually, starting with the beginning of the second calendar year
and each succeeding calendar year thereafter. A revised Pricing
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<PAGE> 26
Schedule (Exhibit 5) will be attached to the Agreement superseding the
previous Pricing Schedule effective with the beginning of each calendar
year. In determining the annual adjustment to prices, starting with the
second calendar year, SUPPLIER and CLARK shall cooperate during the
previous calendar year as provided in 20.2 to apply cost reductions before
making any economic adjustments under 21.1. The economic adjustments shall
be made using the U.S. Department of Labor, Bureau of Labor Statistics
Producer Price Index for electronic components and accessories (commodity
code 1178)0 and plastic products (commodity code 072) as weighted
components in a Unit Price formula set forth below:
PM = PC + (0.5 x 0.2 PC) x (GL - GO)/100 +
(0.5 x 0.6 PC) x (IL - IO)/100
Where:
1. PM is the new Unit Price effective each succeeding calendar year;
2. PC is the old Unit Price;
3. GL is the September index for the electrical components and accessories
(commodity Code 1178) as published in the September issue of the
Producer's Price Index of the current calendar year;
4. GO is the corresponding index for September of the preceding calendar
year;
5. IL is the September index for plastic products (commodity Code 072)
published in the September
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<PAGE> 27
issue of the Producer's Price Index for the current calendar year; and
6. I0 is the corresponding index for September of the preceding calendar
year.
ARTICLE 22. INTENTIONALLY LEFT BLANK
ARTICLE 23. PROTECTION FROM LABOR DISPUTES
23.1 In the event SUPPLIER'S hourly production workers organize a union and
SUPPLIER enters into an agreement to recognize such union, or any trade
union organization becomes certified to represent SUPPLIER's employees in a
skill affecting SUPPLIER's ability to fulfill the terms of this Agreement,
SUPPLIER will build an inventory bank of each Instrument Pod against the
possibility of a work stoppage or slow down prior to the expiration of any
such labor agreement of sufficient quantities of each Instrument Pod to
meet the eight-week forecast of CLARK and each of its affiliates following
expiration of any such labor contract. SUPPLIER shall store such pods off
site at a warehouse location from which SUPPLIER may continue to deliver
pods to fulfill the orders or releases received after the expiration of
such labor contract.
23.2 Neither CLARK nor SUPPLIER shall be liable for delays in delivery or
inability to perform or complete its obligations due to acts of God, acts
of the public enemy, civil or military police authorities, strikes,
epidemics, war or riot,
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and in the event of any such force majeure event causing such delays or
interruption of performance, the party affected thereby shall be excused
from performance from the time when the performance would otherwise have
been due for a period of time equal to the length of the force majeure
event, each party to bear its own expenses during such delay or
interruption of performance, and if the delay or interruption of
performance shall continue for a period in excess of eight calendar weeks
after the week in which the performance was due, the party believing itself
disadvantaged, shall at its option, be able to terminate this Agreement
thereafter.
ARTICLE 24. QUALITY ASSURANCE
24.1 SUPPLIER will establish and maintain a quality assurance program which
conforms to the CLARK Quality Assurance Program SQA1, a copy of which is
attached hereto as Exhibit 5 and made a part of this Agreement.
24.2 CLARK may, at its option and expense, review and inspect SUPPLIER's quality
assurance program and product quality at SUPPLIER's facilities. SUPPLIER
will provide Clark's representatives with good faith cooperation in such
assessments including furnishing testing and inspection devices as may be
reasonably required by CLARK's representatives to conduct such assessment
reviews and inspections. CLARK will use its best efforts consistent with
accomplishing its assessment reviews and inspections to avoid
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<PAGE> 29
undue disruption or delay of SUPPLIER'S operations. Inspection and review
of SUPPLIER's quality assurance program and product quality will not
constitute acceptance of any Pods and will not relieve SUPPLIER of the
responsibility for any non-conformity.
24.3 If SUPPLIER has reason to believe that a defect in design or manufacture or
a non-conformity with the specifications may be present in any Pods or
parts, SUPPLIER will immediately advise CLARK and will cooperate with CLARK
to determine whether the defect or non-conformity is present and, if so,
will cooperate with CLARK to correct it. This provision will not be
construed to expand SUPPLIER warranty to CLARK or to relieve SUPPLIER of
its responsibility for the consequences of any such defect or
non-conformity.
ARTICLE 25. WARRANTY ON INSTRUMENT PODS AND PARTS
25.1 SUPPLIER warrants that the Instrument Pods sold hereunder will conform to
the specifications for the purpose intended, of good material and
workmanship, and free from defects. For purposes of this Agreement, any
failure of an Instrument Pod to be as warranted is referred to as a
"defect." This warranty extends to the performance of the Instrument Pods
in lift trucks into which the Instrument Pods are incorporated.
25.2 If any defect is discovered in an Instrument Pod prior to delivery of a
lift truck to a first user into which it has been incorporated, SUPPLIER
will pay or reimburse CLARK or its
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affiliates for the parts and labor required to correct the defect and any
damage to the lift truck resulting from the defect. An allocation of
overhead costs proportional to the labor charges will be added if the
repairs are made by CLARK or its affiliates before shipment of a truck to
the dealer or customer. The labor rate shall be at the standard dealer
warranty rate if the repairs are made by the dealer before delivery to a
first user or customer.
25.3 If any defect is discovered in a Pod within eighteen (18) months after the
date of delivery to CLARK or its affiliate or during the first two thousand
(2000) hours of use of a truck in which it is installed, whichever occurs
first, SUPPLIER will pay or reimburse CLARK and its affiliates for the
parts and labor required to correct the defect and any damage to the truck
resulting from the defect at the standard dealer warranty rate plus travel.
25.4 If a defect is discovered at any time that poses a hazard which may cause
personal injury or property damage, notwithstanding any other warranty
provision or warranty limitation, SUPPLIER will pay, or reimburse CLARK or
its affiliates, for the cost of parts and labor to correct the defect and
any damage to the truck caused by the defect, at the dealer's standard
warranty rate, plus travel to repair any truck into which the defective Pod
has been incorporated. In addition, the costs to provide proper notice and
warnings to
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<PAGE> 31
dealers and to users of such trucks will be SUPPLIER's expense.
25.5 Parts provided by SUPPLIER for Pods under the warranty provisions of this
Agreement are covered by the above warranty provisions in 25.3 for the
remainder of any applicable warranty period, and thereafter are covered by
the Parts Warranty to the extent that the Parts warranty period exceeds the
Pod warranty period.
ARTICLE 26. WARRANTY CLAIMS
26.1 When a written claim for warranty reimbursement is made, SUPPLIER may take
the following actions:
a) SUPPLIER may require CLARK or its affiliates to return the defective
Pods or the defective Parts at SUPPLIER's expense to a designated
warranty administration facility operated by CLARK or its affiliates.
b) SUPPLIER may inspect any such defective Pods and Parts at the warranty
administration facility, or may instead, upon prompt written notice,
require CLARK or its affiliates, to return such Pods and Parts to
SUPPLIER'S facility at its expense. CLARK and its affiliates will
notify SUPPLIER when such Pods and Parts are available for inspection,
and provide a brief description of the basis for the warranty claims,
after which SUPPLIER will instruct CLARK, or its affiliates within ten
(10) days whether to send the returned Pods and Parts to SUPPLIER's
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<PAGE> 32
facility and failing to receive such instructions, the Pods and Parts
will be automatically deposited for inspection by SUPPLIER at the
warranty administration facilities operated by CLARK and its
affiliates.
c) After inspection by SUPPLIER, if SUPPLIER determines that such Pods or
Parts are not defective, SUPPLIER will provide CLARK with the data and
analysis on which SUPPLIER's determination is based in each case, and
segregate each item for physical inspection and verification.
Otherwise, SUPPLIER will pay or reimburse CLARK and its affiliates in
accordance with the applicable warranty provisions for each item
subject to a warranty claim within fifteen (15) days from the date of
SUPPLIER's inspection.
d) Any warranty claim made by CLARK or its affiliates will be considered
accepted, unless within thirty (30) days after SUPPLIER's receipt of
the claim, as provided in paragraph b) above, SUPPLIER either notifies
CLARK or its affiliates in writing:
i) that the claim is denied in accordance with the procedure set
forth in paragraph c) above, or
ii) that SUPPLIER requests additional time not to exceed thirty (30)
days within which to complete the procedures set forth in
paragraph b) and c) above.
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<PAGE> 33
26.2 The warranties provided by this Article 26 will not apply to Pods which are
incorporated into trucks which have not been approved by SUPPLIER for use
with that truck, however, CLARK or its affiliates may request such
approval, which shall not be unreasonably denied, and SUPPLIER will be
deemed to have granted its approval unless a refusal is made, in writing,
giving the reasons therefor within thirty (30) days of such request.
26.3 The warranties provided do not apply to malfunction or failure caused after
delivery to users by parties other than SUPPLIER or SUPPLIER's
representatives, by accident, misuse or neglect, or arising from
alterations not authorized by SUPPLIER. These warranties do not cover
service replacement of consummable items such a light bulbs.
26.4 The warranties provided in this Agreement are in lieu of all other
warranties, express or implied, and state SUPPLIER's entire obligations
with respect to defects in Pods or Parts. THERE ARE NO IMPLIED WARRANTIES
OF MERCHANTABILITY OR OF FITNESS FOR A PARTICULAR PURPOSE. EXCEPT AS STATED
IN THIS AGREEMENT, SUPPLIER WILL NOT BE LIABLE FOR INCIDENTAL OR
CONSEQUENTIAL COMMERCIAL DAMAGES FOR BREACH OF WARRANTY.
ARTICLE 27. PRODUCT LIABILITY INSURANCE
27.1 SUPPLIER will carry sufficient insurance with limits adequate in the
opinion of CLARK to satisfy claims by third parties of injury to persons or
damage to property contributed to or
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<PAGE> 34
caused by the Pods or Parts and provide CLARK with evidence upon request
that such insurance is in force throughout the term of this Agreement and
thereafter.
27.2 In the event of any defect in design, workmanship, or manufacture in the
Pods or Parts sold to CLARK or its affiliates by SUPPLIER under this
Agreement that causes or as alleged to cause any injury to persons or
damage to property for which a claim is made by a third party against CLARK
or its affiliates for breach of warranty, strict liability or negligence,
SUPPLIER will indemnify and defend CLARK, or its affiliates, including
payment of all attorney fees and all damages, including punitive damages,
arising from such claims.
ARTICLE 28. INDEMNIFICATION
SUPPLIER agrees, at its own expense, to defend, protect, and hold harmless
CLARK, its successors and assigns, against all suits a law or in equity and
for all damages, expenses, claims and demands arising from infringement of
any United States or foreign patent, trademark or copyright by reason of
CLARK's or other's use, sale or purchase of the Instrument Pods covered by
this Agreement. CLARK will promptly notify SUPPLIER of such suit or action
and copies of legal documents served on CLARK with regard thereto shall be
promptly delivered to SUPPLIER.
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<PAGE> 35
ARTICLE 29. PARTS AVAILABILITY AND WARRANTY
29.1 SUPPLIER shall have the obligation to sell to CLARK and its affiliates and
CLARK or its affiliates shall have the opt(pound)on to purchase from
SUPPLIER, during the term of this Agreement and for five (5) years
thereafter, replacement pods and component parts therefor which are
manufactured by SUPPLIER for the World Trucks and sold pursuant to this
Agreement.
29.2 During the term of this Agreement and for five (5) years thereafter, CLARK
and its affiliates will maintain a stock of Pods and Parts to supply
dealers and customers; however, SUPPLIER will also maintain a back-up
supply of Pods and Parts in sufficient quantities. The parties shall from
time to time agree on the appropriate quantities of back-up Pods and Parts.
SUPPLIER will use its best efforts to ship back-up Pods and Parts orders
within twenty-four (24) hours after the order is received. An order will be
considered a back-up order if the Pod or Part is required to repair a truck
which is idle or out of service because the repair cannot be supplied from
stock maintained by CLARK or its affiliates.
29.3 If any defect is discovered in a Part within eighteen (18) months after the
date of delivery to CLARK or its affiliates or during the first two
thousand (2000) hours of use of a truck in which it is installed, whichever
occurs first, SUPPLIER will pay or reimburse CLARK and its affiliates for
the parts and labor required to correct the defect and any damage to the
truck resulting from the defect at the standard
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<PAGE> 36
dealer warranty rate plus travel.
29.4 A replacement Pod or Part is covered under the Pod Warranty for the
remainder of the applicable warranty period in Article 25.3 and thereafter
is covered by the replacement Pod or Part Warranty to the extent the latter
exceeds the former.
ARTICLE 30. STANDARD TERMS OF SALE
30.1 The contracts of sale for Pods and Parts shall be made pursuant to this
Agreement and any standard or printed terms accompanying any purchase
order, release, invoice, confirmation, or any other communications shall
not modify or change the terms of this Agreement. In the event of any
conflict with the written or printed terms of any such communication and
those of this Agreement, or the presence of any additional or different
terms than those in this Agreement, the terms of this Agreement shall be
controlling and supersede any such conflicting, additional or different
terms.
ARTICLE 31. TERM AND TERMINATION
31.1 Except as otherwise provided under Article 14 of Part I, this Agreement
shall remain in force for the term set forth in 17.2 of Part II, unless
terminated immediately by notice in writing given by either party to the
other upon the happening of any of the following events:
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<PAGE> 37
i) Upon the breach by the other party of any provisions of this Agreement,
provided where such breach is capable of remedy, notice of termination
shall not be given unless and until the party in breach fails to remedy
such breach within thirty (30) days after notice in writing from the
other party requiring such remedy;
ii) Upon the other party making any concession with its creditors or having
a petition in bankruptcy filed by or against it or having or suffering
a receiver or administrator to be appointed over the whole or any part
of its assets, or a moratorium being declared in respect of any of its
debts, or taking advantage of any statute for the relief of insolvent
debtors, or any action being taken for the suspension of payments or of
any creditor's rights or of any petition in bankruptcy which is not
vacated within thirty (30) days, and
iii) Upon either party ceasing to do business in a normal way, or any
significant change in control, or sale or disposition of substantially
all the assets of either party without the prior written consent of the
other party.
31.2 The termination of this Agreement shall not relieve either party of any
obligations or monies due the other party prior to termination, nor shall
termination of this Agreement prejudice any rights or obligations which are
deemed to
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<PAGE> 38
survive termination pursuant to the following articles: 7.7; 10.4, 11;
24.3; 25; 26; 27; 28 and 29.
ARTICLE 32. GENERAL PROVISIONS
32.1 Written notice shall be deemed to have been duly served in person on the
individual or the officer for whom it is intended, when sent by any of the
means described herein, or if sent by registered or certified mail to the
business address given below on the date sent with proper U.S. postage
paid.
32.2 Notices to be given by either party will be in writing and may be delivered
by either telecopy facsimile, telegram, or prepaid registered or certified
mail to the following address:
SUPPLIER: Dixson, Inc.
287 27 Road
Grand Junction, Colorado 81503
Telecopy No. 303-245-6267
CLARK: Clark Material Handling Company
333 W. Vine Street
Lexington, Kentucky 40507
Telecopy No.: 606-288-1541
AND A COPY TO: CLARK/Legal
Suite 701
106 W. Vine Street
Lexington, KY 40507
Telecopy No.: 606-288-1355
32.3 This Agreement will not be assigned by either party without the prior
written consent of the other party, except when the assignment is made to a
wholly owned subsidiary of the parties, or to a successor of the business
to which this
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<PAGE> 39
Agreement relates. Unless otherwise agreed, no assignment will relieve the
party assigning of any duty to perform or any liability for breach.
32.4 This Agreement encompasses the entire Agreement between the parties
respecting the sale and purchase of the Pods and Parts covered by this
Agreement and supersedes any and all previous Agreements, Memoranda,
negotiations or understandings of the parties with respect thereto. This
Agreement and the Contract Documents may be modified by mutual agreement of
the parties only by written amendment signed by both parties.
32.5 Any failure by either party hereto to enforce, at any time, any term or
condition of this Agreement will not constitute, nor will it be construed
as a waiver of that party's right thereafter to enforce each and every term
and condition of this Agreement.
32.6 If for any reason any provision of this Agreement is invalid, illegal, or
unenforceable, then such provision will be deemed severable form the other
provisions of this Agreement, all of which remain in full force and effect
and binding on the parties to this Agreement.
32.7 This Agreement and all disputes arising pursuant to this Agreement will be
governed by and construed in accordance with the laws of the Commonwealth
of Kentucky.
32.8 IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
in duplicate originals by their duly authorized representatives as of the
day and year first written above.
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<PAGE> 40
DIXSON, INC.
BY: /s/
-------------------------------------
TITLE: Vice President of Marketing
-------------------------------------
DATE: 9/23/91
-------------------------------------
CLARK MATERIAL HANDLING COMPANY A Business
Unit of Clark Equipment Co.
BY: /s/
-------------------------------------
TITLE: President
-------------------------------------
DATE: 12/20/91
-------------------------------------
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<PAGE> 1
EXHIBIT 10.27
LEASE AGREEMENT
THIS LEASE is made this 15th day of April, 1987, by and between VERGIL
D. KELLY and KENNY ANGELUCCI, (collectively, "LESSOR"), and CLARK EQUIPMENT
COMPANY, ("LESSEE"), a Delaware corporation;
WITNESSETH:
ARTICLE I
DEMISED PREMISES
SECTION 1.01. LESSOR, In consideration of the covenants herein
contained, does hereby lease to LESSEE, and LESSEE does hire from LESSOR the
following property (collectively the "DEMISED PREMISES"):
The real property (the "LAND") located in the Leestown Industrial Park,
County of Fayette, State of Kentucky, shown and described on Exhibit A.
All building, structures, facilities, parking areas, truck docking
areas and other improvements now or hereafter located on the LAND
including, but not limited to THE BUILDING (Section 2.01).
All rights of way or use, licenses, easements, tenements, hereditaments
and appurtenances now or hereafter belonging or appertaining to any of
the foregoing.
SECTION 1.02. LESSOR has delivered (or within five (5) days of the date
hereof will deliver) to LESSEE a title insurance commitment #817-499981 from
Commonwealth Title Insurance Company dated March 24, 1987 which commits to
insure LESSOR's title in fee simple to DEMISED PREMISES ("Title Commitment").
LESSOR warrants that within twenty (20) days from the date hereof LESSOR will
take fee simple title to DEMISED PREMISES, free and clear of all encumbrances
except as set forth in such Title Commitment and in the event LESSOR fails to so
take title to DEMISED PREMISES, then at LESSEE's Commitment, furnish LESSOR with
a written statement of any valid objections thereto. LESSOR shall, within ten
(10) days after receipt of LESSEE's objections, cause the Leasehold Commitment
to be revised to satisfy such objections and shall within such ten (10) days
deliver to LESSEE a revised Leasehold Commitment satisfying LESSEE's objections,
and in the event LESSOR falls to satisfy such objections, then, at LESSEE's
option, LESSEE may terminate this LEASE and thereafter LESSEE shall have no
further obligations to LESSOR under this LEASE.
SECTION 1.03. On or within five (5) days of the date hereof LESSOR will
deliver to LESSEE a Leasehold Commitment for Title Insurance, commitment
#817-499983 issued by Commonwealth Title Insurance Company pursuant to which
Commonwealth Title Insurance Company agrees to insure the full value of
LESSEE'S leasehold interest in DEMISED PREMISES in the amount of $8,000,000.00,
without exception except for those, if any, in the Title Commitment described
in Section 1.02. LESSEE shall examine such Leasehold Commitment and within
fifteen (15) days of receipt of the Leasehold
<PAGE> 2
Commitment, furnish LESSOR with a written statement of any valid objections
thereto. LESSOR shall, within ten (10) days after receipt of LESSEE's
objections, cause the Leasehold Commitment to be revised to satisfy such
objections and shall within such ten (10) days deliver to LESSEE a revised
Leasehold Commitment satisfying LESSEE's objections, and in the event LESSOR
fails to satisfy such objections, then, at LESSEE's option, LESSEE may terminate
this LEASE and thereafter LESSEE shall have no further obligations to LESSOR
under this LEASE.
SECTION 1.04. Attached hereto as Exhibit "B" is the Proposed Site Usage
Plan of the DEMISED PREMISES which is acceptable to LESSEE and conclusively
determines the LAND as between LESSEE and LESSOR.
SECTION 1.05. Within ten (10) days of the date hereof LESSOR shall
deliver to LESSEE an opinion of an attorney admitted to practice and in good
standing in the state in which DEMISED PREMISES are located stating that the
LAND is subject to a zoning classification which will permit a manufacturing,
warehouse, distribution center and office of the size contemplated in Section
2.01 hereof to be built and operated thereon, together with a copy of the
section of the zoning ordinance under which the LAND is zoned. In the event that
a rezoning of the DEMISED PROPERTY or any part thereof is required, LESSOR shall
take all reasonable steps to secure approval of the zoning change.
SECTION 1.06. Within ten (10) days of the date hereof LESSOR shall
deliver to LESSEE an opinion, addressed to LESSEE, from a Soil Engineer
acceptable to LESSEE, that the LAND has never been used for the handling,
treatment, storage or disposal of any hazardous or toxic substance as defined
under any applicable state or Federal law including, without limitation Section
101(4) of the Comprehensive Environmental Response, Compensation and Liability
Act, 42.U.S.C. S9601(14) and that there is no soil or water contamination on or
below the surface of the LAND.
SECTION 1.07. LESSOR covenants that LESSOR has good right and lawful
authority to execute this LEASE and that same does not require joinder or
approval of any other person, firm or corporation; that LESSEE, its successors
and assigns, while not in default hereunder shall peaceably and quietly enjoy
and possess DEMISED PREMISES; and that LESSOR shall and will warrant and defend
LESSEE, its successors and assigns, against every person claiming or whom may
claim DEMISED PREMISES.
<PAGE> 3
SECTION 1.08. In the event that LESSOR shall fail to comply with any of
the provisions of this ARTICLE I within the time required, LESSEE may, at any
time thereafter, without prejudice to and in addition to any other rights it may
have under this LEASE or at law or in equity, cancel this LEASE forthwith by
notice to LESSOR, or LESSEE at its option may do such other things as LESSOR
shall fail to do as required by this ARTICLE and LESSOR shall on demand
reimburse LESSEE for its disbursements and expenses in connection therewith,
including reasonable attorney's fees.
ARTICLE II
IMPROVEMENTS TO DEMISED PREMISES
SECTION 2.01. LESSOR shall cause to be constructed on the DEMISED
PREMISES a building ("THE BUILDING") containing approximately 373,833 square
feet of floor area plus paved truck docking areas and parking areas. The rail
siding and rail yard will be constructed by LESSOR, as shown on Exhibit "B".
LESSEE has delivered to LESSOR Design Development Documents for THE BUILDING
dated January 6, 1987, February 28, 1987 and various other dates, consisting of
drawings and other documents (herein referred to as Exhibit "C", attached to and
made a part hereof) to: (i) fix and prescribe the size and character of THE
BUILDING and the structural, architectural appearance, and exterior finish
materials to be used therein; and (ii) to fix the location of THE BUILDING on
DEMISED PREMISES and to show all paved docking areas and parking areas. Working
Drawings and Specifications acceptable to LESSEE will be prepared by LESSOR
consistent with the Design Development Documents (Exhibit "C") and THE BUILDING
will be constructed in strict accordance therewith. LESSEE and its
representatives have the right to enter the DEMISED PREMISES to inspect
construction of THE BUILDING. LESSOR will give due consideration to comments and
suggestions made by LESSEE or its representatives in connection with BUILDING
construction, however this will in no way relieve LESSOR of its obligation
hereunder.
SECTION 2.02. LESSOR agrees to commence construction of THE BUILDING
on or before April 1, 1987 and shall complete the same on or before December 1,
1987 in accordance with the final working drawings and specifications prepared
by LESSOR, and upon completion will deliver to LESSEE a copy of such drawings
and specifications. Completion of THE BUILDING will have occurred only when
<PAGE> 4
(i) construction has been substantially completed in accordance with the final
working drawings and specifications except for "punch list" items approved in
writing by LESSEE; (ii) each and every governmental certificate required as a
condition precedent to occupancy of THE BUILDING by LESSEE has been
unconditionally issued in its final form, and (iii) LESSEE has accepted THE
BUILDING as having been constructed in accordance with the final working
drawings and specifications and any agreed upon changes.
SECTION 2.03. LESSEE may, by written request, make changes in the
drawings, designs or specifications applicable to construction of THE BUILDING.
If such change increases the cost of construction, LESSOR will prepare a
quotation for changes to be considered by LESSEE. If LESSEE decides to go
forward with the change, LESSOR will make such change, and at the completion of
such change, LESSOR will invoice LESSEE for such agreed upon cost. If the change
requested by LESSOR decreases the cost of construction, LESSOR shall issue a
credit for such savings, which shall be paid by LESSOR to LESSEE upon completion
of construction. At the parties' option, a running total of all credits and
approved cost increases may be kept, and at the completion of construction, the
net setoff amount will be paid as appropriate. All changes or extra work ordered
by LESSEE shall be deemed to be part of the work hereunder and shall be
performed and furnished in accordance with all of the terms and provisions of
this Agreement. In no event will the RENT provided for in Section 4 hereof be
increased or decreased as a result of changes made hereunder.
SECTION 2.04. All construction on the DEMISED PREMISES shall be
completed in accordance with the plans and specifications therefor in a good
workmanlike manner and in conformity with good construction and engineering
practices and in compliance with all applicable building codes, ordinances,
permits and other governmental authorization. LESSOR shall from time to time
(but not more than monthly) at the request of LESSEE furnish to LESSEE a
certificate of the architect or general contractor in charge of construction as
to the current status thereof, percentage of completion thereof, and conformity
thereof to such working drawings and specifications and the approximate number
of days to complete the same.
Section 2.05. In the event that performance as required by Section
2.02 is delayed by reason of strike, fire, windstorm, governmental order, acts
of God, unavailability of materials if ordered in time, or other causes beyond
<PAGE> 5
the control of LESSOR, LESSOR shall, upon written request deliver to LESSEE
within fifteen (15) days of the occurrence of the delaying event, be entitled to
an extension of time equal to the reasonable time that it takes LESSOR's
contractor to perform after the date that the event causing such delay is
terminated and the contractor has rescheduled its work force to begin and/or
continue work on DEMISED PREMISES, provided, however, that if for any reason THE
BUILDING is not completed by December 31, 1987 then at any time thereafter until
THE BUILDING is completed LESSEE may, by written notice to LESSOR, terminate
this LEASE without liability.
ARTICLE III
TERM
SECTION 3.01. LESSEE Is hereby granted the right TO HAVE AND TO HOLD
the DEMISED PREMISES, together with all and singular the improvements from time
to time thereon, appurtenances, rights, privileges and easements thereunto
belonging or any wise appertaining, for:
(i) a preliminary term (the "PRELIMINARY TERM") commencing
on the date of this LEASE and terminating on the
commencement of the PRIMARY TERM. During the last sixty
(60) days of the PRELIMINARY TERM LESSEE may install its
conveyor systems and manufacturing equipment;
(ii) a primary term (the "PRIMARY TERM") commencing on
December 1, 1987 and continuing thereafter to and
including the 30th day of November, 1997; provided
however that if THE BUILDING is not completed as
required by Section 2.02 by December 1, 1987 then the
PRIMARY TERM will not commence until the first day of
the month next following completion of THE BUILDING as
required by Section 2.02, and the PRIMARY TERM will end
ten (10) years after the Lease begins.
SECTION 3.02. LESSEE, so long as it is not in default hereunder, shall
have the right and option to extend the term of this LEASE on the same terms and
conditions (except for rent increases provided in Section 4.03) for three (3)
additional terms of five (5) years each. This LEASE shall, without any action
by LESSEE, be automatically extended for each of said terms unless LESSEE
shall, prior to one hundred, eighty (180) days before the expiration of the
term then in effect, notify in writing LESSOR that LESSEE elects not to extend
the term hereof, in which event this LEASE, and all subsequent options to
extend, shall terminate at the expiration of the term then in effect provided,
however, that LESSOR shall notify LESSEE two hundred, seventy (270)
5
<PAGE> 6
days prior to the expiration of the term then in effect of the impending
expiration of such term.
ARTICLE IV
RENT
SECTION 4.01. For the PRELIMINARY TERM, rent shall be $10.00.
SECTION 4.02. Monthly Rent during the PRIMARY TERM shall be:
Eighty-Seven Thousand ($87,000.00) Dollars
SECTION 4.03. Monthly rent during the extension terms provided for in
Section 3.02 shall be negotiated prior to any extension. Provided, however, that
in no event shall the monthly rental for the extension term(s) exceed the
previously applicable monthly rent by more than two percent (2%) per year,
calculated on a simple basis.
SECTION 4.04. Monthly rent shall be paid in advance on or before the
10th day of each month.
ARTICLE V
REAL ESTATE TAXES, ASSESSMENTS
AND UTILITIES
SECTION 5.01. LESSEE covenants and agrees to return and to pay all real
estate taxes and assessments which are levied or assessed against DEMISED
PREMISES including any interest and penalty and which become payable during the
PRIMARY TERM and each extension terms, if extended, before they shall
respectively become due and payable. Written evidence of the payment of said
taxes and assessments shall be furnished by LESSEE to LESSOR upon LESSOR's
written request therefor.
In the event the state in which DEMISED PREMISES are located or any
taxing authority thereunder should, subsequent to the execution of this LEASE,
change or modify the present system of taxing real estate so as to tax the
rental income from real estate in lieu of or in substitution (in whole or in
part) for the real estate taxes and so as to impose a liability upon LESSOR for
the amount of such tax, then LESSEE shall be liable under this LEASE for the
payment of the taxes so imposed during the PRIMARY TERM, and any extension
terms, if extended, of this LEASE to the same extent as though the alternative
tax was a tax upon the value of DEMISED PREMISES.
SECTION 5.02. LESSEE shall pay all charges for gas, water, electricity,
sewer and other utilities used on DEMISED PREMISES during the PRIMARY TERM of
<PAGE> 7
this LEASE and each extension term. The costs of all such utility lines and
utility tap on fees shall be paid by LESSOR.
ARTICLE VI
USE AND COMPLIANCE WITH LAWS
SECTION 6.01. LESSEE shall use the DEMISED PREMISES and THE BUILDING
for manufacturing, warehousing, a distribution center and offices, subject
however to the zoning ordinances and such agreements, conditions, restrictions
and other encumbrances, if any, to which the DEMISED PREMISES are subject.
LESSEE shall not permit the same to be used for any unlawful purpose, nor
produce, store or transport hazardous waste therein without proper permits nor
commit nor suffer any waste thereto.
SECTION 6.02. LESSEE shall comply with all laws, ordinances, rules and
regulations of all governmental authorities having jurisdiction over DEMISED
PREMISES provided that such laws, ordinances, rules and regulations pertain to
LESSEE's use of DEMISED PREMISES. LESSOR shall comply with all such laws,
ordinances, rules and regulations pertaining to the conditions of DEMISED
PREMISES. LESSOR and LESSEE shall each have the right, at the cost and expense
of the contesting party, to contest or review by legal proceedings the validity
or legality of any such law, order, ordinance, rule, or regulation, and during
such the pendency of contest, the contesting party may refrain from complying
therewith, providing that the contesting party shall hold the other harmless
from the consequences of violation of any such law, order, ordinance, rule or
regulation.
SECTION 6.03. LESSEE shall not cause or maintain any nuisance in, or on
DEMISED PREMISES.
ARTICLE VII
MUTUAL INDEMNIFICATION AGAINST LIABILITY
SECTION 7.01. LESSOR shall indemnify and save harmless LESSEE from and
against any and all actions, claims, liability, penalties, damages, expenses,
and judgments of any kind, including reasonable attorney's fees and court
costs, which may be brought or made against LESSEE, or which LESSEE may pay or
incur, by reason of LESSOR's negligent performance of, or failure to perform,
any of its obligations under this LEASE.
<PAGE> 8
SECTION 7.02. LESSEE shall Indemnify and save harmless LESSOR from and
against any and all actions, claim, liability, penalties, damages, expenses, and
judgments of any kind, including reasonable attorneys' fees and court costs,
which may be brought or made against LESSOR by reason of any injury or claim of
injury to persons or property of any nature and which arises out of the use,
occupation, and control of DEMISED PREMISES by LESSEE at any time (including any
such claims resulting from any work by LESSEE in connection with any alteration,
changes, new construction, or demolition of portions of the DEMISED PREMISES)
provided, however, that LESSEE shall have no liability for any injury or claim
of injury to persons or property due to the negligence of LESSOR, including,
without limitation, any negligent acts or omissions by LESSOR or its agents in
connection with construction of THE BUILDING. LESSEE shall have the right to
defend any such suit with attorneys of its own selection, but LESSOR shall have
a right, if it sees fit, to participate in such defense at is own expense.
LESSEE shall not be liable for any loss or damage to the DEMISED PREMISES causes
by fire and such other casualties as are covered by the insurance required to be
carried by LESSEE pursuant to the provisions of Section 10.01 hereof.
SECTION 7.03. During the PRIMARY TERM and any extensions thereof,
LESSEE shall obtain and maintain in force a policy of general comprehensive
public liability insurance having limits of not less than $3,000,000.00 in
respect to any one accident and naming LESSOR and LESSEE, as their interests may
appear and with respect to LESSEE's obligation to LESSOR pursuant to Section
7.02. Said insurance may be maintained as part of LESSEE's general policy of
public liability Insurance and may include coverage of other properties of
LESSEE.
ARTICLE VIII
MAINTENANCE AND REPAIRS
SECTION 8.01. During the PRIMARY TERM and any extension thereof,
LESSOR shall keep, or cause to be kept, the roof, the exterior walls and all
structural elements of THE BUILDING in good and substantial order, condition
and repair (unless such repair is made necessary by the actions of LESSEE but
not including therein repairs for ordinary wear and tear), and LESSEE shall
keep the interior and the non-structural parts of THE BUILDING in good and
substantial order, condition and repair, provided, however, that any damage
<PAGE> 9
caused by fire or other casualty shall be repaired or replaced in accordance
with and if required by the provisions of Article X and any damage by any taking
by condemnation or exercise of the right of eminent domain shall be repaired or
replaced in accordance with and if required by the provisions of Article XIII.
LESSEE's obligation to repair includes the repair and necessary replacement of
the HVAC system for the PRIMARY TERM. LESSEE will repair the parking lot and
driveways on DEMISED PREMISES, provided, however, that during the first twelve
(12) months of the PRIMARY TERM, LESSOR shall be responsible for any repairs to
the parking lot and driveways due to settling or structural cracking.
In the event LESSOR fails to perform its maintenance and repair
obligations as set out above, then after thirty (30) days' written notice to
LESSOR of LESSOR'S failure to repair or to maintain, provided however, that no
such written notice is required under emergency circumstances, LESSEE may cure
such failure at LESSOR's expense. LESSEE shall have the right to demand
immediate reimbursement from LESSOR for any such payment, with interest thereon
in an amount not exceeding the highest legal rate of interest then applicable,
and upon failure of LESSOR to so reimburse LESSEE, LESSEE may deduct such sums
from the next succeeding installment or installments of rent due under this
LEASE.
ARTICLE IX
ALTERATIONS AND IMPROVEMENTS
SECTION 9.01. LESSEE shall have the right and privilege at all times to
make, at LESSEE's own expense, such changes, improvements, alterations,
remodeling and additions to DEMISED PREMISES as LESSEE may desire which shall be
the exclusive property of LESSEE, provided that exterior and structural changes,
improvements, alterations, and additions will not be done without LESSOR's
consent, which consent shall not be unreasonably withheld, and that any such
work done by LESSEE shall be done in a good and workmanlike manner without
impairing the structural soundness of DEMISED PREMISES and shall conform to
every applicable requirement of law. LESSOR shall cooperate with and shall
execute all applications and other instruments needed by LESSEE in LESSEE's
securing the necessary permits and authority to perform any work permitted
under this LEASE. Any improvements, nonstructural alterations, and additions
made by LESSEE shall remain the property of LESSOR at the expiration
<PAGE> 10
of PRIMARY TERM and any extensions thereof provided, however, that any
equipment, trade fixtures, furnishings or other personal property not
permanently affixed to THE BUILDING shall remain the property of LESSEE at the
expiration of PRIMARY TERM and any extensions thereof. Such equipment, trade
fixtures, furnishings or other personal property may be removed by LESSEE, and
any damage to DEMISED PREMISES caused by such removal shall be repaired by
LESSEE prior to the expiration of the term.
ARTICLE X
INSURANCE AND DAMAGE
SECTION 10.01. During the PRIMARY TERM and any extensions thereof,
LESSEE shall keep THE BUILDING insured with responsible insurance companies
licensed to do business in the state in which DEMISED PREMISES are located
against loss or damage to the buildings by fire and other such casualties as are
included in "extended coverage" or "all risks coverage" in an amount
representing not less than one hundred (100%) percent of the full insurable
value of THE BUILDING (excluding foundation and excavation costs and other
normal exceptions to coverage).
SECTION 10.02. All of the insurance policies provided for in Section
10.01 shall be In the name of LESSOR, LESSEE, and any lender under any mortgage
on DEMISED PREMISES pursuant to a standard mortgagee clause or endorsement,
provided that such lender agrees that the proceeds of insurance may be used for
restoration. LESSEE shall, upon written request of LESSOR, deliver to LESSOR and
to lender certificates evidencing such insurance coverage, and, upon written
request of LESSOR, exhibit to LESSOR evidence of renewals of such policies and
receipts for payment of premiums on such insurance policies and renewals
thereof.
SECTION 10.03. Loss, if any, under any or all such insurance policies
shall be adjusted with the insurance company or companies by LESSOR and
LESSEE. The loss, so adjusted, shall be paid to LESSOR and LESSEE or, if agreed
between LESSOR, LESSEE and LESSOR's lender, to the lender, for the sole purpose
of reconstructing and repairing any damage provided for herein under such
reasonable conditions as such lender may prescribe, but not for the purpose of
reducing or repaying of the balance of such loan without repair and replacement
of such damaged buildings.
<PAGE> 11
SECTION 10.04. If during the first eight (8) years of the PRIMARY TERM,
all or any part of the DEMISED PREMISES are damaged by fire or other peril, then
LESSOR shall restore or rebuild the improvements upon the DEMISED PREMISES to
the extent of any proceeds of any insurance hereinabove provided. After such
eight (8) years, and during any renewal term, if forty (40%) percent or more of
THE BUILDING s damaged by fire or other peril, LESSEE may elect to terminate
this LEASE, In which event all insurance proceeds shall be paid by LESSOR. If
this LEASE is not terminated or if the damage is less than forty (40%) percent,
then LESSOR shall restore or rebuild the improvements upon the DEMISED PREMISES
to the extent of any insurance proceeds. Unless this LEASE is terminated, there
will be abatement of rent for the period during which LESSEE is not in occupancy
and use of the damaged portion of the DEMISED PREMISES during such restoration.
SECTION 10.05. LESSEE may carry any insurance required to be maintained
under this ARTICLE X, either in whole or in part, under: (i) a policy or
policies covering other liabilities and locations of any subsidiary, successor,
affiliate or controlling corporation of LESSEE; or (ii) any plan of
self-insurance which LESSEE, or any affiliated or controlling corporation may
have in effect provided that such affiliated or controlling corporation
guarantees LESSEE's obligations under this ARTICLE X and provided that such
corporation has a net worth in excess of $100,000,000. The statement from LESSEE
that it has elected to be a self-insurer of the risk and in the amount specified
in such statement, may be supplied in lieu of the appropriate insurance
certificate otherwise required hereunder.
ARTICLE XI
MECHANIC'S LIENS
SECTION 11.01. LESSEE agrees that it will pay or cause to be paid all
costs for work done by it or ordered by it on DEMISED PREMISES and THE
BUILDING and LESSEE shall keep the DEMISED PREMISES and THE BUILDING and the
tenancy created by this LEASE, free and clear of mechanics liens on account of
work done or ordered by LESSEE or persons claiming under LESSEE. LESSEE agrees
to and shall indemnify and save LESSOR free and harmless from and against any
and all liability, loss, damage, cost, attorney's fees and all other expenses
on account of claims of lien or laborers or materialmen or others for work
performed or materials or supplies furnished for LESSEE or
11
<PAGE> 12
persons claiming under LESSEE. In the event a mechanic's lien is filed against
the DEMISED PREMISES or THE BUILDING for, or purporting to be for, labor or
material alleged to have been furnished for LESSEE, then LESSEE shall promptly
pay or bond and discharge such mechanic's lien within forty-five (45) days of
notice of such mechanic's lien. If LESSEE shall be in default in paying or
bonding any charge for which a mechanic's lien claim and suit to foreclose the
lien have been filed, LESSOR may (but shall not be obligated to) pay the claim
and any costs and the amount so paid together with reasonable attorney's fees
Incurred in connection therewith shall be immediately due and owing from LESSEE
to LESSOR, and LESSEE agrees to and shall pay the same with interest as provided
hereunder from the date of LESSOR's payments.
SECTION 11.02. LESSOR agrees that it will pay or cause to be paid all
costs for work done by it or ordered by it on DEMISED PREMISES and THE BUILDING
and LESSOR shall keep the DEMISED PREMISES and THE BUILDING and the tenancy
created by this LEASE, free and clear of mechanics liens on account of work done
or ordered by LESSOR or persons claiming under LESSOR. LESSOR agrees to and
shall indemnify and save LESSEE free and harmless from and against any and all
liability, loss, damage, cost, attorney's fees and all other expenses on account
of claims of lien of laborers or materialmen or others for work performed or
materials or supplies furnished for LESSOR or persons claiming under LESSOR. In
the event a mechanic's lien is filed against the DEMISED PREMISES or THE
BUILDING for, or purporting to be for, labor or material alleged to have been
furnished for LESSOR, then LESSOR shall promptly pay or bond and discharge such
mechanic's lien within forty-five (45) days of notice of such mechanic's lien.
If LESSOR shall be in default in paying or bonding any charge for which a
mechanics lien claim and suit to foreclose the lien have been filed, LESSEE may
(but shall not be obligated to) pay the claim and any costs and the amount so
paid together with reasonable attorney's fees incurred In connection therewith
shall be immediately due and owing from LESSOR to LESSEE, and LESSOR agrees to
and shall immediately pay the same with interest as provided hereunder from the
date of LESSEE's payments and if LESSOR fails to so reimburse LESSEE, LESSEE
may deduct such sums from the next succeeding installment or installments of
rent due under this Lease.
12
<PAGE> 13
ARTICLE XII
DEFAULT
SECTION 12.01. In the event of any default by LESSEE as defined in
Section 12.02 hereof, LESSOR shall be entitled to terminate this LEASE and shall
be free to institute an appropriate action for recovery of possession of DEMISED
PREMISES; provided LESSOR shall have first given written notice specifying such
default to LESSEE, and, if such default shall be cured within the grace period
hereinafter specified with respect to default by LESSEE, this LEASE shall
continue in full force and effect to the same extent as if said default had not
occurred.
SECTION 12.02. In the event LESSEE shall fail to cure within ten (10)
days after the date of receipt from LESSOR of written notice of any default in
paying any of the following:
(i) any item of rent, when due, provided to be paid by
LESSEE to LESSOR;
(ii) any utilities required to be paid by LESSEE;
(iii) any insurance premiums required to be paid by LESSEE;
(iv) any real estate taxes and assessments required to be
paid by LESSEE; and
(v) any valid final judgment obtained by LESSOR against
LESSEE on account of LESSEE's failure to comply with any
provision of this LEASE,
then such failure to pay as specified herein and any breach of any other
covenant contained in this LEASE shall be deemed a default by LESSEE under this
LEASE.
SECTION 12.03. If LESSEE shall default in the performance of any
covenant contained herein, and such default continues for thirty (30) days after
receipt of written notice or if such default cannot be cured within thirty (30)
days, LESSEE fails to diligently proceed to cure such default within thirty (30)
days after receipt of written notice thereof, LESSOR may, after giving LESSEE
ten (10) days' prior written notice specifying the event of default, cure the
same and charge the cost of curing to LESSEE.
SECTION 12.04. If LESSOR shall default in the performance of any
covenant contained herein, and such default continues for thirty (30) days
after receipt of written notice, or if such default cannot be cured within
thirty (30) days, LESSOR fails to diligently proceed to cure such default
within thirty (30) days after receipt of written notice thereof, LESSEE may,
after giving LESSOR ten (10) days' prior written notice specifying the event
<PAGE> 14
of default, cure the same and charge the cost of curing to LESSOR, or LESSEE
shall be entitled to terminate this Lease. LESSEE will not exercise its right to
terminate this Lease, however, until (a) it has given written notice of such
default to the holder of any first mortgage affecting THE BUILDING, and (b) a
reasonable period for remedying such default shall have elapsed following such
giving of notice. If at the expiration of the term of this LEASE, as possibly
extended, there shall be any sums owing by LESSOR to LESSEE, this LEASE may, at
the election of LESSEE, be extended and continue in full force and effect until
January 31 of the calendar year following the date when the indebtedness of
LESSOR to LESSEE shall have been fully set off and recouped or otherwise paid
and after such date when the indebtedness is fully recouped until such January
31st date is reached LESSEE shall resume payments of monthly rent.
ARTICLE XIII
APPROPRIATION AND CONDEMNATION
SECTION 13.01. If twenty-five percent (25%) or more of THE BUILDING or
if (i) any access to the DEMISED PREMISES, (ii) or any access to the truck
turnaround pad or (iii) any portion of the parking area to the extent that
LESSEE's use of the DEMISED PREMISES is thereby impaired shall be taken for any
public or quasipublic use under any statute or by right of eminent domain or
private purchase in lieu thereof, then, when possession shall be taken
thereunder, this LEASE shall at LESSEE's option terminate, all the rights and
obligations of LESSEE hereunder shall immediately cease and terminate. Rent
thereunder, however, shall be adjusted as of the time of such termination. If
less than twenty-five percent (25%) of the DEMISED PREMISES shall so be taken,
LESSEE shall continue in possession of that part of the DEMISED PREMISES not so
appropriated, and LESSOR shall, promptly restore the remaining portion of the
DEMISED PREMISES to a condition satisfactory and suitable for LESSEE's
occupancy and use, including the replacement of all walls and the doing of all
needed structural and repair work; such repair and restoration shall be
completed with all reasonable speed. After restoration expense, the balance of
condemnation proceeds shall be paid to LESSOR. A proportionate reduction of
rent shall be made corresponding to the time during which, and to the amount of
DEMISED PREMISES property of which, LESSEE has been and shall be so deprived of
satisfactory use and occupancy of DEMISED PREMISES on account of
<PAGE> 15
such condemnation proceedings, appropriation, taking or restoration, and LESSEE
shall be entitled to such an equitable reduction in the rental payable hereunder
during the remainder of the term. Neither party shall have any right to
condemnation awards paid or allocated to the other. If only one award is made,
after restoration expenses, if any, are paid, the award shall be applied first
to and as required by LESSOR's lender and the balance shall be divided among
LESSOR and LESSEE In proportion to their Interest in the DEMISED PREMISES and
this LEASE.
ARTICLE XIV
SUBLETTING AND ASSIGNMENT
SECTION 14.01. Without the prior consent of LESSOR, LESSEE may sublet
all or any portion of DEMISED PREMISES or license all or any portion of DEMISED
PREMISES, but such subletting or licensing shall be consistent with the terms of
this LEE and in such event LESSEE shall not be relieved of any liability
hereunder.
SECTION 14.02. LESSEE may assign this LEASE:
(i) without the prior written consent of LESSOR, to any
corporation which may, as the result of a
reorganization, merger, consolidation, or sale of
substantially all of the assets (excluding inventory) of
LESSEE, provided that In the case of such a sale the
purchasing corporation shall have a net worth in excess
of $20,000,000.00, succeed to the business now being
carried on by LESSEE in the State in which DEMISED
PREMISES are located, or to any parent, affiliate, or
subsidiary corporation of LESSEE; and
(ii) with the prior consent of LESSOR, and LESSOR's
mortgagee, which consents shall not be reasonably
withheld, and if withheld shall be for cause stated, to
any person or corporation of equal or better financial
responsibility than LESSEE.
In either such event of assignment, LESSEE shall be relieved of all further
responsibility under this LEASE upon the assumption in writing by the said
assignee of all of LESSEE's responsibilities and obligations under this LEASE.
SECTION 14.03. LESSOR may assign this LEASE, with the prior written
consent of LESSEE, which consent shall not be unreasonably withheld. As a
condition of such consent, LESSOR shall deliver to LESSEE an assumption, in
writing, by the proposed Assignee of all of LESSOR's responsibilities and
obligations under this LEASE. If LESSOR's interest in this LEASE shall, for any
reason, be acquired by more than one person, firm, corporation or other entity,
whether by conveyance, operation of law, or otherwise, LESSOR shall,
<PAGE> 16
by notice to LESSEE, signed by all of the then LESSORS hereunder, appoint one
such LESSOR to whom rent may be paid by LESSEE, and upon whom all notices which
LESSEE may give hereunder may be served. Until such notice and appointment,
LESSEE may withhold all payments of rent due hereunder, but such payments shall
be paid to an escrow or trustee account. If LESSOR, or either one of them,
desires to sell, transfer, or convey their Interest in the DEMISED PREMISES to
any person, firm, corporation or other entity, LESSOR shall deliver to LESSEE an
assumption, in writing, by the proposed transferee, of all of LESSOR's
responsibilities and obligations under the LEASE.
ARTICLE XV
SURRENDER OF PREMISES
SECTION 15.01. LESSEE shall, upon the expiration or termination of this
LEASE, surrender to LESSOR the DEMISED PREMISES in good order, condition and
repair, except for reasonable wear and tear and use thereof, except for those
improvements, nonstructural alterations and additions made by LESSEE and removed
by LESSEE pursuant to Section 9.01, and except also that damage by fire or other
casualty, shall be governed by the provisions of Sections 10.04 and 10.05, and
except also that damage by any taking by condemnation or exercise of the right
of eminent domain shall be governed by the provisions of Section 13.01.
ARTICLE XVI
NOTICES
SECTION 16.01. All notices, demands, and requests hereunder by either
party to the other shall be in writing.
All notices, demands, and requests by LESSOR to LESSEE shall be
delivered in person or sent by United States Registered or Certified Mail,
postage prepaid, addressed to LESSER:
CLARK EQUIPMENT COMPANY
300 Security Trust Building
Lexington, Kentucky 40507
or at such other place in the United States as LESSEE may from time to time
designate in writing.
All rent, notices, demands and requests by LESSEE to LESSOR shall be
delivered in person or sent by United States Registered or Certified Mail,
postage prepaid, addressed to LESSOR:
<PAGE> 17
KENNY ANGELUCCI
106 W. Vine Street
Lexington, Kentucky 40507
or to such other place in the United States as LESSOR may from time to time
designate in writing.
Notices, demands, and requests which shall be served upon LESSOR and
LESSEE in the manner aforesaid shall not be deemed sufficiently given and
received until such time as such notice, demand, or request has been received
(or delivery refused) by such party to whom it is addressed if delivered in
person, or on the third calendar day following the date, on which said notice,
demand, or request is deposited in the mail.
ARTICLE XVII
MISCELLANEOUS
SECTION 17.01. The specified remedies to which LESSOR or LESSEE may
resort under the terms of this LEASE are cumulative and are not intended to be
exclusive of any other remedies to which LESSOR or LESSEE may be lawfully
entitled in case of any breach or threatened breach of any provision of this
LEASE.
SECTION 17.02. The failure of LESSOR or LESSEE to insist, in any one or
more cases, upon the strict performance of any of the terms, covenants,
conditions, provisions, or agreements of this LEASE, or to exercise any right or
remedy herein contained, shall not be construed as a waiver or a relinquishment
for the future of any such rights or remedies. LESSOR's acceptance of any
payment required under this LEASE shall not be deemed a waiver of any subsequent
default by LESSEE hereunder. No waiver by LESSOR of any term, covenant,
condition, provision, or agreement of this LEASE shall be deemed to have been
made unless expressed in writing and signed by LESSOR.
SECTION 17.03. LESSOR and LESSEE agree that this LEASE agreement
constitutes the sole and entire agreement between them and cannot be changed
orally, and any additions, deletions, amendments or extensions thereof must be
in writing and executed by all the parties hereto.
SECTION 17.04. The covenants of the LEASE shall run with the LAND. Any
sale of the DEMISED PREMISES, or part thereof, by LESSOR shall be subject to
all of LESSOR's obligations and responsibilities under this LEASE.
SECTION 17.05. LESSEE agrees to subordinate its interest under this
LEASE to any subsequent mortgages and groundleases and to deliver an estoppel
<PAGE> 18
certificate to such subsequent mortgagees and groundlessors, provided that
LESSOR delivers to LESSEE from each subsequent mortgagee and groundlessor a
corresponding non-disturbance agreement.
SECTION 17.06. The terms, covenants, conditions, provisions and
agreements herein contained shall be binding upon and inure to the benefit of
LESSOR and LESSEE, their respective heirs, executors, administrators, successors
and assigns.
SECTION 17.07. Subject to the provisions of Section 12.03, if LESSEE
remains in possession of DEMISED PREMISES after the expiration of the term
hereof and all extensions of such terms, LESSEE shall then be deemed a tenant at
will at the rental rate in effect at the end of this LEASE and there shall be no
renewal of this LEASE by operation of law.
SECTION 17.08. All exhibits to this LEASE are, by this reference, made
a part of this LEASE to the same extent as the same would be if written directly
within the body of this LEASE.
SECTION 17.09. This LEASE shall be governed and construed in accordance
with the law of the State in which DEMISED PREMISES are located. If any
provision of this LEASE shall, to any extent, be invalid under such law, the
remaining provisions of this LEASE shall not be affected thereby. The titles of
the various subdivisions of this LEASE are for convenience only and shall not be
considered In construing this LEASE.
SECTION 17.10. LESSOR and LESSEE agree, upon request of either, to
execute and deliver, in form sufficient for recording, a short form lease
describing DEMISED PREMISES, the term of this LEASE and such other provisions as
either party may reasonably deem necessary or appropriate.
SECTION 17.11. The captions and headings throughout this LEASE are for
convenience and reference only and the words contained therein shall in no way
be held or deemed to define, limit, describe, explain, modify, amplify, or add
to the interpretation, construction, or meaning of any provision of, or the
scope or intent of, this LEASE nor in any way affect this LEASE.
SECTION 17.12. LESSOR and LESSEE each agree, upon written request of
the other to certify to the other whether this LEASE is in effect, whether it
has been amended and, to the best of the knowledge of the party making such
certification, whether there are then any defaults under this LEASE.
SECTION 17.13. LESSOR certifies that the rules and regulations for the
Leestown Industrial Park attached hereto as Exhibit "D" are the entire and
<PAGE> 19
true set of such rules and regulations. LESSOR and LESSEE shall perform their
respective obligations imposed by such rules, which obligations are listed as
LESSOR's and LESSEE's responsibilities in Exhibit "D" attached hereto.
SECTION 17.14. LESSEE may erect signs on buildings, doors, windows,
improvements or grounds, without the prior written consent of LESSOR.
ARTICLE XVIII
EXPANSION, EXPANSION PARCEL AND EXCESS PARCEL
SECTION 18.01. If LESSEE wishes to expand THE BUILDING and/or the
parking areas and/or the truck docking areas, LESSEE will designate the part of
DEMISED PREMISES required for the expansion, and will generally describe the
expansion, in a submission to LESSOR. LESSOR will have sixty (60) days from
receipt of such submission in which to deliver to LESSEE a written proposal for
performing such expansion and for increasing the rent hereunder when such
expansion construction is completed. LESSEE shall have forty-five (45) days from
receipt of LESSOR's proposal in which to accept or reject in writing such
proposal. If LESSEE accepts such proposal, LESSEE shall submit to LESSOR a
written amendment to the LEASE providing for the terms and conditions of
LESSEE's expansion, and the increase in rent and LESSOR and LESSEE shall use
reasonable efforts to negotiate, execute and deliver such amendment within
thirty (30) days of LESSEE's acceptance of LESSOR's proposal. If LESSOR fails to
make a proposal, if LESSEE rejects the proposal made, or if LESSEE accepts the
proposal and then LESSOR and LESSEE are unable to agree on an amendment to the
LEASE, then, LESSEE may proceed with such expansion at LESSEE's cost and expense
and there shall be no increase or reduction in rent hereunder as a result of
such expansion.
ARTICLE XIX
OPTION TO PURCHASE
SECTION 19.01. LESSEE shall have the option, exercisable by delivering
written notice of the exercise to LESSOR any time after the first year of the
PRIMARY TERM to purchase the LAND and BUILDING for the price calculated as
follows:
Unless the parties otherwise agree in writing on the purchase price,
the purchase price shall be the average of two appraisals each made by
a MAI appraiser of Fayette County. Each party hereto shall select an
MAI appraiser in Fayette County of its choice. If the appraisals are
not within ten percent (10%) of each other, the two
<PAGE> 20
appraisers shall select a third qualified MAI appraiser, and in such
event the purchase price shall be the average of the two appraisals,
within ten percent (10%) of each other, which are the closest together.
If the third appraisal is not within ten percent (10%) of the first two
appraisals, then the purchase price shall be the average of all three
appraisals.
LESSEE shall give LESSOR at least six (6) months' notice of its desire to
exercise to option hereunder. The purchase price shall be determined within the
next ninety (90) days, whether by agreement of the parties, or as a result of
the appraisals as provided for above. Upon determination of the purchase price,
and upon no less than ninety (90) days' written notice, LESSEE shall notify
LESSOR whether or not it intends to exercise its option to purchase. If LESSEE
fails to so notify LESSOR, LESSEE shall be deemed to have declined to exercise
its option. LESSOR shall be responsible for conveying good and marketable title
to the BUILDING and LAND. In the event there is a mortgage on the property which
cannot be paid off without a prepayment penalty, LESSEE may, at its option, pay
the penalty or elect to assume the mortgage. The cost of appraisals shall be
shared equally by LESSOR and LESSEE. The closing shall take place on the date
specified by LESSEE's notice, or at such other time as the parties may agree. In
the event that the closing is scheduled to occur during the second half of a
given calendar year, LESSEE agrees, upon LESSOR's request, to postpone the
closing until January 1 of the following year, or such other date between
January 1 and June 30 of such year as LESSEE may designate.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed under seal as of the day and year first above written.
Signed and delivered LESSOR:
in the presence of:
VERGIL D. KELLY
/s/ /s/ VERGIL D. KELLY
- ------------------------------ -------------------------
KENNY ANGELUCCI
/s/ /s/ Kenny Angelucci
- ------------------------------ -------------------------
20
<PAGE> 21
Signed and delivered LESSEE:
in the presence of:
CLARK EQUIPMENT COMPANY
/s/ By: /s/
- -------------------------- -----------------------------
Title: Vice President
STATE OF Kentucky
COUNTY OF Fayette
On April 15, 1987, before me, the undersigned, a Notary Public in and
for said State, personally appeared Vergil D. Kelly and Kenny Angelucci,
respectively, and who are known to me to be the persons who signed the foregoing
instrument, and acknowledged before me that on this day, being informed of the
contents of said instrument, they executed the same voluntarily for and as the
act of said corporation.
WITNESS my hand and official seal.
/s/
----------------------------------
NOTARY PUBLIC
(SEAL)
My Commission Expires:
August 26, 1989
STATE OF Kentucky
COUNTY OF Fayette
On April 15, 1987, before me, the undersigned, a Notary Public in and
for said State, personally appeared Gary D. Bello, who is known to me to be the
Vice President of Clark Equipment Company, a Delaware corporation, and who is
known to me to be the person who signed the foregoing instrument, and
acknowledged before me that on this day, being informed of the contents of said
instrument, he, as such officer, and with full authority, executed the same
voluntarily for and as the act of said corporation.
WITNESS my hand and official seal.
/s/
----------------------------------
NOTARY PUBLIC
(SEAL)
My Commission Expires:
June 30, 1990
21
<PAGE> 22
THIS AMENDMENT #1 TO LEASE dated April 15, 1987 is entered into by and
between VERGIL D. KELLY and KENNY ANGELUCCI, a Kentucky General Partnership,
("LESSOR") and CLARK EQUIPMENT COMPANY, a Delaware Corporation, ("LESSEE").
WITNESSETH:
The aforementioned LEASE dated April 15, 1987 between LESSOR and LESSEE
is hereby amended and modified as follows:
(1) Article IV is amended and modified to read in its entirety as
follows:
ARTICLE IV
RENT
LESSEE covenants and agrees to pay to LESSOR the following rent:
Section 4.01. For the PRELIMINARY TERM, rent shall be $10.00.
Section 4.02. Monthly Rent during the PRIMARY TERM shall be:
Eighty-Seven Thousand ($87,000) Dollars.
Section 4.03. Monthly rent during the extension terms provided for in
Section 3.02 shall be negotiated prior to any extension. Provided, however,
that in no event shall the monthly rental for the extension term(s) exceed the
previously applicable monthly rent by more than two percent (2%) per year,
calculated on a simple basis.
Section 4.04. Monthly rent shall be paid in advance on or before the
10th day of each month.
(2) The last word in the seventh (7th) line of Section 10.04 is changed
from "by" to "to".
(3) Section 12.01 of Article XII is amended and modified to read in
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its entirety as follows:
DEFAULT
Section 12.01. In the event of any default by LESSEE as defined in
Section 12.02 hereof, LESSOR shall be entitled to terminate this LEASE and shall
be free to institute an appropriate action for recovery of possession of DEMISED
PREMISES or bring any other proceeding allowed by law; provided LESSOR shall
have first given written notice specifying such default to LESSEE, and, if such
default shall be cured within the grace period hereinafter specified with
respect to default by LESSEE, this LEASE shall continue in full force and
effect to the same extent as if said default had not occurred.
(4) Section 12.04 of Article XII is amended and modified in its
entirety to read as follows:
Section 12.04. If LESSOR shall default in the performance of any
covenant contained herein, and such default continues for thirty (30) days
after receipt of written notice, or if such default cannot be cured within
thirty (30) days, LESSOR fails to diligently proceed to cure such default
within thirty (30) days after receipt of written notice thereof, LESSEE may,
after giving LESSOR ten (10) days prior written notice specifying the event of
default, cure the same and charge the cost of curing to LESSOR, or LESSEE shall
be entitled to terminate this LEASE. LESSEE agrees to give any Mortgagees
and/or Trust Deed Holders, by Registered Mail, a copy of any Notice of Default
served upon the LESSOR, provided that prior to such notice LESSEE has been
notified, in writing, (by way of Notice of Assignment of Rents and Leases, or
otherwise) of the address of Such Mortgagees and/or Trust Deed Holders. LESSEE
further agrees that if LESSOR shall have failed to cure such default within the
time provided for in this Lease, then the Mortgagees and/or
2
<PAGE> 24
Trust Deed Holders shall have an additional thirty (30) days within which to
cure such default or if such default cannot be cured within that time, then
such additional time as may be necessary if within such thirty (30) days, any
Mortgagee and/or Trust Deed Holder has commenced and is diligently pursuing the
remedies necessary to cure such default, (including, but not limited to,
commencement of foreclosure proceedings, if necessary to effect such cure) in
which event this Lease shall not be terminated while such remedies are being so
diligently pursued. If at the expiration term of this LEASE, as possibly
extended, there shall be any sums owing by LESSOR to LESSEE, this LEASE may, at
the election of LESSEE, be extended and continue in full force and effect until
January 31 of the calendar year following the date when the indebtedness of
LESSOR to LESSEE shall have been fully set off and recouped or otherwise paid
and after such date when the indebtedness is fully recouped until such
January 31st date is reached LESSEE shall resume payments of monthly rent.
(5) The following addition is added to the end of Section 19.01 on
page 20:
Anything in the foregoing notwithstanding, if Aetna Life Insurance
Company or its assignee holds a first mortgage loan on the premises at the
time LESSEE exercises this option to purchase, then (a) either the then
outstanding indebtedness evidenced by the mortgage loan must be paid in full
including interest, prepayment charges and other charges required under the
loan agreement with Aetna without offset or deduction, in which case the
proceeds from the purchase shall first be applied to pay off the then
outstanding indebtedness evidenced by the mortgage loan including interest,
prepayment and other charges, or the LESSEE/PURCHASER must assume the mortgage
loan in which case the LESSOR will receive the difference, if any, between the
purchase price and the amount of the then outstanding mortgage loan and the
3
<PAGE> 25
LEASE shall not terminate or merge with the fee as long as Aetna or its
successors retain an interest in or lien on the property, or (b) the option is
exercised subsequent to foreclosure of the Aetna loan, the LESSEE shall not be
entitled to set off against the option price any indebtedness of any former
LESSOR.
In the event Aetna Life Insurance Company or its assignee is the owner
of the premises at the time LESSEE exercises its option to purchase, Aetna or
its assignees deed may be without warranty.
IN TESTIMONY WHEREOF, witness the signatures of the parties hereto this
1st day of December, 1987.
VERGIL D. KELLY AND KENNY ANGELUCCI,
A Kentucky General Partnership
By: /s/ Virgil D. Kelly
-----------------------------------------
Virgil D. Kelly, General Partner
and
By: /s/ Kenny Angelucci
-----------------------------------------
Kenny Angelucci, General Partner
CLARK EQUIPMENT COMPANY, a Delaware Corporation
By: /s/
-----------------------------------------
STATE OF KENTUCKY )
) ss
COUNTY OF FAYETTE )
The foregoing Amendment #1 to Lease was acknowledged before me this 1st
day of December 1987, by Vergil D. Kelly and Kenny Angelucci, General Partners,
on behalf of Vergil D. Kelly and Kenny Angelucci, a Kentucky general
partnership.
My commission expires: 8-26-89
-------------------------------------------
Notary Public
4
<PAGE> 26
STATE OF KENTUCKY )
)ss
COUNTY OF FAYETTE )
The foregoing Amendment #1 to Lease was acknowledged before me this 1st
day of December 1987, by Gary D. Bello as Vice-President of Clark Equipment
Company, a Delaware Corporation, on behalf of the corporation.
My commission expires:
----------------------------------
Notary Public
5
<PAGE> 1
EXHIBIT 10.28
CLARK MATERIAL HANDLING COMPANY
DEALER SALES AGREEMENT
THIS DEALER SALES AGREEMENT is effective the - day of , 199__, by and between
CLARK MATERIAL HANDLING COMPANY, a Kentucky corporation, with offices at 749
West Short Street, Lexington, Kentucky 40508 (hereinafter called "CLARK"), and
______________________________________ a(n) _______ corporation with its primary
place of business at __________________________________ (hereinatter called
"DEALER").
IN CONSIDERATON OF the mutual promises herein contained, the parties agree as
follows:
1. APPOINTMENT. CLARK hereby appoints DEALER a non-exclusive authorized
DEALER only for those PRODUCTS manufactured or distributed by CLARK identified
below, including accessories and attachments therefor (PRODUCTS), and for
service and replacement PARTS offered for sale by CLARK for use on PRODUCTS
identified below
(PARTS) :
Industrial Truck Association (ITA) Classes: All Classes
Other: None
Other: None
To the extent that DEALER is an authorized DEALER for the PRODUCTS and/or PARTS
identified above, DEALER will purchase and maintain at all times a sufficient
quantity and variety of PRODUCTS on hand for demonstration purposes.
2. AREA OF PRIMARY RESPONSIBILITY. DEALER's area of primary responsibility
(APR) is:
In the STATE OF the counties of , _____, ,
_____, _____, ,and ______.
DEALER acknowledges and agrees that the APR granted herein is granted only for
the term of this Agreement and that DEALER acquires no vested right to this APR
with respect to its being a DEALER of CLARK in the future. DEALER also
acknowledges CLARK's right to appoint another dealer or dealers in the APR.
3. TERM. The term of this Agreement shall commence on the date set forth
above and unless sooner terminated as provided in this Agreement shall expire
April 1, 1997,
<PAGE> 2
without notice or action by either party. CLARK shall give DEALER not less than
ninety (90) days' notice that its Agreement will not be renewed. In the event
this Agreement is not renewed or extended and CLARK has not given DEALER such
notice at least ninety (90) days prior to the expiration date, the Agreement
shall remain in effect for a period of ninety (90) days from the date CLARK
actually gives DEALER notice that its Agreement will not be renewed, unless
sooner terminated as provided in this Agreement.
4. SALES PERFORMANCE. DEALER will use its best efforts to promote the sale
and rental of and sell and rent PRODUCTS and PARTS and will maintain a level of
sales and rentals of PRODUCTS and sales of PARTS satisfactory to CLARK. In
determining whether DEALER's level of sales has been satisfactory during any
period, CLARK will consider DEALER's performance in meeting DEALER's volume and
market penetration goals for sales and rentals of PRODUCTS and sales of PARTS in
DEALER's APR as established from time-to-time jointly by DEALER and CLARK
including those goals set forth in DEALER's annual DEALER MARKETING PLAN, the
trend of DEALER's performance in the APR over a reasonable period of time,
DEALER's actions with respect to improvements in his operations, organization or
facilities, and such other factors which, in CLARK's reasonable opinion, may be
appropriate under the circumstances. DEALER will maintain a suitable place of
business, and an adequate stock of PRODUCTS and PARTS and solicit all actual and
potential customers in the APR regularly and frequently.
5. SERVICE.
5.1 DEALER will promptly and courteously render high quality repair and
maintenance service at reasonable prices to users of new and used PRODUCTS,
regardless of where or by whom sold. DEALER shall not establish any business
locations for the sale, rental or service of PRODUCTS, other than those existing
at the date of this Agreement, or change business locations, without the prior
<PAGE> 3
written consent of CLARK
5.2 For all new PRODUCTS sold or rented by DEALER regardless of the place
of delivery or location of the PRODUCTS, DEALER will provide installation
service as recommended by CLARK, will fulfill its own warranty obligations, and
will provide warranty service under the standard CLARK warranties applicable
thereto and said warranties may be modified or changed by CLARK from
time-to-time. DEALER may arrange to have another CLARK dealer perform DEALER's
installation service and warranty obligation on new PRODUCTS delivered or
located outside DEALER's APR and agree with such CLARK dealer on terms and
compensation. Any such arrangement, however, shall not relieve DEALER of its
responsibility to perform such installation service and warranty obligations.
5.3 DEALER will keep its service building clean, well lighted and in good
repair and will provide the latest types of tools recommended by CLARK and
facilities for servicing and repairing PRODUCTS. DEALER will also provide
properly equipped trucks and trailers to enable DEALER to perform routine
service and repair of PRODUCTS at its customers' places of business and to
transport customers' PRODUCTS to and from DEALER's service facility for major
repairs and overhauls.
5.4 DEALER will perform special policy adjustments and field campaign
adjustments requested by CLARK for all PRODUCTS in DEALER's APR regardless of
where or by whom sold and will cooperate fully with CLARK in identifying and
notifying owners of PRODUCTS subject to such adjustments.
5.5 DEALER will receive, investigate and handle all complaints received
from owners of PRODUCTS with a view to securing and maintaining the confidence
of customers in DEALER, CLARK and CLARK PRODUCTS. DEALER will immediately notify
CLARK of all warranty claims which DEALER cannot resolve promptly.
5.6 If DEALER fails to comply, or fails to cause any dealer with whom it
has an agreement to comply, with the provision of this Section 5, CLARK, in
addition to its other rights under this AGREEMENT, reserves the right, at its
sole discretion, to perform or cause to be performed the obligations of DEALER
or such other dealer thereunder and DEALER agrees to reimburse CLARK for all
costs and expenses incurred by CLARK in connection therewith. If the particular
situation and circumstances permit, CLARK will notify DEALER in advance that
CLARK
<PAGE> 4
intends to exercise its rights under this section.
5.7 For performing warranty service under the standard CLARK warranties and
such other warranties as CLARK may offer from time-to-time and special policy
and field campaign adjustments CLARK will (1) provide DEALER with the necessary
parts or, at CLARK's option, pay or credit DEALER for the then current DEALER
price of such parts plus a reasonable handling fee in accordance with CLARK's
published rate in effect from time-to-time, and (2) pay or credit DEALER for
DEALER's work in performing such warranty service and adjustments in accordance
with CLARK's Warranty Rate Incentive Program as in effect from time-to-time,
or, if such program is terminated, a fair and equitable amount established by
CLARK, which amount shall take into consideration the prevailing labor rates in
DEALER's area for comparable work, DEALER's established public rates,
competitors' rates, and other relevant factors. To the extent that the customer
is required to pay for any such adjustments CLARK may reduce the compensation
specified in this section.
5.8 There are no warranties, express or implied, except as provided in this
section. THERE ARE NO IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE MADE BY CLARK TO DEALER ON PRODUCTS OR PARTS, EXCEPT THE
STANDARD CLARK WARRANTIES APPLICABLE THERETO AND SAID WARRANTIES MAY BE MODIFIED
OR CHANGED BY CLARK FROM TIME-TO-TIME. IN NO EVENT SHALL CLARK BE LIABLE FOR
CONSEQUENTIAL, INCIDENTAL OR SPECIAL DAMAGES OF ANY NATURE WHATSOEVER FOR BREACH
OF THE STANDARD CLARK WARRANTIES AND SUCH OTHER WARRANTIES AS CLARK MAY OFFER
FROM TIME-TO-TIME. ANY ACTION FOR AN ALLEGED BREACH OF THE STANDARD CLARK
WARRANTIES OR SUCH OTHER WARRANTIES AS CLARK MAY OFFER FROM TIME-TO-TIME IN
RESPECT OF PRODUCTS OR PARTS MUST BE COMMENCED WITHIN ONE (1) YEAR AFTER THE
CAUSE OF ACTION ACCRUED OR SUCH BREACH SHALL BE DEEMED WAIVED AND BARRED.
6. INVENTORY OF PRODUCTS. Dealer will at all times maintain an inventory
of PRODUCTS in quantity and variety as is reasonably necessary to enable DEALER
to fulfill its responsibility to promote the sale and rental of PRODUCTS
throughout the APR, and at least in quantities and varieties necessary to meet
CLARK's published guidelines which are in effect from time-to-time.
7. PARTS.
7.1 DEALER will at all times maintain an inventory of PARTS in such
quantity and
<PAGE> 5
variety as is reasonably necessary to enable DEALER to fulfill its
responsibility to provide prompt service and availability of PARTS to all
customers in the APR in accordance with policies established by CLARK from
time-to-time. DEALER and CLARK will review periodically the size of DEALER's
inventory of PARTS in relation to its sales and turnover of PARTS and the
population of PRODUCTS in the APR. DEALER will comply with all reasonable
recommendations made by CLARK from time-to-time with respect to the optimum
quantity and variety of DEALER's inventory of PARTS.
7.2 DEALER agrees to carry on its business transactions with its customers
by supplying PARTS from DEALER's stock and agrees not to order PARTS from the
factory for direct shipment to DEALER's customers except in non-repetitive
emergency situations, subject to the following conditions: Requests for direct
shipment of PARTS to DEALER's customers shall be limited to customers in
DEALER's APR (excluding U.S. Government or any agencies thereof) who have
equipment out of service or threatened with immediate breakdown. The prices for
any such direct shipments shall be subject to additional charges as established
by CLARK from time-to-time.
7.3 DEALER shall not return nor instruct a customer to return PRODUCTS or
PARTS to the factory without prior authorization in writing and shipping
instructions from CLARK. In the event that such authorization is given by CLARK
and the PRODUCTS or PARTS are returned to the factory, CLARK may charge DEALER
for refinishing and restocking, but not less than ten percent (10%) of CLARK's
net price of the returned PRODUCTS or PARTS to CLARK's costs, except that if
such returned PRODUCTS or PARTS were defective when originally shipped by CLARK
or were originally shipped by CLARK in error, there will be no refinishing or
restocking charge.
8. SALES BY CLARK. CLARK may sell, rent, lease, loan, license or give
PRODUCTS or PARTS or provide service, directly or indirectly, to anyone at any
time without incurring any liability to DEALER for payment of commission or
other remuneration. CLARK may, at its sole discretion, compensate DEALER for
sales assistance rendered by DEALER and requested by CLARK. If requested to do
so by CLARK, DEALER will render to customers acquiring PRODUCTS from CLARK for
use in DEALER's APR,
<PAGE> 6
those services enumerated in Section 5 hereof, and CLARK will compensate DEALER
for the performance of such requested services.
9. DELIVERY. Delivery to DEALER shall be for CLARK's plant or warehouse
or such other point of origin as CLARK shall designate. CLARK shall not be
liable for loss or damage in transit. Claims for shortages to shipments shall be
made against carrier by DEALER. Claims for shortages not attributable to the
carrier must be made by DEALER against CLARK within ten (10) days after arrival
of shipment at the consigned destination. If CLARK makes deliveries by its own
trucks, CLARK's liability for loss or damage in transit, if any, shall be that
of a carrier. CLARK will use commercially reasonable efforts to timely provide
DEALER with such quantities and models of PRODUCTS and PARTS to enable DEALER to
fulfill its goals under the DEALER's Annual Marketing Plan, consistent with
market conditions and the competitive situation. Shipping and delivery dates
are estimated, and CLARK shall not be liable for any loss or damage due to delay
in manufacture or delivery resulting from any cause beyond its reasonable
control including, but not limited to, compliance with regulations, orders or
instructions of any federal, state or municipal government or any department or
agent thereof, acts of God, acts or omissions of DEALER, acts of civil or
military authority, fires, strikes, factory shutdowns or alterations, embargoes,
war, riot, delays in transportation, or inability to obtain necessary labor,
manufacturing facilities or materials from CLARK's usual sources, and any delays
resulting from any such cause shall extend delivery correspondingly. IN NO EVENT
SHALL CLARK BE LIABLE FOR CONSEQUENTIAL OR SPECIAL DAMAGES DUE TO ANY CAUSE.
10. PRICES AND TERMS.
10.1 The sale by CLARK to DEALER of PRODUCTS and PARTS shall be subject to
the provisions of this Agreement and, except as otherwise provided herein,
subject to CLARK's standard terms and conditions of sale in effect at the time
of acceptance of the order. Any provisions of any purchase order placed by
DEALER which is inconsistent with or in addition to such standard terms and
conditions shall be null and void unless expressly accepted by CLARK in writing.
10.2 The prices of PRODUCTS and PARTS sold to DEALER by CLARK shall be
determined from CLARK's list prices in effect at the time of delivery by CLARK
<PAGE> 7
of DEALER's order, less applicable DEALER's discount then being offered to
DEALER by CLARK, and subject to CLARK's usual additional charges for special
engineering, packaging, handling, delivery and transportation including those
necessitated by warehousing of PARTS other than in CLARK's factory or
distribution warehouse (which prices, discounts and additional charges are
subject to change by CLARK without notice) plus such sums as are equivalent to
or in reimbursement for any taxes paid by CLARK or which CLARK is obligated to
pay to any taxing authority, upon the manufacture, transport, use or sale of
such PRODUCTS and PARTS.
10.3 All orders of DEALER for PRODUCTS and PARTS are subject to acceptance
by CLARK and shall be subject to such reasonable allocation as, in the sole
judgment of CLARK may be necessary or equitable in the event of any shortages
of PRODUCTS or PARTS at any time.
10.4 If DEALER cancels or changes any order for PRODUCTS or PARTS, DEALER
will pay CLARK such charge as is provided for in CLARK's generally announced
policies as in effect at the time of such cancellation or change.
11. RELATIONSHIP OF PARTIES. The relationship between CLARK and DEALER is
that of buyer and seller. All sales by DEALER of PRODUCTS and PARTS are to be
made in DEALER's name and not in the name of CLARK. Neither CLARK nor DEALER is
in any way the legal representative or agent of the other for any purpose
whatsoever and neither has any right or authority to assume or create in writing
or otherwise any obligation of any kind, expressed or implied, on behalf of the
other, it being intended that DEALER will be and remain an independent
contractor.
12. ADVERTISING. CLARK reserves the right to require DEALER to submit to
CLARK all or any advertising copy concerning CLARK PRODUCTS or PARTS and all
proposed publications or listing of CLARK's names, trademarks or tradenames.
13. TRADEMARKS AND SERVICE MARKS.
13.1 During the term of this Agreement (and during such term only), DEALER
will indicate on its letterhead, on signs, on service trucks, and in connection
with its use of any other methods of identifying itself to the public, that
DEALER is an authorized dealer in CLARK PRODUCTS and PARTS in its APR, all in
<PAGE> 8
accordance with policies established by CLARK from time-to-time. In furtherance
thereof, DEALER will display at least one CLARK identification sign as
recommended by CLARK and will adhere to the color schemes recommended by CLARK
on CLARK PRODUCTS unless a different color scheme is requested by DEALER's
customers. All use of CLARK trademarks, service marks and tradenames shall be in
a manner satisfactory to CLARK and the form of the trademarks, service marks and
tradenames shall be as used by CLARK or as approved by CLARK.
13.2 DEALER will not use any of the trademarks, service marks or tradenames
of CLARK or any affiliates of CLARK in DEALER's company name or in any
divisional or other name which DEALER's business is conducted, or in the name of
any subsidiary, unless prior written authorization has been received from CLARK
for such use of such name in a separate written agreement of the parties.
13.3 DEALER is not authorized to use any of CLARK's trademarks, service
marks or tradenames, now or hereafter owned, controlled or licensed by CLARK,
outside DEALER's APR or at business locations other than those existing at the
date of this Agreement: (1) On salesrooms, service facilities or vehicles; or
(2) on letterheads, signs or other advertising or promotional materials
indicating a salesroom or service facility outside such area or location; or
(3) as a part of DEALER's trade style or corporate name on salesrooms or service
facilities. DEALER is not authorized to use any of CLARK's trademarks, service
marks or
<PAGE> 9
tradenames, flow or hereafter owned by CLARK, in connection with any business
other than its CLARK business.
13.4 DEALER shall not adopt or use in its business in respect of its own
products or the products of others of which DEALER may be a dealer or vendor,
any trademark or service mark which is or may be confusingly similar to or
likely to cause confusion with any CLARK trademark or service mark. DEALER
agrees that whenever its attention is called by CLARK to any confusion or risk
of confusion, it will accept any reasonable suggestion which may be made by
CLARK for avoiding such confusion or risk of confusion.
13.5 CLARK shall defend, or in its sole discretion, effect settlement of a
litigation or claim brought against DEALER which is based on a contention that
any CLARK trademark infringes any trademark owned by the claimant. DEALER shall
promptly notify CLARK, in writing, of any such claims or the commencement of any
such litigation and shall give CLARK all necessary authority, information and
assistance required for the defense or settlement of such claim or litigation.
If DEALER complies with these obligations, CLARK shall pay any judgment and any
costs awarded against DEALER in any such litigation, as well as reasonable
attorney's fees incurred by DEALER independently of those incurred by CLARK to
defend the action. The foregoing states the entire liability of CLARK for
tradenaark infringement.
14. DEALER CONSENT TO CLARK OBTAINING AND GIVING DEALER INFORMATION. DEALER
hereby consents to CLARK's requests for and receipts of financial and customer
information with respect to DEALER and DEALER's customers from any provider to
CLARK of floor plan financing and CLARK supplying to any provider of floor plan
financing DEALER sales performance information in the custody of CLARK.
15. REPORTS. DEALER agrees to furnish CLARK reports indicating the PRODUCTS
and PARTS bought, owned and sold by DEALER. DEALER also agrees to furnish CLARK,
semi-annually, in a format prescribed by CLARK, complete and accurate financial
and operating statements covering the preceding six-month period. Reports shall
be furnished by DEALER to CLARK at such ties on such forms as CLARK may
reasonably prescribe. CLARK shall have the right, at all reasonable times and
during regular business hours, to inspect DEALER's facilities and to examine and
audit all records, accounts and supporting data relating to the sale and sales
reporting of CLARK
<PAGE> 10
PRODUCTS and PARTS. CLARK agrees to provide DEALER with at least three (3) days'
prior notice of CLARK's intention to conduct such audit or inspection.
16. TRAINING. The principal operating officer of DEALER, at CLARK's
request, shall visit the naanufacturing or assembly plants or executive offices
of CLARK one (1) time each year at DEALER's expense. If CLARK requests
additional visits by such officer, the expense of the additional visits will be
paid by CLARK. DEALER will participate in the training programs and courses
offered by CLARK by sending DEALER's employees at DEALER's expense to such
programs and courses at reasonable intervals until all personnel have received
the training that is offered by CLARK and which is appropriate to their duties,
and will periodically send such personnel to refresher courses. DEALER will
establish such training programs and schools for DEALER's employees as may be
reasonably recommended by CLARK. DEALER will subscribe to and participate in
the CLARK video training program. CLARK will provide product training
assistance and materials which CLARK determines to be necessary for DEALER's
sales and technical service functions. Expenses for such assistance and
materials, if any, shall be as determined by CLARK from time-to-time.
17. TELECOMMUNICATIONS NETWORK. DEALER will subscribe to the CLARK
Telecommunications Network and will comply with CLARK's policies with respect to
use of the Network. All messages received by CLARK or its affiliates over such
Network which indicate DEALER as originator shall be equivalent to and have the
same force and effect as a written communication signed by DEALER, and any
transcription of such message from the punched tape shall constitute original
evidence of such message. Use of the CLARK Telecommunications Network by DEALER
is limited to DEALER's CLARK business.
18. ENGINEERING APPROVAL. DEALER will not make modifications to PRODUCTS or
PARTS and will not apply and use attachments, accessories, parts or batteries on
PRODUCTS unless such modifications, applications or use have been given
engineering approval in writing by CLARK. Any modification, application or use
which has been approved will be made only in accordance with instructions from
CLARK DEALER shall not, without prior approval by CLARK, remove from PRODUCTS or
<PAGE> 11
PARTS any identifying marks, labels, tags or other identifying symbols or
legends placed thereon by CLARK. DEALER will defend and save CLARK harmless from
claims of any kind, including but not limited to injuries to persons or damage
to property, arising from modifications, applications or uses which are not so
authorized or which are made other than as instructed by CLARK.
19. SUBDEALERS. DEALER will not appoint subdealers or subdistributors for
sales, service or rental of CLARK PRODUCTS or PARTS or for any other activities
normally performed by a dealer of CLARK without CLARK's prior approval in
writing, which shall not be unreasonably withheld.
20. PATENT INDEMNIFICATION. CLARK shall defend, or in its sole discretion,
effect settlement of any litigation or claim brought against DEALER which is
based on a contention that any of the CLARK PRODUCTS furnished hereunder
infringe any U.S. patent owned by the claimant. DEALER shall promptly notify
CLARK, in writing, of any such claims or the commencement of any such litigation
and shall give CLARK all necessary authority, information and assistance
required for the defense or settlement of such claim or litigation. If DEALER
complies with these obligations, CLARK shall pay any judgment and any costs
awarded against DEALER in any such litigation, as well as reasonable attorney's
fees incurred by DEALER independently of those incurred by CLARK to defend the
action. The foregoing states the entire liability of CLARK for patent
infringement. CLARK shall have no liability to DEALER under this Section 20 if
any patent Infringement or claim thereof is based upon the use or modification
of PRODUCTS delivered hereunder in connection or in combination with equipment,
devices or software not delivered by CLARK or use of any such PRODUCTS in a
manner for which they were not designed. DEALER shall indemnify and hold
harmless CLARK from any loss, cost or expense suffered or incurred in connection
with any claim, Suit or proceeding brought against CLARK so far as it is based
on a claim that the manufacture, sale or use of any PRODUCT delivered hereunder
and modified, altered or combined with any equipment, device or software not
supplied by CLARK hereunder constitutes such an infringement because of such
modification,
<PAGE> 12
alteration or combination.
21. CONFIDENTIAL INFORMATION: DEALER may receive from CLARK from
time-to-time information and materials of a secret or confidential nature
relating to various facets of DEALER's business which may include parts
information, computer programs, procedures and Systems, accounting data and
records, customer lists, credit records, production and sales plans, projections
in volume, pricing and discount practices, market studies, sources of supply,
service information, engineering and technical documentation, special programs
relating to sales, service, training, products and equipment and other
confidential matters. DEALER agrees that any such information will be used only
by DEALER or its employees for its business in CLARK PRODUCTS and PARTS and that
DEALER will apply security measures and otherwise take all reasonable or
necessary precautions to prevent disclosure of such information to unauthorized
persons. In the event DEALER finds it necessary to disclose any such information
to a customer, DEALER shall include in contracts with such customers a clause
notifying such customers of CLARK's proprietary rights and requiring such
customers to comply with the requirements of this Section 21. DEALER may be
required to enter into additional agreements regarding the protection of certain
information as a prerequisite to receiving the right to use that information.
DEALER will return any such information and all copies thereof to CLARK promptly
upon request by CLARK at any time.
Unless otherwise agreed in writing, DEALER's right to use any confidential
information provided by CLARK pursuant to this or any subsequent agreement shall
not extend beyond termination of this Agreement and upon such termination all
copies of all confidential information shall be returned to CLARK. DEALER's
obligation not to disclose any such information shall be a continuing obligation
which survives termination of this Agreement and continues for so long as such
information is proprietary information of CLARK or of any other party which
obtains rights in such information, directly or indirectly, from CLARK.
22.
22.1 DEALER may terminate this Agreement at any time, with or without cause,
after at least thirty (30) days prior written notice to CLARK of termination,
sent by certified mail.
<PAGE> 13
22.2 CLARK may terminate this Agreement if DEALER does not develop the sales
and/or rental of PRODUCTS and PARTS to the satisfaction of CLARK as required in
Section 4, by giving DEALER not less than one hundred twenty (120) days notice
within which to cure such failure or condition. If such failure or condition is
not cured within said period of one hundred twenty (120) days, CLARK may
terminate this Agreement at any time thereafter upon sixty (60) days' notice to
DEALER.
22.3 CLARK may terminate this Agreement for failure by DEALER to perform or
adhere to any of the other promises given or obligations undertaken in this
Agreement or in any other agreements between CLARK and DEALER including, but not
limited to, confidentiality agreements, trademark agreements, Clark Master Parts
Book Agreement and "On-Line" Agreement, by giving DEALER this (30) days' written
notice within which to cure such default. If such defauit is not cured within
said period of this (30) days, CLARK may terminate this Agreement at any time
thereafter upon notice to DEALER. If said default is cured within said time
period but thereafter repeated, CLARK may terminate this Agreement forthwith by
notice.
22.4 CLARK may terminate this AGREEMENT immediately by delivering to DEALER
or his representative written notice of such termination in the event of any of
the foUowing:
a. Any transfer or assignment, or attempted transfer or assignment of this
Agreement or any right or obligation hereunder or any sale, transfer,
relinquishment, voluntary or involuntary, by operation of law or otherwise, of
any interest in the direct or indirect ownership or active management of DEALER
without the prior written approval of CLARK; or
b. Any dispute, disagreement, or controversy between or among principals,
partners, managers, officers or stockholders of DEALER, or any loss of any
principals, partners, general manager, or chief operating officer, through
termination of employment or otherwise, which, in the opinion of CLARK, may
adversely affect the business of DEALER or CLARK; or
c. The insolvency of DEALER; the filing of a petition in bankruptcy or for
reorganization, whether voluntary or involuntary; the execution by DEALER of an
assignment for the benefit of creditors; if a receiver is appointed for DEALER
or its property; the conviction of DEALER or any principal officer or manager of
DEALER of any crimes, which in the opinion of CLARK, may adversely affect the
business of DEALER or CLARK; or
<PAGE> 14
d. DEALER fails to carry on regular and continuous business operations for
the sales of PRODUCTS and PARTS and the provision of service at the business
location identified in the preamble to this Agreement; or
e. DEALER makes any material written or oral statements or representation
which is false or otherwise misleading.
22.5 CLARK may terminate this AGREEMENT for failure of DEALER to pay any
indebtedness to CLARK or its affiliates, successors or assigns within thirty
(30) days after such indebtedness becomes due, notwithstanding any prior
forbearance, indulgence or waiver, or upon demand fails to account to CLARK or
its affiliates, successors or assigns for the proceeds from the sale of goods
for which DEALER is indebted to CLARK or its affiliates, Successors or assigns,
by giving DEALER not less than ten (10) days' written notice within which to
cure such default. If such default is not cured within said period of ten (10)
days, CLARK may terminate this AGREEMENT at any time thereafter upon notice to
DEALER. If such default is cured within said time period but thereafter
repeated, CLARK may terminate this AGREEMENT forthwith by notice.
23. RIGHTS AFTER TERMINATION.
23.1 In the event of termination of this Agreement, all obligations owed by
DEALER to CLARK and its affiliates, successors or assigns, shall become
immediately due and payable on the effective date of termination whether
otherwise then due or not.
23.2 The acceptance of orders from DEALER or the continuous sale of PRODUCTS
or PARTS to DEALER or any other act after termination shall not be construed as
a renewal of this Agreement for any further term nor as a waiver of the
termination.
23.3 Upon termination of this Agreement, CLARK shall repurchase at DEALER's
cost (net of all floor plan and other charges and less any cash discount), and
DEALER shall sell to CLARK all of DEALER's inventory of PRODUCTS not previously
sold or rented by DEALER which are new and in good and usable condition, not
obsolete, which are currently offered for sale by CLARK. CLARK shall have the
option, but no obligation, to repurchase PARTS at the then current net price to
DEALER and less cash discount, if any, provided such PARTS are in good
<PAGE> 15
and usable condition, not obsolete, which are currently offered for sale by
CLARK. There shall be deducted from the repurchase price of PARTS a charge to
cover handling, freight, and restocking equal to ten percent (10%) of the basic
repurchase price. To the extent that applicable law differs from this section,
this section is deemed modified to the extent necessary to comply.
23.4 DEALER shall, within ten (10) days after the date of termination of
this Agreement, furnish to CLARK a list of its inventory of PRODUCTS and PARTS
which are to (or in the case of PARTS, may) be purchased by CLARK pursuant to
Section 23.3 hereof. The purchase provided for in this Section 23 shall be made
within thirty (30) days after the receipt by CLARK of such list. DEALER shall
carefully pack, box or crate in a safe and proper manner, at DEALER's expense,
and promptly ship such PRODUCTS and PARTS in accordance with shipping
instructions issued by CLARK to DEALER at CLARK's expense. CLARK shall bear the
cost of shipment of PRODUCTS and DEALER shall bear the cost of shipment of PARTS
and the cost of preparing the list of its inventory of PRODUCTS and PARTS. The
PRODUCTS and PARTS so delivered shall be subject to inspection by CLARK and
payment therefor shall be made or credited within fifteen (15) days of final
acceptance by CLARK.
23.5 Upon termination of this AGREEMENT, CLARK shall repurchase from DEALER
and DEALER shall sell to CLARK DEALER's product identification cards (all
sets), complete CLARK customer sales files (including quote logs) for the
previous twelve (12) months and in the event CLARK exercises its option to
repurchase PARTS, inventory control and disbursement records of PARTS, for a
price of One Thousand Dollars ($1,000.00). DEALER may retain one (1) copy of
each of the items repurchased by CLARK.
23.6 CLARK shall have the right to withhold from the price of any PRODUCTS
or PARTS repurchased pursuant to Section 23.3 a sum sufficient to discharge any
liens, encumbrances, charges or claims against such assets and shall have the
right to discharge such liens, encumbrances, charges or claims. DEALER shall
execute any appropriate documentation and take any additional action reasonably
requested by CLARK to transfer ownership of such PRODUCTS and PARTS free and
clear of such liens, encumbrances, claims and charges.
23.7 Upon termination of this Agreement, DEALER shall immediately
discontinue the
<PAGE> 16
use of all CLARK trademarks and trade names, including immediately removing from
its salesrooms and service facilities, including buildings and vehicles, and
from signs, letterheads, business cards, telephone directory advertising, and
other advertising and promotional materials, all references to CLARK and CLARK
trademarks and trade names and shall not thereafter use any deceptively similar
name or trademark tending to give the impression that the relationship between
CLARK and DEALER still exists. Furthermore, DEALER shall immediately return to
CLARK, whether or not paid for by DEALER, at CLARK's expense, without charge,
all materials supplied by CLARK, including without limitation, any and all CLARK
customer lists, sales records, instruction books, circulars, Sales and Product
Information Manuals, Dealer Information System Manuals, parts cross-reference
manuals, sales aids such as audio visual media, interactive programming,
computer assisted learning devices, all parts books, microfilm, cassettes, price
books, microfiche, maintenance manuals, service bulletins, and other
publications of CLARK and its affiliates relating to PRODUCTS and PARTS. DEALER
may retain one (1) copy of each of CLARK's customer lists and sales records.
23.8 The termination of this AGREEMENT shall not release DEALER or CLARK
from the payment of any sum then owing.
24. SET-OFFS. CLARK may, at any time, at its option, set off any amounts
which DEALER may owe CLARK and its affiliates, successors or assigns, against
any amounts which CLARK and its affiliates, successors or assigns, may owe to
DEALER, whether arising out of this Agreement or otherwise.
25. CHANGES IN CLARK PRODUCTS. CLARK reserves the right at any time to
change models, classifications of models, specifications or design, or add to or
discontinue the manufacture or sales of any PRODUCT or product lines, without
notice and without incurring any obligation to DEALER.
26. ASSIGNMENT. This Agreement may not be assigned or transferred by DEALER
without the prior written consent of CLARK. Any merger, consolidation, transfer
of assets, event or transaction resulting (by operation of law or otherwise)
in a change of ownership or control of DEALER or DEALER's business shall be
deemed to be an assignment for purposes of this Agreement. DEALER will not
make or suffer to be made any change in the ownership or management of DEALER
without the prior
<PAGE> 17
written approval of CLARK. Any attempted assignment or transfer without such
written approval shall be null and void.
27. NOTICES. Any notices required or permitted under the terms of this
Agreement, may be delivered in person to the party to whom the notice is being
given and shall be in writing, or if the party is a corporation, to an officer
thereof, or by mail, postage fully prepaid, in an envelope properly addressed to
the party to whom notice is being given at the last known address given by such
party to the other or commercial courier service, fully prepald, properly
addressed to the party to whom notice is being given at the last known address
given by such party to the other. Any such notice shall be considered to have
been given when personally delivered, mailed or sent by commercial courier
service in the manner herein above provided.
28. LAWS. This Agreement shall be construed and the legal relations between
the parties determined in accordance with the laws of the State of Kentucky, and
if any provision or part hereof is prohibited or invalidated by applicable law,
only such provision or part shall be ineffective without invalidating the
remaining provisions or parts hereof provided that if the provision so
prohibited or invalidated is deemed by either party to be essential to this
Agreement, such party may terminate this Agreement by notice in writing to the
other party.
29. NO WAIVER. Failure of either party at any time to require performance
of any provision shall not affect the right to require full performance thereof
at any time thereafter, and the waiver by either party of a breach of any such
provision shall not constitute a waiver of any subsequent breach thereof or
nullify the effectiveness of such provision.
30. VOLUNTARY ACCEPTANCE BY DEALER. DEALER acknowledges that the Agreement
has been read in its entirety before its execution by DEALER and that DEALER
understands the terms and voluntarily agrees to them.
31. SEVERABILITY. The invalidity or unenforceability of any of the
provisions of this Agreement or the application thereof shall not affect or
impair the validity or enforceability of any other provision herein. Any
provision of this Agreement that otherwise is declared invalid or unenforceable
because of contravention of any applicable law, statute or government regulation
shall be deemed to be amended to
<PAGE> 18
the extent necessary to remove the cause of such invalidation or
unenforceability, and such provision, as so amended, shall remain in full force
and effect.
32. DAMAGES. Neither CLARK or any of its affiliates nor DEALER or any of
its affiliates shall by reason of the termination or nonrenewal of this
Agreement, be liable to the other for compensation, reimbursement or damages on
account of the loss of prospective profits or anticipated sales or on account of
expenditures, investments, leases, property improvements or commitments in
connection with the business or good will of CLARK, of the dealer, or
otherwise. IN NO EVENT SHALL CLARK OR DEALER BE LIABLE FOR INCIDENTAL,
CONSEQUENTIAL OR SPECIAL DAMAGES OF ANY NATURE WHATSOEVER FOR BREACH OF THIS
AGREEMENT, BREACH OF WARRANTY, NEGLIGENCE, TORT (INCLUDING STRICT LIABILITY),
OR OTHERWISE, INCLUDING, WITHOUT LIMITATION, LOSS OF PROFIT OR REVENUE; LOSS
OF USE OF EQUIPMENT OR ANY PART THEREOF OR SOFTWARE MATERIAL; COST OF CAPITAL;
COST OF REPLACEMENT EQUIPMENT; OR CLAIMS RESULTING FROM CONTRACTS BETWEEN
DEALER, ITS CUSTOMERS AND/OR SUPPLIERS.
33. ENTIRE AGREEMENT. This Agreement, including any and all exhibits
attached hereto or referenced herein contain the entire and only agreement
betwecn the parties respecting the sale to and the purchase and distribution by
DEALER of said PRODUCTS and PARTS and any representations, terms or conditions
in connection therewith not incorporated herein or therein shall not be binding
upon either party. This Agreement wholly cancels, terminates, and supersedes any
agreement heretofore entered into between the parties, or their successors or
assigns, pertaining to said PRODUCTS and PARTS. No modification, renewal,
extension, waiver or termination of this Agreement shall be valid unless made in
writing and signed by a duly authorized representative of CLARK and a duly
authorized representative of DEALER.
IN WITNESS WHEREOF, the parties have executed this Agreement in duplicate by
their duly authorized representatives effective as of the day and year first
above written.
CLARK MATERIAL HANDLING COMPANY:
By:
Martin M. Dorio, Jr.
Title:
Date: ____________________________________
_______________________________________
<PAGE> 19
SCHEDULE TO ITEM 10.28
- -Dealer arrangements with each of the following entities:
a. Clarklift South, Inc.
b. W.D. Matthews Machinery Co.
c. Clarklift Services, Inc.
d. Brodie, Inc.
e. A.R. Williams Materials Handling, Ltd.
f. Midstate Equipment Companies
g. Chicagoland Material Handling
h. Clarklift of Atlanta, Inc.
i. Maryland Clarklift Co.
j. Alabama Clarklift, Inc.
k. Clarklift of Buffalo, Inc.
l. Lease Lift, Inc.
m. Jefferds Corporation
n. Clarklift of Cleveland, Inc.
o. Midland Clarklift, Inc.
p. Power-Lift Corporation
q. Big River Equipment Co., Inc.
r. Clarklift of Des Moines, Inc.
s. Clarklift of El Paso, Inc.
t. Black Equipment Co., Inc.
u. Clarklift of Fort Worth, Inc.
v. Portman Equipment Company
w. Clarklift of Central Ohio
x. Clarklift of Dalton, Inc.
y. Colorado Clarklift, Inc.
z. Clarklift of Detroit, Inc.
aa. Erie IndustriaI Trucks, Inc.
ab. Materials Handling Equipment Corp.
ac. Gray Lift, Inc.
ad. Inland Empire Equipment, Inc.
ae. Modem Material Handling Equipment
af. Allegheny High Lift, Inc.
ag. Forklifts, Inc.
<PAGE> 20
ah. Southline Equipment Co.
ai. Burke Handling Systems, Inc.
aj. Lift Truck Sales & Service, Inc.
ak. Clarklift of Detroit - West
al. Industrial Truck Sales & Service, Inc.
am. Piedmont Clarklift, Inc.
an. Clarklift Pacific
ao. Clarklift of Indiana
ap. Clarklift of Jacksonville, Inc.
aq. Cumberland Clarklift, Inc.
ar. Hugg & Hall Equipment, Inc.
as. Equipment Services, Inc.
at. Cardinal Carryor, Inc.
au. Clarklift Mttterial Handling, Inc.
av. Lift Truck Specialist. Inc.
aw. Clarklift of Minnesota, Inc.
ax. Jefferds Corporation
ay. Long Island Clarklift, Inc.
az. Pacific Coast Clarklift
ba. Western Clarklift & Supply, Inc.
bb. Delta Materials Handling, Inc.
bc. W.E. Johnson Equipment Co.
bd. Mid-Hudson Clarklift, Inc.
be. Clarklift of Mid Tennessee, Inc.
bf. Clarklift of New York, Inc.
bg. Summit Handling Systems, Inc.
bh. Sooner Lift, Inc.
bi. Clarklift of Orlando, Inc.
bj. Industrial Material Handling Systems, Inc.
bk. Norlift of Oregon, Inc.
bl. Industrial Lift Truck Co.
bm. Atlantic Lift Systems, Inc.
bn. East Bay Clarklift, Inc.
bo. Midlands Rental & Machinery
bp. Common Equipment Co.
bq. Naumann/Hobbs Material Handling, Inc.
br. Richmond Clarklift Co.
bs. Homestead Materials Handling Co.
bt. Material Handling Services, Inc.
bu. Lift Parts Atlantic, Ltd.
bv. Southwest Lift Trucks Co.
bw. Clarklift of San Diego, Inc.
bx. Clarklift of Savannah, Inc.
by. Louisiana Lift and Equipment, Inc.
bz. Clarklift-Team Power
ca. Forklifts of St. Louis, Inc.
cb. Inland Empire Equipment, Inc.
cc. Moore Material Handling Group
cd. Clarklift of Washington/AIaska, Inc.
ce. Materials Handling Equipment Corp.
cf. Industrial Lift Inc.
cg. United Machinery & Supply Co., Inc.
ch. Thompson & Johnson Equipment Co., Inc.
ci. Clarklift Canada
cj. Williams Machinery, Ltd.
ck. Potomac Industrial Trucks, Inc.
cl. CLD Handling Systems
cm. Norlift, Inc.
cn. Gray Lift, Inc.
co. Florida Lift Systems
cp. Southern Material Handling Company
cq. Equipment Depot, Inc.
cr. Lift Truck Center, Inc.
cs. Mid Columbia Forklift, Inc.
ct. Valley IndustriaI Trucks, Inc.
<PAGE> 1
EXHIBIT 10.29
THIS AGREEMENT made and entered into as of the 12th day of September,
1995, by and between CLARK MATERIAL HANDLING COMPANY, a Kentucky corporation
with offices at Lexington, Kentucky ("Buyer") and NISSAN FORKLIFT CORPORATION,
NORTH AMERICA, an Illinois corporation with offices at Marengo, Illinois
("Seller") .
PURPOSE
Buyer manufactures and distributes certain industrial trucks and
related accessories, attachments and parts through a network of dealers and
subsidiaries in the United States and Canada.
Buyer wishes to purchase from Seller certain industrial trucks and
related accessories, attachments and parts for distribution in the United States
and Canada under the Clark name through its distribution network.
Seller manufactures and distributes industrial trucks and distributes
service and repair parts for those industrial trucks. Seller wishes to sell
certain of its industrial trucks and parts to Buyer for distribution under the
Clark name through the Buyer's distribution network.
The purpose of this Agreement is to establish the terms and conditions
upon which Seller will sell and deliver to Buyer and Buyer will purchase certain
of Seller's industrial trucks and related accessories, attachments and service
and repair parts both during the term of this Agreement and after termination.
NOW, THEREFORE, in consideration of Buyer's purchase of products and of
the mutual Agreements contained herein, the parties agree as follows:
1. SALE AND PURCHASE
1.1 Seller will sell and deliver to Buyer and Buyer will purchase
from Seller, in accordance with this Agreement, those
products, accessories and service and repair parts, to which
this Agreement applies, which are ordered by Buyer and
accepted by Seller during the term of this Agreement.
1.2 This Agreement applies to the basic lift trucks, including
improvements thereto, and the accessories and optional
equipment and specifications for the lift truck described in
Schedule 1, attached hereto and made a part hereof, together
with any modifications thereto approved or authorized in
accordance with the provisions thereto approved or authorized
in accordance with the provisions of this Agreement
("Products") . Products may be added to Schedule 1 by written
agreement of the parties. This Agreement applies to any
service or repair parts for
<PAGE> 2
such Products, accessories or optional equipment sold to Buyer
pursuant to this Agreement ("Parts"). As used in this
Agreement, unless otherwise indicated, the term "Products"
includes accessories and optional equipment, but not service
and repair parts.
1.3 Set forth in Schedule 2, attached hereto and made a part
hereof, is a list of dealers which as of the date of this
Agreement are authorized dealers of both Buyer and Seller,
which list may be amended from time to time. Buyer and Seller
reserve the right at any time to appoint, change, or end
relationships with their respective dealers. However, the
parties will notify each other of changes to Schedule 2.
Unless otherwise agreed by the parties, the total number of
authorized dealers of both Buyer and Seller shall not exceed
ten (10) at any given time during the term of this Agreement.
1.4 Provided Buyer places at least three hundred (300) firm orders
for Products during (i) the first eighteen (18) months of this
Agreement, and (ii) each subsequent twelve (12) month period
of this Agreement, during the term of this Agreement, Seller
shall not enter into any new OEM agreement or new OEM
arrangement with a third party for sale of Products in North
America.
2. ORDERS
2.1 Beginning on or about September 1, 1995 and on the first of
each calendar month thereafter, Buyer shall deliver to Seller
Buyer's best forecast of orders to be placed by Buyer during
the following twelve (12) calendar months. This rolling
forecast will not constitute an order for Products, and Buyer
does not assume any obligation to purchase all or any portion
of such forecasted quantities. Buyer shall submit firm orders
to Seller on an ongoing basis throughout the month. In the
event Buyer's firm orders for any given month exceed the
monthly forecast, Seller may adjust the delivery times as
Seller deems necessary. Subject to the immediately preceding
sentence and Sections 4.1 and 4.2 hereof, orders will be
filled within Seller's normal lead time. Seller's purchase
order sheet (or other mutually agreed upon document or system)
will be used to order Products and will be issued periodically
as required.
2.2 All contracts of sale will be upon the terms and conditions
set forth in this Agreement. No different or additional terms
or conditions set forth in any other
2
<PAGE> 3
documents, including but not limited to Buyer's purchase order
sheet or forecast, will add to or modify in any way the terms
and conditions of this Agreement.
3. DELIVERY OF PRODUCTS
3.1 Subject to Section 2.1 above, firm order quantities of
Products placed by Buyer and accepted by Seller will be
delivered within Seller's normal lead time for a particular
model of Product in effect at time of order acceptance. Seller
will periodically supply Buyer with a lead time schedule which
will establish the normal lead times by model of Products for
standard Products, until such time as Seller supplies Buyer
with a new lead time schedule. Delivery schedules for special
products (products with special equipment or options not
described in Schedule 1) and for Products in excess of
forecasted quantities will be established by mutual Agreement.
3.2 Within twenty-four (24) hours after the issuance of any
purchase order sheet for firm orders of Products, Seller will
either confirm the delivery schedule specified by Buyer (which
delivery schedule must be within Seller's then current normal
lead times) or advise Buyer of the earliest delivery schedule
which is within Seller's then current normal lead times which
Seller will be able to meet, subject to Sections 2.1 and 3.1
above.
3.3 Deliveries will be F.O.B. Seller's manufacturing facility.
Title to Products shall pass from Seller to Buyer upon
delivery of Product to Buyer at Seller's manufacturing
facility, or upon delivery to a carrier for transportation to
Buyer, whichever occurs first. Deliveries will be to Buyer's
location in Lexington, Kentucky. Prices include all reasonable
and proper preparations for North American shipment. Prices
will be equitably adjusted for special packing or shipping
preparations requested by Buyer. Freight charges will be borne
by Buyer and invoiced by Seller.
4. CANCELLATION
4.1 Buyer may at any time upon written notice up to sixty (60)
days prior to the scheduled delivery date cancel all or any
portion of orders placed with Seller. For Product orders
canceled pursuant to this provision, Buyer will be subject to
a cancellation charge of $400.00. Such cancellation charges
will be waived to the extent that the order is reinstated
within
3
<PAGE> 4
thirty (30) days. New delivery dates for reinstated orders
will be based on mutual agreement. In addition, Buyer will be
subject to an additional cancellation charge for special or
non-standard attachments, accessories or optional equipment
which are not listed in standard price pages to cover the
non-recoverable cost of such special or non-standard
attachment, accessory or optional equipment, including, but
not limited to, the cost of the attachment, accessory or
equipment, freight and labor.
4.2 Buyer will be subject to a $200.00 surcharge for all changes
to orders made within sixty (60) days before a scheduled
delivery date, plus costs of option or rework, if any,
incurred by Seller. If a single change to an order contains
multiple changes, it will still be subject to a maximum
surcharge of only $200.00. Changes in orders may result in
changes to delivery times. Seller, at its sole discretion,
reserves the right to reject any or all changes to orders.
5. PRICES, PAYMENT
5.1 Prices for Products, accessories and options will be Seller's
then current Manufacturer's Suggested Selling Price ("MSSP")
for such Products, accessories and options, less (i) the
discounts stated in Schedule 1, and (ii) the warranty
allowance stated in Schedule 3.
5.2 In the event Seller at any time changes its MSSP for any
Products, firm orders for Products previously placed by Buyer
and accepted by Seller and firm orders for Products placed by
Buyer and accepted by Seller within thirty (30) days of the
announcement of the change in MSSP which are within one
hundred fifty percent (150%) of the most recent forecasted
quantity for such thirty (30) day period (or two hundred
percent (200%) of the most recent forecasted quantity for any
single specific model of five (5) units or less) shall be
priced at the price in effect prior to such change. All other
orders, including but not limited to orders in excess of most
recent forecasted quantities for such thirty (30) day period,
shall be priced at the changed price.
5.3 Prices for Parts will be Seller's U.S. dealer net price less
(i) 18.5% and (ii) the warranty allowance stated in Schedule
3.
5.4 Buyer will pay all invoices for Products and Parts within
thirty (30) days after the date the invoice is received by
Buyer. Buyer will receive a discount of one percent (1%) off
of the invoice amount for Products and
4
<PAGE> 5
Parts in the event such invoice is paid within ten (10) days
after the date such invoice is received by Buyer.
6. WARRANTY ON PRODUCTS
6.1 Within thirty (30) days of invoice date or prior to shipment
of a Product from Buyer's location to a dealer or customer,
whichever comes first, Buyer may notify Seller's designated
representative of substantial defects in such Products.
Subject to the written approval of Seller's designated
representative, Seller will make arrangements for corrections
to such Products which Seller deems appropriate at Seller's
expense.
The above warranty is in lieu of all other warranties for
Products or Parts, express or implied, and states Seller's
entire obligation with respect to defects or nonconformities
in Products or Parts. THERE ARE NO IMPLIED WARRANTIES OF
MERCHANTABILITY OR OF FITNESS FOR A PARTICULAR PURPOSE. Seller
shall not be liable for incidental, special or consequential
damages for this warranty or any other reason whatsoever.
6.2 Seller will, after net amounts for each and every invoice to
Buyer are computed for Products and Parts (such net amounts
shall be arrived at by applying the discounts set forth in
Schedule 1 for Products and the discount set forth in Section
5.3 for Parts), extend a warranty allowance as provided in
Schedule 3, and the resulting amount will be the final net
amount of the invoice.
The parties agree to review Buyer's warranty payments to its
dealers and customers for Products and Parts (based on Buyer's
standard warranty in effect on the date of this Agreement)
every six (6) months. The parties agree that should Buyer's
net warranty payments be greater or less than the warranty
allowances provided in Schedule 3 for the relevant Products
and Parts, the parties will negotiate in good faith to adjust
the standard warranty allowance.
Warranty payments shall be defined as the sum of all warranty
repair labor as allowed within Buyer's standard rate guide and
all other associated costs (including travel), plus Buyer's
net purchase price for parts used in the warranty repairs,
based upon Buyer's standard warranty in effect on the date of
this Agreement.
6.3 The parties agree that the warranty allowance provided by
Schedule 3 will be used by Buyer to cover all costs
5
<PAGE> 6
to provide warranty coverage to Buyer's dealers and customers
for Products and Parts, and said warranty allowance, as may be
adjusted from time-to-time in accordance with this Agreement,
is Seller's only warranty obligation for Products and Parts
supplied under this Agreement.
Notwithstanding the foregoing, the parties agree that costs
incurred by Buyer for Seller-initiated field campaigns and
recalls will be wholly borne by Seller. Such costs will not be
included in calculations used to determine potential
adjustments in the warranty allowance under Section 6.2.
6.4 warranty recoveries from vendors shall be the sole
responsibility of Buyer. Seller's sole responsibility with
respect to warranty recoveries shall be to notify, upon
Buyer's written request, appropriate vendors that Buyer is
authorized by Seller to seek warranty recoveries for
components and parts supplied by such vendor.
6.5 Buyer shall, on a quarterly basis and for the duration of this
Agreement, provide Seller with an itemized listing of all
claims or incidents relating to the warranty allowance which
have occurred during the previous quarter for which the report
is made.
6.6 The warranty allowance does not apply to defects or
nonconformities in Products or Parts caused by Buyer. The
warranty allowance also does not apply to normal service or
maintenance items such as tune-up parts, filters, motor
brushes, wheels, tires and other parts, that are expected
normal replacement items which occur due to normal use of the
Products.
7. QUALITY PLAN
7.1 Buyer may, upon reasonable advance notice to Seller, at its
option and expense, review and inspect Seller's quality
assurance program and product quality at Seller's facilities.
Seller will provide Buyer's representatives with good faith
cooperation and such access and facilities including testing
and inspection devices and equipment, as may reasonably be
required by Buyer's representatives to conduct such review and
inspection. Buyer will use its best efforts consistent with
accomplishing its review and inspection to avoid disruption or
delay of Seller's operations. Inspection or review of Seller's
quality assurance program or products at Seller's facilities
will not constitute
6
<PAGE> 7
acceptance of any Products and will not relieve Seller of
responsibility for any defect in any Product.
7.2 Seller further warrants that if Seller at any time has reason
to believe that any defect in design or manufacture may be
present in Products or Parts sold or to be sold pursuant to
this Agreement, Seller will promptly advise Buyer and will
cooperate with Buyer to determine whether the defect is
present and, if so, will cooperate with Buyer in good faith to
correct it. This provision will not be construed to expand
Seller's warranty to Buyer or to relieve Seller of its
responsibility for the consequences of any such defect.
8. INDEMNITY
8.1 Subject to Section 8.2 hereof, Seller will indemnify and hold
Buyer harmless from and against any and all claims for injury
to or death of persons or damage to property (including
reasonable attorneys' fees) in any manner caused by, arising
from, incident to, connected with, or growing out of any
defect in the materials, manufacture or design of the Products
and Parts sold to Buyer under this Agreement, except claims
caused by Buyer's negligence, misconduct or claims subject to
Section 8.2 hereof. Buyer shall notify Seller in writing
within ten (10) days after Buyer receives written notice of
any such claim. Seller further agrees to secure and maintain
during the term of this Agreement a public liability policy or
policies providing (a) products liability coverage with broad
form vendor' s endorsement protecting Buyer with respect to
claims arising from Products and Parts sold to Buyer pursuant
to this Agreement; and (b) providing contractual liability
coverage for the hold harmless clause set forth above in this
section, each of such insurance coverage to have bodily injury
limits of not less than $5 Million per person and $5 Million
per occurrence and property damage limits of not less than $5
Million per occurrence. Seller will upon request furnish Buyer
with a certificate from Seller's insurance carrier in a form
satisfactory to Buyer and will provide for thirty (30) days'
prior written notice from the insurance carrier to Buyer prior
to any cancellation or change reducing coverage.
8.2 Buyer shall be liable for, and will indemnify and hold Seller
harmless from and against any and all claims for injury to or
death of persons or damage to property (including reasonable
attorney's fees) in any manner caused by, arising from,
incident to, connected with,
7
<PAGE> 8
or growing out of (i) any defect in the design of any changes
or modifications made, authorized, approved or requested by
Buyer to the Products or Parts; or (ii) any changes or
modifications made, authorized, approved or requested by Buyer
to the manuals, warnings, decals or instructions. As used in
the immediately preceding sentence, "modifications made,
authorized, approved or requested by Buyer" shall include, but
not be limited to, safety gate switches. Buyer agrees to
secure and maintain during the term of this Agreement a public
liability policy or policies providing (a) products liability
coverage with broad form vendor's endorsement protecting
Seller from claims covered by this Section 8.2, and (b)
providing contractual liability coverage for the hold harmless
clause set forth above in this section, each of such insurance
coverage to have bodily injury limits of not less than $5
Million per person and $5 Million per occurrence and property
damage limits of not less than $5 Million per occurrence.
Buyer will upon request furnish Seller with a certificate from
Buyer's insurance carrier in a form satisfactory to Seller and
will provide for thirty (30) days prior written notice from
the insurance carrier to Seller prior to any cancellation or
change reducing coverage.
8.3 In the event of a claim which is subject to Section 8.1 or 8.2
above, the following shall apply:
a. Neither party shall enter into any settlement with a
plaintiff without the advice and prior written
consent of the other party;
b. Each party shall provide reasonable assistance and
cooperation to the other party in the defense of the
claim, including production of witnesses and
documents as requested;
c. Each party agrees to use its best efforts to avoid
taking positions in litigation which are adverse to
the other party.
d. In the event evidence indicating that the indemnified
party is not entitled to indemnification under
Section 8.1 or 8.2 hereunder, as the case may be, is
discovered after the indemnifying party has
indemnified and taken over the defense of the
indemnified party, then the indemnifying party shall
have the right to void Section 8.1 or 8.2, as the
case may be, ending any obligation to hold harmless
and defend the other party. In such event, neither
party shall object to or oppose the continued
8
<PAGE> 9
representation of the other party's attorney in such
litigation or otherwise.
9. PATENTS
9.1 Seller represents and warrants that the Products and Parts
ordered pursuant to this Agreement and their sale or use,
alone or in combination, according to Seller's specifications
or recommendations, if any, will not infringe any U.S. or
foreign patents, and Seller agrees to defend, protect and save
harmless Buyer, its successors, assigns, customers and users
of the Products and Parts, against all suits and from all
damages, claims and demands resulting from such alleged
infringements, and Seller further agrees that Seller will,
upon written request, defend or assist in the defense at
Seller's expense of any such suit.
10. TRADEMARKS ADVERTISING
10.1 Each Product sold to Buyer pursuant to this Agreement will
have affixed a nameplate, warning/instruction decals, and one
(1) or more of the trademarks specified by Buyer in the
distinctive form specified by Buyer in a suitable place to be
designated by Buyer. Seller will not acquire rights of any
kind under any of Buyer's trademarks; except the right to use
them in the manner permitted by this section, and will in no
event sell, distribute, or otherwise dispose of any Products
or Parts bearing any of Buyer's trademarks to any person, firm
or corporation other than Buyer without first removing the
trademarks or obtaining Buyer's express written consent.
10.2 All publicity and advertising concerning the sale of Products
and Parts bearing Buyer's trademarks shall be prepared under
Buyer's sole direction and control. Neither party will
disclose the existence of this Agreement, or any of its terms
and conditions to any other person, firm or corporation, or
advertise, or make any public announcements, or release any
publicity concerning this Agreement or the performance by
either party without the other party's written consent in each
instance, except as otherwise required by law.
10.3 Buyer shall not at any time during the term of this Agreement
or thereafter adopt, use or register a trademark, service
mark, trade name, trade dress, or otherwise any word or words
similar to any of Seller's trademarks, trade names or trade
dress for any purposes.
9
<PAGE> 10
11. TECHNICAL DATA
11.1 Seller will promptly provide at no charge five (5) copies of
its parts manuals, operator instructions and service and
repair manuals for Products listed in Schedule 1. Seller will
also furnish Buyer at no charge such available additional
non-proprietary engineering and technical data as Buyer may
reasonably request for the purpose of preparing appropriate
Product descriptions and specifications, advertising
literature, operator's manuals, service and repair manuals and
any similar materials ordinarily provided by Buyer with
respect to its own industrial trucks. Buyer may reprint or
copy all or any portion of the materials supplied for these
purposes, provided references to Seller and Seller's
trademarks are first deleted.
12. PRODUCT CHANGES
12.1 Seller shall have the right upon the earlier of (i) six (6)
months' prior written notice to Buyer, or (ii) the same notice
period given by Seller to its dealers to discontinue the
production of any Product.
12.2 Seller shall provide Buyer with forty-five (45) days' notice
in writing of material changes in (i) the outward appearance
of Products, or (ii) the performance specifications of
Products.
12.3 Buyer may request changes in form, fit or function of Products
by way of exterior design in order to provide product
differentiation from Seller's products. Such changes, if
agreed to by Seller, shall be made at the sole cost and
expense of Buyer.
12.4 In the event Seller discontinues the production of any
Product, Seller shall give Buyer the first opportunity, at
Seller's option, to purchase or license the technology related
to such Product, upon terms, conditions and prices mutually
agreed upon.
12.5 Seller shall have up to nine (9) months after the execution
date of this Agreement to obtain UL certification for Products
subject to this Agreement at Seller's expense. If any Product
has not been certified by UL within such nine (9) month
period, Seller shall pay Buyer Fifty Dollars ($50.00) per day,
until such time as all such certifications have been obtained.
Immediately upon receipt of such UL certification, Seller
shall provide Buyer with written confirmation of same, and all
Products delivered to Buyer shall
10
<PAGE> 11
thereafter include a decal or nameplate indicating compliance
with UL.
13. ENGINEERING AND SERVICE ASSISTANCE
13.1 During the term of this Agreement, Seller will provide on a
one-time basis at no additional charge service training for
Buyer's representatives at Seller's Marengo, Illinois
location. Buyer will be responsible for its own travel and
living expenses in connection with such training sessions.
13.2 Buyer will attempt to resolve service problems by written or
telephone communications with Seller's service department,
however, when and as reasonably requested and subject to
Seller's manpower constraints, Seller will provide a qualified
service representative to review and resolve service problems
at Buyer's location or at the location of the Products
anywhere in North America. Buyer will be responsible for
Seller's expenses with respect to such service calls.
13.3 Seller will also provide engineering assistance to approve
modifications and capacity ratings for various Seller-approved
standard modifications and for standard attachments for
prospective sales of Products to be delivered and for
modification of Products in the field. Seller will authorize
and approve by written authorization to Buyer any appropriate
changes to the Product nameplates which may be required by any
such changes to the attachments used with the Product or
standard modifications to the Product.
13.4 Buyer may from time-to-time request Seller to approve special
modifications. If Seller wishes to charge Buyer for
engineering work required to approve such modifications,
Seller will promptly advise Buyer in writing and provide a
quotation for such work. No such work will be performed except
by mutual agreement. All other requests to approve special
modifications will be promptly answered and approved or not
approved at no additional charge to Buyer.
14. SERVICE AND REPAIR PARTS
14.1 Seller will sell and deliver to Buyer and Buyer will purchase
from Seller the following classes of Parts which Buyer orders
during the term of this Agreement and within five (5) years
thereafter:
11
<PAGE> 12
1. Parts manufactured by Seller for Products sold to
Buyer;
2. Parts manufactured by other suppliers to Seller's
specifications for Products sold to Buyer.
14.2 During the term of this Agreement and for five (5) years
thereafter, Buyer will maintain a stock of Parts as it
determines is adequate to supply dealers. Seller will use
commercially reasonable efforts to ship emergency Parts orders
within 48 hours after the order is received. An order will be
considered an emergency Parts order if the Part is required to
repair a Product which is out of service and Buyer cannot
supply the Part from its stock.
14.3 Parts orders will be placed through Seller's on-line parts
ordering system, as set forth in Section 14.4 hereof. Parts
orders which are not placed through Seller's on-line parts
ordering system shall be subject to a $.10 charge per line.
14.4 Seller shall make available to Buyer, upon terms, conditions
and prices acceptable to Seller, Seller's on-line parts
ordering system. Buyer access to such system shall be limited
to use in connection with Products, and Buyer shall execute
such other agreements as Seller deems necessary in connection
with such use, including a confidentiality agreement, in form
and substance similar to Schedule 4, attached hereto and a
part hereof.
14.5 All Parts sales will be upon the terms and conditions of this
Agreement.
14.6 Buyer shall have the right, exercisable within thirty (30)
days following the end of the first year of this Agreement, to
return for full credit unsold Parts which Buyer purchased from
Seller, and which were contained in Seller's recommended parts
list, provided such Parts are new, unused and in resaleable
condition. Buyer shall arrange for and pay the cost of
returning such Parts to Seller.
14.7 Buyer shall have the right, exercisable within thirty (30)
days following the end of the second year of this Agreement
and the end of each succeeding year of this Agreement, to
return to Seller for full credit up to three percent (3%)
(dollar volume) of its annual parts purchases for stock
orders, provided such Parts are new, unused and in resaleable
condition. Buyer shall arrange for and pay the cost of
returning such
12
<PAGE> 13
Parts to Seller, plus pay a ten percent (10%) restocking
change.
14.8 In the event of overages, shortages or discrepancies in Parts
shipments, (i) if it is caused by Seller, return is allowed
anytime, and Seller pays freight, (ii) if it is caused by
Buyer, Buyer must return within thirty (30) days, at Buyer's
cost. Return allowed provided Parts are new, unused, and in
resaleable condition.
15. TERMINATION
15.1 The initial term of this Agreement shall be five (5) years
from the date first written above and will automatically be
extended for an additional one (1) year thereafter unless
terminated by either party upon written notice given at least
one hundred eighty (180) days prior to expiration of the term.
15.2 Either party may terminate this Agreement for failure by the
other party to perform or adhere to any promises or
obligations undertaken pursuant to this Agreement by giving
the other party sixty (60) days' written notice within which
to cure such default. If such default is not cured within the
60-day period, the party which gave the notice may terminate
this Agreement at any time thereafter upon written notice to
the other party.
15.3 Either party may terminate this Agreement immediately by
written notice to the other party if any of the following
events occur:
1. Any attempted transfer or assignment of this
Agreement or any right or obligation hereunder by the
other party unless the assignment is otherwise
permitted by this Agreement.
2. The filing of a voluntary petition in bankruptcy by
the other party.
3. The filing of a petition in bankruptcy against the
other party, provided it is not vacated within thirty
(30) days from the date of filing.
4. The appointment of a receiver or trustee for the
other party, provided such appointment is not vacated
within thirty (30) days from the date of such
appointment.
15.4 The termination of this Agreement will not affect or impair
the rights, liabilities and obligations of either
13
<PAGE> 14
party under any order issued prior to the termination, will
not relieve either party of any obligation or liability
accrued under this Agreement or pursuant to any order issued
prior to the termination, and will not relieve either party of
the continuing obligations pursuant to Section 6, Warranty on
Products, Section 7, Quality Plan, Section 8, Indemnity,
Section 9, Patents, Section 10, Trademarks Advertising, and
Section 14, Service and Repair Parts, which obligations will
survive any termination of this Agreement.
16. GENERAL
16.1 Notice to be given by either party will be in writing and may
be delivered by either telefax or prepaid, certified mail to
the following addresses:
Seller: Nissan Forklift Corporation, North America
240 N. Prospect Street
Marengo, Illinois 60152-3298
Attention: Vice President -
Sales and Marketing
Buyer: Clark Material Handling Company
610 West Second Street
Lexington, Kentucky 40508-1237
Attention: Vice President -
Sales and Marketing
Either party may change its address by written notice to the
other party.
16.2 Neither party will disclose any proprietary confidential
information to the other party and neither party will be
obligated to treat information as proprietary confidential
information unless the information is clearly identified as
confidential and the parties have entered a specific
nondisclosure Agreement regarding such information.
16.3 This Agreement will not be assigned by either party without
the written consent of the other party, except when the
assignment is made to any subsidiary of the parties or to a
successor to all or a substantial part of the business of
either of the parties. Unless otherwise agreed, no assignment
will relieve the party assigning of any duty to perform or any
liability for breach.
16.4 This Agreement encompasses the entire Agreement between the
parties respecting the sale and purchase of Products and Parts
covered by this Agreement and supersedes any
14
<PAGE> 15
and all previous Agreements, memoranda, negotiations or other
understandings of the parties with respect thereto.
16.5 Any failure by either party hereto to enforce, at any time,
any term or condition of this Agreement will not constitute,
nor will it be construed as, a waiver of that party's right
thereafter to enforce each and every term and condition of
this Agreement.
16.6 The invalidity or unenforceability of any of the provisions of
this Agreement or the application thereof shall not affect or
impair the validity or enforceability of any other provision
herein. Any provision of this Agreement that is invalid,
illegal or unenforceable because of contravention of any
applicable law, statute or government regulation shall be
severed from this Agreement, and the remaining provisions of
this Agreement will remain in full force and effect.
16.7 This Agreement and all orders issued pursuant to this
Agreement will be governed by and construed in accordance with
the laws of the State of Illinois. Any provisions in Buyer's
standard purchase order terms specifying warranty on Products
or Parts or requiring arbitration of claims arising out of any
purchase order are deleted and will be void and have no force
and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate originals by their duly authorized representatives as of
the day and year first written above.
CLARK MATERIAL HANDLING COMPANY NISSAN FORKLIFT CORPORATION,
NORTH AMERICA
/s/ Martin M. Dorio, Jr. /s/ K. Yamada
- -------------------------------------- --------------------------------------
Signature Signature
Name: Martin M. Dorio, Jr. Name: K. Yamada
------------------------------ ------------------------------
Title: President Title: President
------------------------------ ------------------------------
Date: 12 September 1995 Date: 12 September 1995
------------------------------ ------------------------------
15
<PAGE> 1
Exhibit 12.1
CLARK MATERIAL HANDLING
CALCULATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
Year Ended December 31,
Predecessor basis (in thousands) 9 months ended
7 months 5 months -------------- --------------
1991 7/31/92 12/31/92 1993 1994 1995 9/30/95 9/30/96
---- ------- -------- ---- ---- ---- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
EARNINGS
Income from continuing operations
before taxes and minority interest
(before extraordinary items)........(37,650) NA(2) (4,881) (44,761) (24,469) (17,271) (17,281) (2,880)
Fixed Charges (as calculated below).. 2,734 NA(2) 7,608 20,061 18,861 18,492 13,242 14,301
------- ------ ------ ------- ------- ------- ------- -------
Earnings.......................(34,916) -- 2,727 (24,700) (5,608) 1,221 (4,039) 11,421
------- ------ ------ ------- ------- ------- ------- -------
COMBINED FIXED CHARGES
Interest expense, including debt
discount amortization
Third Party....................... 1,660 NA(2) 356 1,169 2,221 790 680 278
On Allocated Debt................. -- NA(2) 6,395 16,756 14,361 16,145 11,365 13,175
Amortization of debt issuance costs.. -- NA(2) 420 1,004 822 530 417 338
Portion of rental expense
representative of interest factor
(assumed to be 33%)................. 1,074 NA(2) 437 1,132 1,457 1,027 780 510
------- ------ ------ ------- ------- ------- ------- -------
Fixed charges.................. 2,734 -- 7,608 20,061 18,861 18,492 13,242 14,301
------- ------ ------ ------- ------- ------- ------- -------
------- ------ ------ ------- ------- ------- ------- -------
RATIO OF EARNINGS TO COMBINED
FIXED CHARGES (1)................... -- -- -- -- -- -- -- --
------- ------ ------ ------- ------- ------- ------- -------
AMOUNT OF EARNINGS DEFICIENCY FOR
COVERAGE OF COMBINED FIXED CHARGES... 37,650 -- 4,881 44,761 24,469 17,271 17,281 2,880
======= ====== ====== ======= ======= ======= ======= =======
</TABLE>
(1) Earnings are inadequate to cover fixed charges.
(2) The Company was included as part of Clark Equipment Company's consolidated
financial statements prior to August 1, 1992. The financial data as of and
for the seven months ended July 31, 1992, are not presently available to the
Company. The Company has requested such data and amount from Clark Equipment
Company, but has not been provided with the requested information.
<PAGE> 1
Exhibit 21.1
Subsidiaries
<TABLE>
<CAPTION>
Name Jurisdiction
---- ------------
<S> <C>
Clark Material Handling GmbH Germany
Clark Maquinaria S.A. Spain
Clark Material Handling France* France
Clark Material Handling of Canada, Ltd. Canada
Clark Forklift Korea, Inc. Korea
Clark Empilhaderas do Brasil Ltda. Brazil
</TABLE>
- ------------------------------
* Clark Material Handling France owns a 40% interest in Flandres Manutention
S.A, a French corporation, which interest is being sold.
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-4 of our report dated March 22, 1996, relating
to the combined financial statements of Terex Corporation's material handling
business ("Clark Material Handling"), which appears in such Prospectus. We also
consent to the application of such report to the Financial Statement Schedule
for the three years ended December 31, 1995 listed under Item 21(b) of this
Registration Statement when such schedule is read in conjunction with the
financial statements referred to in our report. The audit referred to in such
report also included this schedule. We also consent to the reference to us under
the heading "Experts" in such Prospectus.
Price Waterhouse LLP
Stamford, CT
December 26th, 1996
<PAGE> 1
EXHIBIT 25
FORM T-1
===================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
------------
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(B)(2)
UNITED STATES TRUST COMPANY OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-3818954
(Jurisdiction of incorporation (I.R.S. employer
if not a U.S. national bank) identification No.)
114 West 47th Street 10036-1532
New York, NY (Zip Code)
(Address of principal
executive offices)
------------
CLARK Material Handling Company
(Exact name of obligor as specified in its charter)
Delaware 61-1312827
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
172 Trade Street
Lexington, KY 40508
(Address of principal executive offices) (Zip Code)
------------
10-3/4% Senior Notes
Due 2006
(Title of the indenture securities)
===================================
<PAGE> 2
-2-
GENERAL
1. GENERAL INFORMATION
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
Federal Reserve Bank of New York (2nd District), New York, New York
(Board of Governors of the Federal Reserve System)
Federal Deposit Insurance Corporation, Washington, D.C.
New York State Banking Department, Albany, New York
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
2. AFFILIATIONS WITH THE OBLIGOR
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None
3, 4, 5, 6, 7, 8,9, 10,11,12, 13, 14 and 15:
CLARK Material Handling Company currently is not in default under any
of its outstanding securities for which United States Trust Company of
New York is Trustee. Accordingly, responses to Items 3, 4, 5, 6, 7, 8,
9, 10, 11, 12, 13,14 and 15 of Form T-1 are not required under General
Instruction B.
16. LIST OF EXHIBITS
T-1.1 -- Organization Certificate, as amended, issued by the
State of New York Banking Department to transact
business as a Trust Company, is incorporated by
reference to Exhibit T-1.1 to Form T-1 filed on
September 15,1995 with the Commission pursuant to the
Trust Indenture Act of 1939, as amended by the Trust
Indenture Reform Act of 1990 (Registration No.
33-97056).
T-1.2 -- Included in Exhibit T-1.1
T-1.3 -- Included in Exhibit T-1.1
<PAGE> 3
-3-
16. LIST OF EXHIBITS
(cont'd)
T-1.4 -- The By-Laws of United States Trust Company of New
York, as amended, is incorporated by reference to
Exhibit T-1.4 to Form T-1 filed on September 15, 1995
with the Commission pursuant to the Trust Indenture
Act of 1939, as amended by the Trust Indenture Reform
Act of 1990 (Registration No. 33-97056).
T-1.6 -- The consent of the trustee required by Section 321(b)
of the Trust Indenture Act of 1939, as amended by the
Trust Indenture Reform Act of 1990.
T-1.7 -- A copy of the latest report of condition of the
trustee pursuant to law or the requirements of its
supervising or examining authority.
NOTE
As of December 16, 1996, the trustee had 2,999,020 shares of Common Stock
outstanding, all of which are owned by its parent company, U.S. Trust
Corporation. The term "trustee" in Item 2, refers to each of United States Trust
Company of New York and its parent company, U. S. Trust Corporation.
In answering Item 2 in this statement of eligibility as to matters peculiarly
within the knowledge of the obligor or its directors, the trustee has relied
upon information furnished to it by the obligor and will rely on information to
be furnished by the obligor and the trustee disclaims responsibility for the
accuracy or completeness of such information.
---------------
Pursuant to the requirements of the Trust Indenture Act of 1939, the trustee,
United States Trust Company of New York, a corporation organized and existing
under the laws of the State of New York, has duly caused this statement of
eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of New York, and State of New York, on the 16th day
of December, 1996.
UNITED STATES TRUST COMPANY
OF NEW YORK, Trustee
By: /s/
-----------------------------
JG/pg
<PAGE> 4
EXHIBIT T-1.6
The consent of the trustee required by Section 321(b) of the Act.
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
September 1, 1995
Securities and Exchange Commission 450 5th Street, N.W.
Washington, DC 20549
Gentlemen:
Pursuant to the provisions of Section 321(b) of the Trust Indenture Act of 1939,
as amended by the Trust Indenture Reform Act of 1990, and subject to the
limitations set forth therein, United States Trust Company of New York ("U.S.
Trust") hereby consents that reports of examinations of U.S. Trust by Federal,
State, Territorial or District authorities may be furnished by such authorities
to the Securities and Exchange Corn mission upon request therefor.
Very truly yours,
UNITED STATES TRUST COMPANY
OF NEW YORK
By: /s/
-----------------------------
Gerard F. Ganey
Senior Vice President
<PAGE> 5
EXHIBIT T-1.7
UNITED STATES TRUST COMPANY OF NEW YORK
CONSOLIDATED STATEMENT OF CONDITION
SEPTEMBER 30, 1996
(IN THOUSANDS)
<TABLE>
<S> <C>
ASSETS
Cash and Due from Banks $ 38,257
Short-Term Investments 82,377
Securities, Available for Sale 861,975
Loans 1,404,930
Less: Allowance for Credit Losses 13,048
----------
Net Loans 1,391,882
Premises and Equipment 60,012
Other Assets 133,673
----------
Total Assets $2,568,176
==========
LIABILITIES
Deposits:
Non-Interest Bearing $ 466,849
Interest Bearing 1,433,894
----------
Total Deposits 1,900,743
Short-Term Credit Facilities 369,045
Accounts Payable and Accrued Liabilities 143.604
----------
Total Liabilities $2,413,392
==========
STOCKHOLDER'S EQUITY
Common Stock 14,995
Capital Surplus 42,394
Retained Earnings 98,402
Unrealized Gains (Losses) on Securities
Available for Sale, Net of Taxes (1,007)
----------
Total Stockholder's Equity 154,784
----------
Total Liabilities and
Stockholder's Equity $2,568,176
==========
</TABLE>
I, Richard E. Brinkmann, Senior Vice President & Comptroller of the named bank
do hereby declare that this Statement of Condition has been prepared in
conformance with the instructions issued by the appropriate regulatory authority
and is true to the best of my knowledge and belief.
Richard E. Brinkman, SVP & Controller
October 24, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> US DOLLARS
<S> <C> <C>
<PERIOD-TYPE> YEAR 9-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1996
<PERIOD-START> JAN-01-1995 JAN-01-1996
<PERIOD-END> DEC-31-1995 SEP-30-1996
<EXCHANGE-RATE> 1 1
<CASH> 1,555 2,381
<SECURITIES> 0 0
<RECEIVABLES> 42,300 41,597
<ALLOWANCES> (2,867) (2,752)
<INVENTORY> 68,464 62,997
<CURRENT-ASSETS> 114,112 108,816
<PP&E> 84,043 83,142
<DEPRECIATION> (25,849) (31,708)
<TOTAL-ASSETS> 192,709 180,657
<CURRENT-LIABILITIES> 98,259 85,294
<BONDS> 6,554 6,199
0 0
0 0
<COMMON> 0 0
<OTHER-SE> (94,873) (97,753)
<TOTAL-LIABILITY-AND-EQUITY> 192,709 180,657
<SALES> 528,759 334,889
<TOTAL-REVENUES> 528,759 334,889
<CGS> 484,035 297,297
<TOTAL-COSTS> 484,035 297,297
<OTHER-EXPENSES> 41,657 26,710
<LOSS-PROVISION> 0 375
<INTEREST-EXPENSE> (17,465) (13,791)
<INCOME-PRETAX> (17,271) (2,880)
<INCOME-TAX> (148) 0
<INCOME-CONTINUING> (17,419) (2,880)
<DISCONTINUED> 0 0
<EXTRAORDINARY> (1,347) 0
<CHANGES> 0 0
<NET-INCOME> (18,766) (2,880)
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
</TABLE>
<PAGE> 1
EXHIBIT 99.1
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
, 1997, UNLESS EXTENDED (THE "EXPIRATION DATE"). TENDERS OF
EXISTING NOTES MAY BE WITHDRAWN AT ANY TIME PRIOR TO 5:00 P.M. ON THE EXPIRATION
DATE.
CLARK MATERIAL HANDLING COMPANY
LETTER OF TRANSMITTAL
10 3/4% SENIOR NOTES DUE 2006
TO: UNITED STATES TRUST COMPANY OF NEW YORK,
THE EXCHANGE AGENT
<TABLE>
<S> <C>
By Registered or Certified Mail: By Overnight Courier:
United States Trust Company of New York United States Trust Company of New York
P.O. Box 844 770 Broadway
Cooper Station New York, New York 10003
New York, New York 10276-0844 Attn: Corporate Trust
By Hand: By Facsimile:
United States Trust Company of New York United States Trust Company of New York
111 Broadway (212) 420-6152
Lower Level Attn: Corporate Trust
Corporate Trust Window
New York, New York 10006 Confirm by telephone:
(800) 548-6525
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN THE ONE LISTED
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS ACCOMPANYING THIS
LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL
IS COMPLETED.
HOLDERS WHO WISH TO BE ELIGIBLE TO RECEIVE NEW NOTES FOR THEIR EXISTING
NOTES PURSUANT TO THE EXCHANGE OFFER MUST VALIDLY TENDER (AND NOT WITHDRAW)
THEIR EXISTING NOTES TO THE EXCHANGE AGENT PRIOR TO THE EXPIRATION DATE.
The undersigned acknowledges receipt of the Prospectus dated
, 1997 (the "Prospectus") of CLARK MATERIAL HANDLING COMPANY (the
"Company") and this Letter of Transmittal (the "Letter of Transmittal"), which
together constitute the Company's Offer to Exchange (the "Exchange Offer")
$1,000 principal amount of its 10 3/4% Senior Notes due 2006 (the "New Notes"),
which have been registered under the Securities Act of 1933, as amended (the
"Securities Act"), pursuant to a Registration Statement of which the
Prospectus is a part, for each $1,000 principal amount of its outstanding
10 3/4% Senior Notes due 2006 (the "Existing Notes"), of which $130,000,000
principal amount is outstanding, upon the terms and conditions set forth in the
Prospectus. Other capitalized terms used but not defined herein have the
meaning given to them in the Prospectus.
<PAGE> 2
For each Existing Note accepted for exchange, the holder of such Existing
Note will receive a New Note having a principal amount equal to that of the
surrendered Existing Note. Interest on the New Notes will accrue from the last
interest payment date on which interest was paid on the Existing Notes
surrendered in exchange therefor or, if no interest has been paid on the
Existing Notes, from the date of original issue of the Existing Notes. Holders
of Existing Notes accepted for exchange will be deemed to have waived the right
to receive any other payments or accrued interest on the Existing Notes. The
Company reserves the right, at any time or from time to time, to extend the
Exchange Offer at its discretion, in which event the term "Expiration Date"
shall mean the latest time and date to which the Exchange Offer is extended. The
Company shall notify holders of the Existing Notes of any extension by means of
a press release or other public announcement prior to 9:00 A.M., New York City
time, on the next business day after the previously scheduled Expiration Date.
This Letter of Transmittal is to be used by Holders if: (i) certificates
representing Existing Notes are to be physically delivered to the Exchange Agent
herewith by Holders; (ii) tender of Existing Notes is to be made by book-entry
transfer to the Exchange Agent's account at The Depository Trust Company
("DTC"), pursuant to the procedures set forth in the Prospectus under "The
Exchange Offer -- Procedures for Tendering Existing Notes" by any financial
institution that is a participant in DTC and whose name appears on a security
position listing as the owner of Existing Notes or (iii) tender of Existing
Notes is to be made according to the guaranteed delivery procedures set forth in
the prospectus under "The Exchange Offer -- Guaranteed Delivery Procedures."
DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
The term "Holder" with respect to the Exchange Offer means any person: (i)
in whose name Existing Notes are registered on the books of the Company or any
other person who has obtained a properly completed bond power from the
registered Holder; or (ii) whose Existing Notes are held of record by DTC who
desires to deliver such Existing Notes by book-entry transfer at DTC. The
undersigned has completed, executed and delivered this Letter of Transmittal to
indicate the action the undersigned desires to take with respect to the Exchange
Offer.
<PAGE> 3
The instructions included with this Letter of Transmittal must be followed.
Questions and requests for assistance or for additional copies of the
Prospectus, this Letter of Transmittal and the Notice of Guaranteed Delivery may
be directed to the Exchange Agent. See Instruction 10 herein.
HOLDERS WHO WISH TO ACCEPT THE EXCHANGE OFFER
AND TENDER THEIR EXISTING NOTES MUST COMPLETE THIS
LETTER OF TRANSMITTAL IN ITS ENTIRETY.
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE CHECKING ANY BOX BELOW
- --------------------------------------------------------------------------------
DESCRIPTION OF 10 3/4% SENIOR NOTES DUE 2006 (EXISTING NOTES)
<TABLE>
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
AGGREGATE PRINCIPAL PRINCIPAL AMOUNT
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) CERTIFICATE AMOUNT REPRESENTED BY TENDERED (IF LESS THAN
(PLEASE FILL IN, IF BLANK) NUMBER(S)* CERTIFICATE(S) ALL)**
------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by Holders tendering by book-entry transfer.
** Unless indicated in the column labeled "Principal Amount Tendered," any
tendering Holder of Existing Notes will be deemed to have tendered the
entire aggregate principal amount represented by the column labeled
"Aggregate Principal Amount Represented by Certificate(s)." If the space
provided above is inadequate, list the certificate numbers and principal
amounts on a separate signed schedule and affix the list to this Letter of
Transmittal.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 4
The minimum permitted tender is $1,000 in principal amount of Existing
Notes. All other tenders must be integral multiples of $1,000.
------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 4, 5 AND 6)
To be completed ONLY if certificates for Existing Notes in a
principal amount not tendered or not accepted for exchange, or New Notes
issued in exchange for Existing Notes accepted for exchange, are to be
issued in the name of someone other than the undersigned, or if the
Existing Notes tendered by book-entry transfer that are not accepted for
exchange are to be credited to an account maintained by DTC.
Issue certificate(s) to:
Name:
---------------------------------------------------
Address:
-------------------------------------------------
------------------------------------------------------------
(INCLUDE ZIP CODE)
------------------------------------------------------------
(TAX IDENTIFICATION OR
SOCIAL SECURITY NO.)
------------------------------------------------------------
------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 4, 5 AND 6)
To be accepted ONLY if certificates for Existing Notes in a principal
amount not tendered or not accepted for exchange, are to be sent to
someone other than the undersigned, or to the undersigned at an address
other than that shown above.
Mail to:
Name:
---------------------------------------------------
Address:
-------------------------------------------------
------------------------------------------------------------
(INCLUDE ZIP CODE)
------------------------------------------------------------
(TAX IDENTIFICATION OR
SOCIAL SECURITY NO.)
------------------------------------------------------------
<PAGE> 5
[ ] CHECK HERE IF TENDERED EXISTING NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER TO THE EXCHANGE AGENT'S ACCOUNT AT DTC AND COMPLETE THE FOLLOWING:
Name of Tendering Institution:
-----------------------------------------------------------------------------
DTC Book-Entry Account No.:
-----------------------------------------------------------------------------
Transaction Code No.:
-----------------------------------------------------------------------------
[ ] CHECK HERE IF TENDERED EXISTING NOTES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND
COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s):
-----------------------------------------------------------------------------
Window Ticket Number (if any):
-----------------------------------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
-----------------------------------------------------------------
IF DELIVERED BY BOOK-ENTRY TRANSFER, COMPLETE THE FOLLOWING:
<TABLE>
<S> <C>
Account Number: --------------------------- Transaction Code Number: ---------------------------
</TABLE>
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name:
-----------------------------------------------------------------------------
Address:
-----------------------------------------------------------------------------
<PAGE> 6
Ladies and Gentlemen:
Subject to the terms and conditions of the Exchange Offer, the undersigned
hereby tenders to the Company the principal amount of Existing Notes indicated
above. Subject to and effective upon the acceptance for exchange of the
principal amount of Existing Notes tendered in accordance with this Letter of
Transmittal, the undersigned sells, assigns and transfers to, or upon the order
of, the Company all right, title and interest in and to the Existing Notes
tendered hereby. The undersigned hereby irrevocably constitutes and appoints the
Exchange Agent its agent and attorney-in-fact (with full knowledge that the
Exchange Agent also acts as the agent of the Company and as Trustee under the
indenture for the Existing Notes and New Notes) with respect to the tendered
Existing Notes with full power of substitution to (i) deliver certificates for
such Existing Notes to the Company, or transfer ownership of such Existing Notes
on the account books maintained by DTC and deliver all accompanying evidence of
transfer and authenticity to, or upon the order of, the Company and (ii) present
such Existing Notes for transfer on the books of the Company and receive all
benefits and otherwise exercise all rights of beneficial ownership of such
Existing Notes, all in accordance with the terms and subject to the conditions
of the Exchange Offer. The power of attorney granted in this paragraph shall be
deemed irrevocable and coupled with an interest.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Existing Notes
tendered hereby and that the Company will acquire good and unencumbered title
thereto, free and clear of all liens, restrictions, charges and encumbrances and
not subject to any adverse claim, when the same are acquired by the Company. The
undersigned hereby further represents that any New Notes acquired in exchange
for Existing Notes tendered hereby will have been acquired in the ordinary
course of business of the Holder receiving such New Notes, whether or not such
person is the Holder, that neither the Holder nor any such other person has any
arrangement or understanding with any person to participate in the distribution
of such New Notes and that neither the Holder nor any such other person is an
"affiliate," as defined in Rule 405 under the Securities Act, of the Company or
any of its subsidiaries.
The undersigned also acknowledges that this Exchange Offer is being made in
reliance on an interpretation by the staff of the Securities and Exchange
Commission (the "SEC") that the New Notes issued in exchange for the Existing
Notes pursuant to the Exchange Offer may be offered for resale, resold and
otherwise transferred by holders thereof (other than any such holder that is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act), without compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that such New Notes are acquired in
the ordinary course of such holders' business and such holders have no
arrangements with any person to participate in the distribution of such New
Notes. If the undersigned is not a broker-dealer, the undersigned represents
that it is not engaged in, and does not intend to engage in, a distribution of
New Notes. If the undersigned is a broker-dealer that will receive New Notes for
its own account in exchange for Existing Notes that were acquired as a result of
market-making activities or other trading activities, it acknowledges that it
will deliver a prospectus in connection with any resale of such New Notes;
however, by so acknowledging and by delivering a prospectus, the undersigned
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act.
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Exchange Agent or the Company to be necessary or
desirable to complete the assignment, transfer and purchase of the Existing
Notes tendered hereby. All authority conferred or agreed to be conferred by this
Letter of Transmittal shall survive the death, incapacity or dissolution of the
undersigned and every obligation of the undersigned under this Letter of
Transmittal shall be binding upon the undersigned's heirs, personal
representatives, successors and assigns, trustees in bankruptcy or other legal
representatives of the undersigned. This tender may be withdrawn only in
accordance with the procedures set forth in "The Exchange Offer -- Withdrawal
Rights" section of the Prospectus.
For purposes of the Exchange Offer, the Company shall be deemed to have
accepted validly tendered Existing Notes when, as and if the Company has given
oral or written notice thereof to the Exchange Agent.
<PAGE> 7
If any tendered Existing Notes are not accepted for exchange pursuant to
the Exchange Offer for any reason, certificates for any such unaccepted Existing
Notes will be returned (except as noted below with respect to tenders through
DTC), without expense, to the undersigned at the address shown below or at a
different address as may be indicated under Special Delivery Instructions" as
promptly as practicable after the Expiration Date.
The undersigned understands that tenders of Existing Notes pursuant to the
procedures described under the caption "The Exchange Offer -- Procedures for
Tendering Existing Notes" in the Prospectus and in the instructions hereto will
constitute a binding agreement between the undersigned and the Company upon the
terms and subject to the conditions of the Exchange Offer.
Unless otherwise indicated under "Special Payment Instructions," please
issue the certificates representing the New Notes issued in exchange for the
Existing Notes accepted for exchange and return any Existing Notes not tendered
or not exchanged in the name(s) of the undersigned (or in either such event in
the case of the Existing Notes tendered through DTC, by credit to the
undersigned's account, at DTC). Similarly, unless otherwise indicated under
"Special Delivery Instructions," please send the certificates representing the
New Notes issued in exchange for the Existing Notes accepted for exchange and
any certificates for Existing Notes not tendered or not exchanged (and
accompanying documents, as appropriate) to the undersigned at the address shown
below the undersigned's signature(s), unless, in either event, tender is being
made through DTC. In the event that both "Special Payment Instructions" and
"Special Delivery Instructions" are completed, please issue the certificates
representing the New Notes issued in exchange for the Existing Notes accepted
for exchange and return any Existing Notes not tendered or not exchanged in the
name(s) of, and send said certificates to, the person(s) so indicated. The
undersigned recognizes that the Company has no obligation pursuant to the
"Special Payment Instructions" and "Special Delivery Instructions" to transfer
any Existing Notes from the name of the registered Holder(s) thereof if the
Company does not accept for exchange any of the Existing Notes so tendered.
Holders of Existing Notes who wish to tender their Existing Notes and (i)
whose Existing Notes are not immediately available or (ii) who cannot deliver
their Existing Notes, this Letter of Transmittal or any other documents required
hereby to the Exchange Agent, or cannot complete the procedure for book-entry
transfer, prior to the Expiration Date, may tender their Existing Notes
according to the guaranteed delivery procedures set forth in the Prospectus
under the caption "The Exchange Offer -- Guaranteed Delivery Procedures." See
Instruction 1 regarding the completion of the Letter of Transmittal printed
below.
<PAGE> 8
PLEASE SIGN HERE WHETHER OR NOT
EXISTING NOTES ARE BEING PHYSICALLY TENDERED HEREBY
<TABLE>
<S> <C>
X ___________________________________________________ Date _____________________________
X ___________________________________________________ Date _____________________________
Signature(s) of Registered Holder(s)
Or Authorized Signatory
Area Code and Telephone Number: ___________________________________________
</TABLE>
The above lines must be signed by the registered Holder(s) of Existing
Notes as their name(s) appear(s) on the Existing Notes or, if the Existing Notes
are tendered by a participant in DTC, as such participant's name appears on a
security position listing as the owner of Existing Notes, or by person(s)
authorized to become registered Holder(s) by a properly completed bond power
from the registered Holder(s), a copy of which must be transmitted with this
Letter of Transmittal. If Existing Notes to which this Letter of Transmittal
relates are held of record by two or more joint Holders, then all such holders
must sign this Letter of Transmittal. If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation or other
person acting in a fiduciary or representative capacity, such person must (i)
set forth his or her full title below and (ii) unless waived by the Company,
submit evidence satisfactory to the Company of such person's authority to act.
See Instruction 4 regarding the completion of this Letter of Transmittal printed
below.
Name(s): ______________________________________________________________________
(Please Print)
Capacity:______________________________________________________________________
Address: ______________________________________________________________________
(Include Zip Code)
Signature(s) Guaranteed by an Eligible Institution:
(If required by Instruction 4)
_______________________________________________________________________________
(Authorized Signature)
_______________________________________________________________________________
(Title)
_______________________________________________________________________________
(Name of Firm)
Dated: ______________________________
<PAGE> 9
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS
OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER AND EXISTING NOTES; GUARANTEED DELIVERY
PROCEDURES. This Letter is to be completed by noteholders, either if
certificates are to be forwarded herewith or if tenders are to be made pursuant
to the procedures for delivery by book-entry transfer set forth in "The Exchange
Offer--Book-Entry Transfer" section of the Prospectus. Certificates for all
physically tendered Existing Notes, or Book-Entry Confirmation, as the case may
be, as well as a properly completed and duly executed Letter (or manually signed
facsimile hereof) and any other documents required by this Letter, must be
received by the Exchange Agent at the address set forth herein on or prior to
the Expiration Date, or the tendering holder must comply with the guaranteed
delivery procedures set forth below. Existing Notes tendered hereby must be in
denominations of principal amount of maturity of $1,000 and any integral
multiple thereof.
Noteholders whose certificates for Existing Notes are not immediately
available or who cannot deliver their certificates and all other required
documents to the Exchange Agent on or prior to the Expiration Date, or who
cannot complete the procedure for book-entry transfer on a timely basis, may
tender their Existing Notes pursuant to the guaranteed delivery procedures set
forth in "The Exchange Offer--Guaranteed Delivery Procedures" section of the
Prospectus. Pursuant to such procedures, (i) such tender must be made through an
Eligible Institution (as defined in Instruction 4 below), (ii) prior to the
Expiration Date, the Exchange Agent must receive from such Eligible Institution
a properly completed and duly executed Letter (or facsimile thereof) and Notice
of Guaranteed Delivery, substantially in the form provided by the Company (by
facsimile transmission, mail or hand delivery), setting forth the name and
address of the holder of Existing Notes and the amount of Existing Notes
tendered, stating that the tender is being made thereby and guaranteeing that
within five New York Stock Exchange ("NYSE") trading days after the date of
execution of the Notice of Guaranteed Delivery, the certificates for all
physically tendered Existing Notes, or a Book-Entry Confirmation, and any other
documents required by this Letter will be deposited by the Eligible Institution
with the Exchange Agent, and (iii) the certificates for all physically tendered
Existing Notes, in proper form for transfer, or Book-Entry Confirmation, as the
case may be, and all other documents required by this Letter, are received by
the Exchange Agent within five NYSE trading days after the date of execution of
the Notice of Guaranteed Delivery.
The method of delivery of this Letter, the Existing Notes and all other
required documents is at the election and risk of the tendering holders, but the
delivery will be deemed made only when actually received or confirmed by the
Exchange Agent. If Existing Notes are sent by mail, it is suggested that the
mailing be made sufficiently in advance of the Expiration Date to permit the
delivery to the Exchange Agent prior to 5:00 p.m., New York City time, on the
Expiration Date.
See "The Exchange Offer" section in the Prospectus.
2. TENDER BY HOLDER. Only a holder of Existing Notes may tender such
Existing Notes in the Exchange Offer. Any beneficial holder of Existing Notes
who is not the registered holder and who wishes to tender should arrange with
the registered holder to execute and deliver this Letter on his or her behalf or
must, prior to completing and executing this Letter and delivering his or her
Existing Notes, either make appropriate arrangements to register ownership of
the Existing Notes in such holder's name or obtain a properly completed bond
power form the registered holder.
3. PARTIAL TENDERS. Tenders of Existing Notes will be accepted only in
integral multiples of $1,000. If less than the entire principal amount of any
Existing Notes is tendered, the tendering holder should fill in the principal
amount tendered in the fourth column of the box entitled "Description of 10 3/4%
Senior Notes due 2006 (Existing Notes)" above. The entire principal amount of
Existing Notes delivered to the Exchange Agent will be deemed to have been
tendered unless otherwise indicated. If the entire principal amount of all
Existing Notes is not tendered, then Existing Notes for the principal amount of
Existing Notes not tendered and a certificate or certificates representing New
Notes issued in exchange for any Existing Notes accepted will be sent to the
Holder at his or her registered address, unless a different address is provided
in the appropriate box on this Letter promptly after the Existing Notes are
accepted for exchange.
4. SIGNATURES ON THIS LETTER; POWERS OF ATTORNEY AND ENDORSEMENTS;
GUARANTEE OF SIGNATURES. If this Letter is signed by the registered holder of
the Existing Notes tendered hereby, the signature must correspond exactly with
the name as written on the face of the certificates without any change
whatsoever.
<PAGE> 10
If any tendered Existing Notes are owned of record by two or more joint
owners, all such owners must sign this Letter.
If any tendered Existing Notes are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
copies of this Letter as there are different registrations of certificates.
When this Letter is signed by the registered holder or holders of the
Existing Notes specified herein and tendered hereby, no endorsements of
certificates or separate powers of attorney are required. If, however, the New
Notes are to be issued, or any untendered Existing Notes are to be reissued, to
a person other than the registered holder, then endorsements of any certificates
transmitted hereby or separate powers of attorney are required. Signatures on
such certificate(s) must be guaranteed by an Eligible Institution.
If this Letter is signed by a person other than the registered holder or
holders of any certificate(s) specified herein, such certificate(s) must be
endorsed or accompanied by appropriate powers of attorney, in either case signed
exactly as the name or names on the registered holder or holders appear(s) on
the certificate(s) and signatures on such certificate(s) must be guaranteed by
an Eligible Institution.
If this Letter or any certificates 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, such
persons should so indicate when signing, and unless waived by the Company,
proper evidence satisfactory to the Company of their authority to so act must be
submitted.
Endorsements on certificates for Existing Notes or signatures on powers of
attorney required by this Instruction 4 must be guaranteed by a firm which is a
participant in a recognized signature guarantee medallion program ("Eligible
Institutions").
Signatures on this Letter must be guaranteed by an Eligible Institution
unless the Existing Notes are tendered (i) by a registered holder of Existing
Notes (which term, for purposes of the Exchange Offer, includes any participant
in the Book-Entry Transfer Facility system whose name appears on a security
position listing as the holder of such Existing Notes) who has not completed the
box entitled "Special Issuance Instructions" or "Special Delivery Instructions"
on this Letter, or (ii) for the account of an Eligible Institution.
5. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. Tendering holders should
indicate, in the applicable box or boxes, the name and address to which New
Notes or substitute Existing Notes for principal amounts not tendered or not
accepted for exchange are to be issued or sent, if different from the name and
address of the person signing this Letter of Transmittal (or in the case of
tender of Existing Notes through DTC, if different from DTC). In the case of
issuance in a different name, the taxpayer identification or social security
number of the person named must also be indicated. Noteholders tendering
Existing Notes by book-entry transfer may request that Existing Notes not
exchanged be credited to such account maintained at the Book-Entry Transfer
Facility as such noteholder may designate hereon. If no such instructions are
given, such Existing Notes not exchanged will be returned to the name and
address of the person signing this Letter.
6. TAX IDENTIFICATION NUMBER. Federal income tax law requires that a
holder whose offered Existing Notes are accepted for exchange must provide the
Company (as payer) with his, her or its correct Taxpayer Identification Number
("TIN"), which, in the case of an exchanging holder who is an individual, is his
or her social security number. If the Company is not provided with the correct
TIN or an adequate basis for exemption, such holder may be subject to a $50
penalty imposed by the Internal Revenue Service (the "IRS"), and payments made
with respect to Existing Notes purchased pursuant to the Exchange Offer may be
subject to backup withholding at a 31% rate. If withholding results in an
overpayment of taxes, a refund may be obtained. Exempt holders (including, among
others, all corporations and certain foreign individuals) are not subject to
these backup withholding and reporting requirements. See the enclosed
"Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9."
<PAGE> 11
To prevent backup withholding, each exchanging holder must provide his, her
or its correct TIN by completing the Substitute Form W-9 enclosed herewith,
certifying that the TIN provided is correct (or that such Holder is awaiting a
TIN) and that (i) the holder is exempt from backup withholding, (ii) the holder
has been notified by the IRS that he, she or it is subject to backup withholding
as a result of a failure to report all interest or dividends, or (iii) the IRS
has notified the holder that he, she or it is no longer subject to backup
withholding. In order to satisfy the Exchange Agent that a foreign individual
qualifies as an exempt recipient, such holder must submit a statement signed
under penalty of perjury attesting to such exempt status. Such statements may be
obtained from the Exchange Agent. If the Existing Notes are in more than one
name or are not in the name of the actual owner, consult the Substitute Form W-9
for information on which TIN to report. If you do not provide your TIN to the
Company within 60 days, backup withholding will begin and continue until you
furnish your TIN to the Company.
7. TRANSFER TAXES. The Company will pay all transfer taxes, if any,
applicable to the exchange of Existing Notes pursuant to the Exchange Offer. If,
however, certificates representing New Notes or Existing Notes for principal
amounts not tendered or accepted for exchange are to be delivered to, or are to
be registered or issued in the name of, any person other than the registered
holder of the Existing Notes tendered hereby, or if tendered Existing Notes are
registered in the name of any person other than the person signing this Letter,
or if a transfer tax is imposed for any reason other than the exchange of
Existing Notes pursuant to the Exchange Offer, then the amount of any such
transfer taxes (whether imposed on the registered holder or on any other
persons) will be payable by the tendering holder. If satisfactory evidence of
payment of such taxes or exemption therefrom is not submitted herewith, the
amount of such transfer taxes will be billed directly to such tendering holder.
Except as provided in this Instruction 7, it will not be necessary for
transfer tax stamps to be affixed to the Existing Notes listed in this Letter.
8. WAIVER OF CONDITIONS. The Company reserves the absolute right to amend,
waive or modify specified conditions in the Exchange Offer in the case of any
Existing Notes tendered.
9. NO CONDITIONAL TRANSFERS. No alternative, conditional, irregular or
contingent tenders will be accepted. All tendering holders of Existing Notes, by
execution of this Letter, shall waive any right to receive notice of the
acceptance of their Existing Notes for exchange.
Neither the Company, the Exchange Agent nor any other person is obligated
to give notice of any defect or irregularity with respect to any tender of
Existing Notes nor shall any of them incur any liability for failure to give any
such notice.
10. MUTILATED, LOST, STOLEN OR DESTROYED EXISTING NOTES. Any tendering
holder whose Existing Notes have been mutilated, lost, stolen or destroyed
should contact the Exchange Agent at the address indicated herein for further
instructions.
11. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests
for assistance for additional copies of the Prospectus, this Letter and the
Notice of Guaranteed Delivery may be directed to the Exchange Agent at the
address specified in the Prospectus.
(DO NOT WRITE IN THE SPACE BELOW)
<TABLE>
<CAPTION>
CERTIFICATE EXISTING NOTES EXISTING NOTES
SURRENDERED TENDERED ACCEPTED
- ------------------ ------------------ ------------------
<S> <C> <C>
- ------------------ ------------------ ------------------
- ------------------ ------------------ ------------------
- ------------------ ------------------ ------------------
</TABLE>
Delivery Prepared by
--------------- Checked By
--------------- Date
---------------
<PAGE> 12
<TABLE>
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------
PAYER'S NAME: CLARK MATERIAL HANDLING COMPANY
- ----------------------------------------------------------------------------------------------------------
Name (if joint names, list first and circle the name of the person or
SUBSTITUTE entity whose number you enter in Part 1 below. See instructions if your
FORM W-9 name has changed.)
DEPARTMENT OF THE TREASURY ---------------------------------------------------------------------------
INTERNAL REVENUE SERVICE Address
PAYER'S REQUEST FOR TIN ---------------------------------------------------------------------------
City, state and ZIP code
---------------------------------------------------------------------------
List account number(s) here (optional)
---------------------------------------------------------------------------
----------------------------------------------------------------------------
Part 1--PLEASE PROVIDE YOUR TAXPAYER Social security number
IDENTIFICATION NUMBER ("TIN") IN THE BOX AT or TIN
RIGHT AND CERTIFY BY SIGNING AND DATING ------------------------------
BELOW.
----------------------------------------------------------------------------
Part 2--Check the box if you are NOT subject to backup withholding under
the provisions of section 3408(a)(1)(C) of the Internal Revenue Code
because (1) you have not been notified that you are subject to backup
withholding as a result of failure to report all interest or dividends or
(2) the Internal Revenue Service has notified you that you are no longer
subject to backup withholding.
CERTIFICATION--UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT THE
INFORMATION PROVIDED ON THIS FORM IS TRUE, CORRECT AND COMPLETE.
----------------------------------------------------------------------------
Signature _________________ Date PART 3--AWAITING TIN [ ]
- ----------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE EXCHANGE OFFER. PLEASE
REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER OR SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
<PAGE> 13
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.--Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<C> <S> <C>
- ---------------------------------------------------------
GIVE THE
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY
NUMBER OF--
- ---------------------------------------------------------
1. An individual's account The individual
2. Two or more individuals The actual owner of
(joint account) the account or, if
combined funds, any
one of the
individuals(1)
3. Husband and wife The actual owner of
(joint account) the account or, if
joint funds, either
person(1)
4. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
5. Adult and minor The adult or, if
(joint account) the minor is the
only contributor,
the minor(1)
6. Account in the name of guardian The ward, minor, or
or committee for a designated incompetent
ward, minor, or incompetent person(3)
person
7. a. The usual revocable savings The grantor-
trust account (grantor is trustee(1)
also trustee)
b. So-called trust account that The actual owner(1)
is not a legal or valid
trust under State law
8. Sole proprietorship account The Owner(4)
- ---------------------------------------------------------
- ---------------------------------------------------------
GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF--
- ---------------------------------------------------------
9. A valid trust, estate, or Legal entity (Do
pension trust not furnish the
identifying number
of the personal
representative or
trustee unless the
legal entity itself
is not designated
in the account
title.)(5)
10. Corporate account The corporation
11. Religious, charitable, or The organization
educational organization
account
12. Partnership account held in the The partnership
name of the business
13. Association, club, or other The organization
tax-exempt organization
15. Account with the Department of The public entity
Agriculture in the name of a
public entity (such as a State
or local government, school
district, or prison) that
receives agricultural program
payments
- ---------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 14
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
- A corporation.
- A financial institution.
- An organization exempt from tax under section 501(a), or an individual
retirement plan.
- The United States or any agency or instrumentality thereof.
- A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
- A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
- An international organization or any agency, or instrumentality thereof.
- A registered dealer in securities or commodities registered in the U.S. Or
a possession of the U.S.
- A real estate investment trust.
- A common trust fund operated by a bank under section 584(a).
- An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
- An entity registered at all times under the Investment Company Act of
1940.
- A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to
backup withholding include the following:
- Payments to nonresident aliens subject to withholding under section 1941.
- Payments to partnerships not engaged in a trade or business in the U.S.
and which have at least one nonresident partner.
- Payments of patronage dividends where the amount received is not paid n
money.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals. Note: You may
be subject to backup withholding if this interest is $600 or more and in
paid in the course of the payer's trade or business and you have not
provided your correct taxpayer identification number to the payer.
- Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- Payments described in section 6049(b)(5) to non-resident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO
THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO
SIGN AND DATE THE FORM.
Certain payments other than interest, dividends and patronage dividends,
that are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend,
interest, or other payments to give tax-payer identification numbers to payers
who must report for payments to IRS. IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Beginning January 1, 1994, payers must generally
withhold 31% of taxable interest, dividend, and certain other payments to a
payee who does not furnish a taxpayer identification number to a payer. Certain
penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS.--If you fail to
include any portion of an includible payment for interest, dividends, or
patronage dividends in gross income, such failure will be treated as being due
to negligence and will be subject to a penalty of 5% on any portion of an
under-payment attributable to that failure unless there is clear and convincing
evidence to the contrary.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE> 1
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY
FOR
10 3/4% SENIOR NOTES DUE 2006
CLARK MATERIAL HANDLING COMPANY
As set forth in the Prospectus dated , 1997 (the "Prospectus"), of
CLARK MATERIAL HANDLING COMPANY, (the "Company") and in the accompanying Letter
of Transmittal and instructions thereto (the "Letter of Transmittal"), this form
or one substantially equivalent hereto must be used to accept the Company's
offer to exchange (the "Exchange Offer") all of its outstanding 10 3/4% Senior
Notes due 2006 (the "Existing Notes") for its 10 3/4% Senior Notes due 2006,
which have been registered under the Securities Act of 1933, as amended, if
certificates for the Existing Notes are not immediately available or if the
Existing Notes, the Letter of Transmittal or any other documents required
thereby cannot be delivered to the Exchange Agent, or the procedure for
book-entry transfer cannot be completed, prior to 5:00 P.M., New York City
time, on the Expiration Date (as defined in the Prospectus), this form may be
delivered by an Eligible Institution by hand or transmitted by facsimile
transmission, overnight courier or mail to the Exchange Agent as set forth
below. Capitalized terms used but not defined herein have the meaning given to
them in the Prospectus.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
1997, UNLESS THE OFFER IS EXTENDED (THE "EXPIRATION DATE"). TENDERS
OF EXISTING NOTES MAY BE WITHDRAWN AT ANY TIME PRIOR TO 5:00 P.M. ON THE
BUSINESS DAY PRIOR TO THE EXPIRATION DATE.
TO: UNITED STATES TRUST COMPANY OF NEW YORK, THE EXCHANGE AGENT
<TABLE>
<S> <C>
By Registered or Certified Mail: By Overnight Courier:
United States Trust Company of New York United States Trust Company of New York
P.O. Box 844 770 Broadway
Cooper Station New York, New York 10003
New York, New York 10276-0844 Attention: Corporate Trust
By Hand: By Facsimile:
United States Trust Company of New York United States Trust Company of New York
111 Broadway (212) 420-6152
Lower Level Attention: Corporate Trust
Corporate Trust Window
New York, New York 10006 Confirm by telephone:
(800) 548-6565
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS, OR TRANSMISSION OF INSTRUCTIONS
VIA A FACSIMILE, OTHER THAN AS SET FORTH ABOVE, DOES NOT CONSTITUTE A VALID
DELIVERY.
This form is not to be used to guarantee signatures. If a signature on the
Letter of Transmittal to be used to tender Existing Notes is required to be
guaranteed by an "Eligible Institution" under the instructions thereto, such
signature guarantee must appear in the applicable space provided in the Letter
of Transmittal.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to CLARK MATERIAL HANDLING COMPANY, a
Delaware corporation (the "Company"), upon the terms and subject to the
conditions set forth in the Prospectus and the Letter of Transmittal (which
together constitute the "Exchange Offer"), receipt of which is hereby
acknowledged, (number of Existing Notes) Existing Notes pursuant to
the guaranteed delivery procedures set forth in Instruction 1 of the Letter of
Transmittal.
The undersigned understands that tenders of Existing Notes will be accepted
only in principal amounts equal to $1,000 or integral multiples thereof. The
undersigned understand that tenders of Existing Notes pursuant to the Exchange
Offer may not be withdrawn after 5:00 p.m., New York City time, on the business
day prior to the Expiration Date.
All authority herein conferred or agreed to be conferred by this Notice of
Guaranteed Delivery shall survive the death, incapacity or dissolution of the
undersigned and every obligation of the undersigned under this Notice of
Guaranteed Delivery shall be binding upon the heirs, personal representatives,
executors, administrators, successors, assigns, trustees in bankruptcy and other
legal representatives of the undersigned.
NOTE: SIGNATURES MUST BE PROVIDED WHERE INDICATED BELOW.
<TABLE>
<S> <C>
Certificate No(s). for Existing Notes (if
available) Name(s) of Record Holder(s)
- ------------------------------------------------- -------------------------------------------------
- ------------------------------------------------- -------------------------------------------------
PLEASE PRINT OR TYPE
Principal Amount of Existing Notes Address
-------------------------------------------------
- -------------------------------------------------
-------------------------------------------------
Area Code and
Tel. No.
-------------------------------------------------
Signature(s)
-------------------------------------------------
Dated:
-------------------------------------------------
If Existing Notes will be delivered by book-entry
transfer at the Depository Trust Company,
Depository Account No.
-------------------------------------------------
</TABLE>
This Notice of Guaranteed Delivery must be signed by the registered
holder(s) of Existing Notes exactly as its (their) name(s) appear on
certificates for Existing Notes or on a security position listing as the owner
of Existing Notes, or by person(s) authorized to become registered holder(s) by
endorsements and documents transmitted with this Notice of Guaranteed Delivery.
If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer or other person acting in a fiduciary or
representative capacity, such person must provide the following information:
PLEASE PRINT NAME(S) AND ADDRESS(ES)
Name(s):
- --------------------------------------------------------------------------------
Capacity:
- --------------------------------------------------------------------------------
Address(es):
- --------------------------------------------------------------------------------
<PAGE> 3
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member firm of a registered national securities exchange
or of the National Association of Securities Dealers, Inc., or a commercial bank
or trust company having an office or correspondent in the United States or an
"eligible guarantor institution" within the meaning of Rule 17Ad-15 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), hereby (a)
represents that the above named person(s) "own(s)" the Existing Notes tendered
hereby within the meaning of Rule 14e-4 under the Exchange Act, (b) represents
that such tender of Existing Notes complies with Rule 14e-4 under the Exchange
Act and (c) guarantees that delivery to the Exchange Agent of certificates for
the Existing Notes tendered hereby, in proper form for transfer (or confirmation
of the book-entry transfer of such Existing Notes into the Exchange Agent's
Account at the Depository Trust Company, pursuant to the procedures for book-
entry transfer set forth in the Prospectus), with delivery of a properly
completed and duly executed Letter of Transmittal (or manually signed facsimile
thereof) with any required signatures and any other required documents, will he
received by the Exchange Agent at one of its addresses set forth above within
five business days after the Expiration Date.
THE UNDERSIGNED ACKNOWLEDGES THAT IT MUST DELIVER THE LETTER OF TRANSMITTAL
AND EXISTING NOTES TENDERED HEREBY TO THE EXCHANGE AGENT WITHIN THE TIME PERIOD
SET FORTH AND THAT FAILURE TO DO SO COULD RESULT IN FINANCIAL LOSS TO THE
UNDERSIGNED.
Name of Firm
- -------------------------------------------
--------------------------------------
Authorized Signature
Address
- -------------------------------------------------
Name
--------------------------------------
Please Print or Type
- ------------------------------------------------------------
Title
--------------------------------------
Zip Code
Area Code and Tel. No.
- ------------------------------- Date
--------------------------------------
Dated:
- ------------------, 1997
NOTE: DO NOT SEND EXISTING NOTES WITH THIS FORM; EXISTING NOTES SHOULD BE SENT
WITH YOUR LETTER OF TRANSMITTAL SO THAT THEY ARE RECEIVED BY THE EXCHANGE AGENT
WITHIN FIVE BUSINESS DAYS AFTER THE EXPIRATION DATE.
