<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 11, 1997.
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
W.R. CARPENTER NORTH AMERICA, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 7359 54-1049647
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
OF INCORPORATION OR CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
ORGANIZATION)
</TABLE>
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1775 PARK STREET, SELMA, CALIFORNIA 93662, (209) 891-5344
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
DAVID K. SARGENT
PRESIDENT AND CHIEF EXECUTIVE OFFICER
W.R. CARPENTER NORTH AMERICA, INC.
1775 PARK STREET
SELMA, CALIFORNIA 93662
(209) 891-5344
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE
NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
COPIES TO:
JAMES C. OLSON, ESQ.
PATRICIA F. YOUNG, ESQ.
PILLSBURY MADISON & SUTRO LLP
P.O. BOX 7880
SAN FRANCISCO, CALIFORNIA 94120-7880
(415) 983-1000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
If 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
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TITLE OF EACH CLASS OF PROPOSED PROPOSED
SECURITIES TO BE AMOUNT TO MAXIMUM OFFERING MAXIMUM AGGREGATE AMOUNT OF
REGISTERED BE REGISTERED PRICE PER NOTE OFFERING PRICE(1) REGISTRATION FEE
- -------------------------------------------------------------------------------------------------
10 5/8% Senior
Subordinated Notes due
2007................... $105,000,000 100% $105,000,000 $31,818
=================================================================================================
</TABLE>
(1) Estimated pursuant to Rule 457(f) solely for the purposes of calculating the
registration fee.
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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
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 JULY 11, 1997
PROSPECTUS
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Logo of UpRight, Inc. Logo of Horizon High Reach, Inc.
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W.R. CARPENTER NORTH AMERICA, INC.
OFFER TO EXCHANGE ITS 10 5/8% SENIOR SUBORDINATED NOTES DUE 2007,
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT, FOR ANY AND ALL
OF ITS OUTSTANDING 10 5/8% SENIOR SUBORDINATED NOTES DUE 2007
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON , 1997, UNLESS EXTENDED.
W.R. Carpenter North America, Inc., a Delaware corporation ("Carpenter" or
the "Company"), hereby offers to exchange (the "Exchange Offer"), upon the terms
and subject to the conditions set forth in this Prospectus and the accompanying
Letter of Transmittal (the "Letter of Transmittal"), up to $105,000,000 in
aggregate principal amount of the Company's new 10 5/8% Senior Subordinated
Notes due 2007 (the "Exchange Notes"), for the $105,000,000 in aggregate
principal amount of the Company's outstanding 10 5/8% Senior Subordinated Notes
due 2007 (the "Original Notes"). The Original Notes and the Exchange Notes are
sometimes referred to herein collectively as the "Notes."
The terms of the Exchange Notes are substantially identical in all respects
(including principal amount, interest rate and maturity) to the terms of the
Original Notes for which they may be exchanged pursuant to this Exchange Offer,
except that (i) the Exchange Notes will be freely transferable by holders
thereof (other than as provided in the next paragraph) and issued free of any
covenant restricting transfer absent registration and (ii) holders of the
Exchange Notes will not be entitled to certain rights of holders of the Original
Notes under the Registration Rights Agreement (as defined herein), which rights
will terminate upon the consummation of the Exchange Offer. The Exchange Notes
will evidence the same debt as the Original Notes (which they replace) and will
be entitled to the benefits of an Indenture, dated as of June 10, 1997,
governing the Original Notes and the Exchange Notes (the "Indenture"). For a
complete description of the terms of the Exchange Notes, see "Description of the
Notes." There will be no cash proceeds to the Company from the Exchange Offer.
Interest on the Notes will be payable in cash semiannually on each June 15
and December 15, commencing December 15, 1997. The Notes are redeemable at the
option of the Company, in whole or in part, at any time on or after June 15,
2002, at the redemption prices set forth herein, plus accrued and unpaid
interest thereon to the redemption date. In addition, the Company may redeem in
the aggregate up to 35% of the original principal amount of the Notes at any
time and from time to time prior to June 15, 2000, at a redemption price equal
to 110.625% of the aggregate principal amount thereof, plus accrued and unpaid
interest thereon to the redemption date, with the Net Proceeds (as defined
herein) of one or more Public Equity Offerings (as defined herein); provided,
that at least $75.0 million of the principal amount of the Notes originally
issued remains outstanding immediately after the occurrence of any such
redemption and that any such redemption occurs within 90 days following the
closing of any such Public Equity Offering. See "Description of the
Notes -- Optional Redemption."
Upon a Change of Control (as defined herein), the Company will be required
to make an offer to purchase all outstanding Notes at a purchase price equal to
101% of the principal amount thereof, plus accrued and unpaid interest thereon
to the purchase date. See "Description of the Notes -- Change of Control Offer."
In addition, the Company will be obligated in certain instances to make an offer
to purchase the Notes at a purchase price equal to 100% of the principal amount
thereof plus accrued and unpaid interest with the net cash proceeds of certain
asset sales. See "Description of the Notes -- Certain Covenants -- Limitation on
Certain Asset Sales."
The Exchange Notes will bear interest from the most recent date to which
interest has been paid on the Original Notes, or if no interest has been paid on
the Original Notes, from June 10, 1997. Holders whose Original Notes are
accepted for exchange will not receive any payment in respect of interest on
such Original Notes otherwise payable on any interest payment date the record
date for which occurs on or after consummation of the Exchange Offer. See "The
Exchange Offer -- Terms of the Exchange Offer."
The Notes will be general unsecured obligations of the Company and will rank
subordinate in right of payment to all existing and future Senior Indebtedness
(as defined herein) of the Company and senior in right of payment to any
subordinated indebtedness of the Company. The Notes will be unconditionally
guaranteed (the "Guarantees") on an unsecured senior subordinated basis by each
of the Company's subsidiaries (the "Guarantors"). Each Guarantee will be
subordinated to all Senior Indebtedness of such Guarantor. As of March 30, 1997,
after giving pro forma effect to the offering of the Original Notes, and the
application of the net proceeds thereof, the Company would have had no Senior
Indebtedness outstanding, and the Guarantors would have had $5.7 million of
Senior Indebtedness outstanding.
------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 19 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY HOLDERS OF THE NOTES.
THE SECURITIES OFFERED HEREBY 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> 3
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-4 under the Securities Act of
1933, as amended (the "Securities Act") with respect to the Exchange Notes
offered hereby. As permitted by the rules and regulations of the Commission,
this Prospectus omits certain information, exhibits and undertakings contained
in the Registration Statement. For further information with respect to the
Company and the Exchange Notes offered hereby, reference is made to the
Registration Statement, including the exhibits thereto and the financial
statements and notes filed as a part thereof. The Registration Statement (and
the exhibits and schedules thereto), as well as the periodic reports and other
information filed by the Company with the Commission, may be inspected and
copied at the Public Reference Section of the Commission at Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. and at the regional offices of
the Commission located at 7 World Trade Center, Suite 1300, New York, New York
and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois.
Copies of such materials may be obtained from the Public Reference Section of
the Commission, 450 Fifth Street, N.W., Washington, D.C., at prescribed rates.
Such information can also be reviewed through the Commission's Electronic Data
Gathering, Analysis and Retrieval System which is publicly available through the
Commission's Web Site (http://www.sec.gov). Statements contained in this
Prospectus as to the contents of any contract or other document are not
necessarily complete, and in each instance reference is made to the copy of such
contract or document filed as an exhibit to the Registration Statement, each
such statement being qualified by such reference.
Pursuant to the Indenture, the Company has agreed to furnish to the Trustee
and to registered holders of the Notes, without cost to the Trustee or such
registered holders, copies of all reports and other information that would be
required to be filed by the Company with the Commission under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), whether or not the
Company is then required to file reports with the Commission. As a result of the
Exchange Offer, the Company will become subject to the periodic reporting and
other informational requirements of the Exchange Act. The Company has agreed
that, whether or not the Company is subject to filing requirements under Section
13 or 15(d) of the Exchange Act, and so long as any Notes remain outstanding, it
will file with the Commission (but only if the Commission at such time is
accepting such voluntary filings) and will send the Trustee copies of the
financial information, documents and reports that would have been required to be
filed with the Commission pursuant to the Exchange Act.
The principal address of the Company is 1775 Park Street, Selma, California
93662, telephone number (209) 891-5344.
2
<PAGE> 4
CERTAIN DEFINITIONS
For purposes of this Prospectus, the following terms shall have the
meanings indicated herein:
"Aerial work platform" shall mean a mobile device that has an
adjustable position platform, supported from ground level by a structure,
and shall include scissor lifts, boom lifts and portable lifts.
"Boom lift" shall mean a self-propelled integral chassis aerial work
platform having a platform that can be positioned completely beyond the
base by a telescopic or articulated mast used to position personnel, along
with their necessary tools and materials, at work locations. These devices
are power operated with primary functions, including drive, controlled from
the platform, and are intended to be occupied when driven.
"Day utilization" shall mean the number of days that equipment is
rented within a given time period as a percentage of the total number of
days within that given time period.
"Dollar utilization" shall mean the actual rental revenue within a
given time period as a percentage of the "monthly national rate" divided by
28, times the number of days within that given time period. The monthly
national rate is a suggested rental rate per unit for a given type of
equipment which is established by Horizon management as a basis for
internal performance evaluation.
"Portable lift" shall mean a manually-propelled integral chassis
aerial work platform having a platform that can be positioned vertically
above the base, but not completely beyond the base, with a telescopic mast
used to position personnel, along with their necessary tools and materials,
at work locations. These devices are power operated with platform elevation
and descent controlled from the platform but are not intended to be
occupied when moved horizontally.
"Scaffolds" or "Scaffolding" shall mean a temporary elevated platform
and its necessary vertical, diagonal and horizontal members used for
supporting personnel and materials. These devices are mounted on casters
and are manuallypropelled. They are not intended to be occupied when moved
horizontally.
"Scissor lift" shall mean a self-propelled integral chassis aerial
work platform having a platform that can be positioned vertically above the
base, but not completely beyond the base, used to position personnel, along
with their necessary tools and materials, at work locations. These devices
are power operated with primary functions, including drive, controlled from
the platform, and are intended to be occupied when driven.
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and consolidated financial statements, including notes thereto,
appearing elsewhere in this Prospectus or incorporated herein by reference.
Unless the context indicates otherwise, references in this Prospectus to (i) the
"Company" or "Carpenter" are to W.R. Carpenter North America, Inc., and (ii)
"UpRight" are to UpRight, Inc. and "Horizon" are to Horizon High Reach, Inc.,
both wholly-owned subsidiaries of the Company. References to fiscal 1994, fiscal
1995 and fiscal 1996 are to the Company's fiscal years ended July 3, 1994, July
2, 1995 and June 30, 1996, respectively. All financial data presented for
UpRight or Horizon are presented for each such company on a stand-alone basis
prior to giving effect to any eliminations of intercompany balances and
transactions due to consolidation.
THE COMPANY
Carpenter, through its wholly-owned subsidiaries, UpRight and Horizon,
manufactures, sells, rents and services aerial work platform equipment to a
diverse customer base, including construction, industrial, commercial and
institutional end users. For the latest twelve months ended March 30, 1997,
Carpenter generated revenue and pro forma EBITDA of $130.6 million and $22.9
million, respectively.
UpRight
UpRight is a leading manufacturer of aerial work platforms, including
scissor lifts, boom lifts and portable lifts, and aluminum scaffolding, which
are distributed through a network of domestic and international dealers and
industrial equipment rental companies to end users in North America and
increasingly in Europe, Asia and Latin America.
UpRight has been manufacturing scissor lifts since 1974 as an outgrowth of
its leadership in the development and sale of aluminum scaffolding. The industry
developed in and is predominantly based in North America. Based on unit shipment
data reported by the Equipment Manufacturers Institute ("EMI"), an industry
trade organization, UpRight's management estimates that of the world's eight
largest aerial work platform manufacturers, seven are headquartered in North
America, generating approximately 90% of the $1.4 billion in worldwide aerial
work platform sales in 1996. According to historical data reported by EMI, the
aerial work platform industry has experienced compound annual growth rates in
total unit shipments of scissor lifts and boom lifts from 1986 to 1996 of 20%
and from 1991 to 1996 of 33%.
UpRight's management believes that the principal factors driving the growth
of the industry are (i) aerial work platforms provide significant cost and
safety advantages over alternative equipment (primarily scaffolding and
ladders), and (ii) the increasing awareness of the benefits of aerial work
platforms and the growth of the industrial equipment rental industry is
expanding the availability of aerial work platforms to more numerous smaller
businesses and from larger industrial metropolitan centers to more
geographically diverse and smaller industrial and non-industrial areas. In
addition, management believes that the industry's pattern of growth in North
America will be repeated in other industrialized regions of the world as
labor-efficient equipment becomes more readily available.
UpRight sells its products through an extensive network of over 140
equipment dealers and rental companies, including national, regional and local
distributors located throughout the United States and 76 distributors located in
51 countries internationally. For the latest twelve months ended March 30, 1997,
approximately 37% of UpRight's revenue was generated by sales to customers in
Europe and the Pacific Rim, which UpRight's management believes is among the
highest percentages of revenue from international sales of any aerial work
platform manufacturer. Other than Horizon, UpRight's ten largest customers for
such period accounted for approximately 40% of UpRight's revenue. UpRight's
customers sell and/or rent its aerial work platforms to end users in
construction, industrial, commercial and institutional markets who use the
equipment for a wide variety of applications, including for the construction,
repair and maintenance of industrial plants, shopping malls, office buildings,
schools, hotels, hospitals, elevated roadways, bridges and other industrial,
commercial and institutional structures. UpRight believes its customer service,
including
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technical support for dealers and rental companies, repair and maintenance
services, spare parts availability, product upgrades and operational and safety
training, enhances its reputation and improves its competitive position versus
other manufacturers.
Since the beginning of fiscal 1994, UpRight has executed an aggressive
research and product development program, investing in excess of $9.5 million
to: (i) extend existing product lines, particularly in scissor lifts, where
UpRight's management believes that the introduction of numerous new scissor lift
models of various platform sizes, weight capacities and heights has made
UpRight's product line as extensive as that of any other manufacturer in the
industry and has positioned UpRight among the top three scissor lift
manufacturers worldwide; (ii) add new features and enhancements to continually
improve the reliability and operational capability of UpRight's existing
products; and (iii) broaden UpRight's product mix, principally by introducing a
line of boom lifts. UpRight's new products and new models introduced since
January 1, 1994 accounted for approximately 79% of UpRight's revenue for the
latest twelve months ended March 30, 1997. UpRight has demonstrated product
development leadership with regard to product enhancements, many of which are
now commonly used by other manufacturers, including speed leveling, tight
turning and easy platform loading, and intends to continue to develop
improvements to existing aerial work platform products. UpRight also recently
introduced its first boom lift product line and is currently developing
additional boom lift models, replicating the line extension strategy it
successfully utilized in scissor lifts and leveraging its domestic and
international distribution capabilities to accelerate market acceptance. Based
on historical unit shipment data reported by EMI, UpRight's management estimates
that boom lifts accounted for approximately $847 million of the $1.4 billion in
worldwide aerial work platform shipments in 1996.
Since the beginning of fiscal 1994, in addition to the $9.5 million
invested in research and product development, UpRight has invested approximately
$15.1 million in the construction of modern, highly efficient production
facilities incorporating state-of-the-art equipment, has adopted "just-in-time"
inventory procedures and modified cellular production techniques and has
instituted flexible labor and staffing practices to manage peak volume cycles.
UpRight continually redesigns its products to create cost efficiencies and
improve product reliability by standardizing production components and by
reducing the number of parts in its products. These design improvements reduce
UpRight's total cost of purchased components, minimize assembly time and
simplify repairs and maintenance. UpRight believes that its product designs and
operational efficiencies give it a cost advantage over its competitors and that
its revenue per employee is among the highest in the industry.
Horizon
Horizon is a leading industrial equipment rental, sales and service company
specializing in aerial work platforms, including scissor lifts, boom lifts and
portable lifts, and forklifts and scaffolding, serving a diverse range of more
than 11,000 active customers from 14 domestic locations. Horizon offers a full
service, integrated approach to serving its customers' needs by providing
rentals of equipment, sales of new and used equipment, sales of spare parts and
repair and maintenance services. For the latest twelve months ended March 30,
1997, approximately 51% of Horizon's revenue was generated by equipment rentals,
approximately 45% of Horizon's revenue was generated by sales of new and used
equipment, and the remainder was generated by training services, sales of spare
parts and certain related customer services. Management believes that, among
major industrial equipment rental companies, Horizon has one of the highest
ratios of sales to rentals in the industry. Within the last three fiscal years,
Horizon has strategically expanded its product offerings to include, in addition
to UpRight products, certain additional product lines from other leading
manufacturers. Horizon acts as a distributor for UpRight products in most of
Horizon's designated market areas. Horizon and UpRight operate independently,
and all transactions between them are conducted on an arm's-length basis.
Horizon's strategy is to focus on small- to mid-sized companies and
contractors, particularly in the construction market, including users in
specialized trades, such as electricians, painters, HVAC and mechanical
contractors, and in the industrial market, including users engaged in the
maintenance of warehouses, manufacturing plants and commercial and institutional
facilities. Management believes that its customers within its target markets are
less price sensitive, more dependent upon service and equipment
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availability, less sensitive to economic cycles and more diversified in number
than are the larger end users typically targeted by Horizon's primary
competitors. In addition, small- to mid-sized contractors tend to rent equipment
on shorter notice for shorter periods of time. As a result of the higher
turnover of equipment and Horizon's pricing structure, management believes
Horizon generates higher margins and higher dollar utilization than if Horizon
targeted larger end users. Horizon's rental strategy is complemented by
Horizon's sales efforts, which primarily target small- to mid-sized companies
that often purchase the most frequently utilized equipment models and rent
additional equipment or specialized equipment for particular projects.
The equipment rental industry serves a wide variety of commercial and
residential construction, industrial and homeowner customers. According to a
survey conducted by the Associated Equipment Distributors ("AED"), an industry
trade organization, the United States equipment rental industry has grown from
approximately $610 million in revenue in 1982 to an estimated $13 billion in
revenue in 1995, a compound annual growth rate of approximately 27%. Horizon's
management estimates that the aerial work platform segment constitutes
approximately 10% to 15% of such industry revenue. Management believes that the
growth in the industry reflects, in part, (i) an increase in outsourcing by
commercial and industrial customers seeking to reduce their capital invested in
equipment and to reduce the costs associated with maintaining and servicing such
equipment by renting rather than purchasing equipment, (ii) an increase in the
number of equipment rental locations and the corresponding increase in
availability of equipment, and (iii) a general decline in inflation-adjusted
rental rates.
According to the Rental Equipment Register, an industry publication,
Horizon is the 34th largest rental equipment company in the United States based
on 1996 rental revenue; however, within the aerial work platform segment,
Horizon is the eighth largest rental equipment company. Horizon's rental fleet
as of March 30, 1997 exceeded 2,400 self-propelled and portable aerial work
platforms and forklifts with an original equipment cost of approximately $38.0
million, and included aluminum scaffolding with an original equipment cost of
approximately $950,000.
Horizon provides a complete range of customer services through its network
of offices and field support personnel, including safety and operational
training, technical and maintenance support, 24-hour emergency repair service,
spare parts supplies and related services. Management believes Horizon is
recognized as a leader in customer service, a significant factor for many of
Horizon's customers, which are generally more dependent on each piece of
equipment and which cannot afford downtime associated with unscheduled
maintenance. Horizon was among the first aerial work platform rental companies
to offer service and maintenance contracts and training programs, and was one of
the first in the industry to comply with all of the safety and operational
standards of the American National Standards Institute ("ANSI"), a private
non-profit membership organization.
THE AERIAL WORK PLATFORM INDUSTRY
The aerial work platform industry began in the United States in the late
1960s with the introduction of scissor lifts, boom lifts and portable lifts.
Since that time, aerial work platforms have gained increasing acceptance as an
economical and safe alternative to scaffolding and ladders. According to
historical data reported by EMI, the aerial work platform industry has
experienced compound annual growth rates in total unit shipments of scissor
lifts and boom lifts from 1986 to 1996 of 20% and from 1991 to 1996 of 33%. In
addition, exports of scissor lifts and boom lifts accounted for 17% and 20%,
respectively, of total unit shipments in 1996 compared to 10% and 1%,
respectively, of total unit shipments in 1986. Based on unit shipment data
reported by EMI, UpRight's management estimates that worldwide sales of aerial
work platforms totaled $1.4 billion in 1996. Despite the growth in export
shipments, the working population of aerial work platform equipment remains
significantly lower internationally than in North America. The Company's
management expects that in the next several years as the cost of labor increases
and labor-efficient equipment becomes more readily available, sales of aerial
work platforms will experience substantial growth internationally, similar to
that experienced in the United States over the past several years.
Scissor lifts and boom lifts are the two principal aerial work platform
industry products, accounting for approximately 97% of total aerial work
platform sales in 1996, according to data reported by EMI and
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management estimates. A scissor lift consists of a work platform mounted on top
of a hydraulically actuated scissor-type lifting mechanism. A boom lift consists
of a generally smaller work platform supported from the tip of a telescopic or
articulated boom. The lifting mechanisms of both types of machines are mounted
on a self-propelled, steerable, mobile, four-wheeled chassis. Scissor lifts and
boom lifts can be driven by the operator from the platform while in an elevated
position, thus enabling the operator to move from one location to another
without having to return to the ground. This feature, coupled with the
elimination of the time-consuming and more labor-intensive task of erecting,
disassembling and moving scaffolding, generates substantial labor savings and
reduces hazards to workers.
Scissor lifts generally are capable of supporting 500 to 2,000 pounds of
payload and can elevate to heights ranging from 12 to 50 feet. Boom lifts
generally are capable of supporting 500 to 750 pounds of payload and can elevate
to heights ranging from 30 to 150 feet.
Aerial work platforms are used in a variety of applications that require
workers to access elevated work areas. The ability to elevate the worker,
equipment and material on a platform which the worker can position while
elevated improves worker safety and productivity. Self-propelled aerial work
platforms are now commonly used by end users in construction, industrial,
commercial and institutional markets who use the equipment for a wide variety of
applications, including for the construction, repair and maintenance of
industrial plants, shopping malls, office buildings, schools, hotels, hospitals,
elevated roadways, bridges and other industrial, commercial and institutional
structures. During the construction of certain large commercial and industrial
projects, contractors can often require in excess of one hundred aerial work
platforms at one time. The wide acceptance of aerial work platforms as a
cost-effective, safe alternative to scaffolding and ladders in the United
States, Canada and parts of Europe has influenced both the design of certain
buildings and construction methods. For example, the construction, maintenance
and usefulness of high-ceilinged warehouses have been made more practical
through the wide acceptance of aerial work platforms.
The aerial work platform industry is cyclical and historically has been
dependent on the United States construction industry. However, several other
factors have affected the growth in total unit shipments, including the
following:
- - New product introductions, new usage applications and the continued expansion
into international markets have increased demand. The aerial work platform
industry has historically been concentrated in North America and has primarily
served the non-residential construction market. As a result, industry growth
was adversely affected by the severe downturn in commercial construction
between 1990 and 1992. However, according to data reported by EMI, scissor
lift unit shipments exported from North America have increased by a compound
annual growth rate of approximately 25% since 1986. Several new products have
been introduced that are specifically designed for non-construction
applications, such as narrow aisle boom lifts which accounted for
approximately 8% of total boom lift unit shipments in 1996.
- - Significant changes in the industrial equipment rental industry. UpRight's
management believes that increasing demand for rentals is helping to fuel the
growth in demand for aerial work platform products. In addition, companies in
the equipment rental industry are reducing the average age of their rental
fleets by accelerating the turnover of their equipment, thereby increasing
sales of aerial work platforms. At the same time, the consolidation of the
historically fragmented equipment rental industry in the United States has led
to the emergence of several national and regional equipment rental companies
which have greater access to capital. In addition, these large industrial
equipment rental companies are expanding the availability of aerial work
platforms from larger industrial metropolitan centers to more geographically
diverse and smaller industrial and non-industrial areas.
- - Safety regulations are increasing. Product liability concerns in the United
States and an increase in the number and scope of government-mandated safety
regulations, especially in developing countries, have spurred an increase in
the development of safety features and improved the cost effectiveness of
aerial work platforms compared to scaffolding, cranes, forklifts and ladders.
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BUSINESS STRATEGY
The Company intends to actively seek opportunities for continued growth by
providing capital, strategic and financial direction and management support to
assist UpRight and Horizon in executing their respective business strategies as
described below. In addition, the Company continually analyzes and evaluates
acquisition candidates and opportunities for future growth. The Company may make
acquisitions of businesses that are complementary, ancillary or related to those
of UpRight and Horizon.
UpRight
Continually Introduce New Products and Extend Product Line. UpRight
management believes that it is among the leaders in new product development in
the industry. In addition to its extensive scissor lift product line, UpRight
intends to systematically expand its product offerings with a line of
articulated and telescopic boom lifts, the first of which was introduced in
February 1997. UpRight expects to leverage its existing domestic and
international distribution capabilities to accelerate market acceptance and
market share of its boom lifts. The line extension strategy will be targeted to
the most frequently utilized models with broad end user applications and to less
frequently utilized models servicing underserved niches with specific end user
applications. UpRight has recently completed the construction of approximately
80,000 square feet of additional assembly and production capacity and intends to
add over time an additional 300,000 square feet of manufacturing facilities to
accommodate the anticipated growth in its boom lift sales.
Enhance Product Reliability. UpRight believes its products are well
regarded in the industry for their quality, features and reliability and have
among the highest resale values in the used equipment aftermarket. In addition,
management believes that repair and maintenance costs for its equipment compare
favorably to those of its competitors within the industry. UpRight has increased
and expects to continue to increase its research, development and engineering
efforts to integrate new components and materials technology into its products
in order to further enhance product quality and reliability.
Provide High Level of Customer Service. UpRight believes that its level of
customer service is among the highest in the industry and that its reputation
for service is excellent. UpRight's customer service includes technical support
for dealers and rental companies, repair and maintenance services, spare parts
availability, product upgrades and operational and safety training. UpRight
intends to continue to provide operational training, safety instruction and
other services to enhance customer loyalty.
Expand Distribution Network. UpRight intends to expand its distribution
network of domestic and international dealers and industrial equipment rental
companies primarily by (i) adding dealers in existing markets to increase
penetration and market presence, (ii) adding dealers in new markets,
particularly outside the United States, (iii) following existing dealers'
expansion into a greater number of locations, and (iv) expanding its boom lift
line which will make UpRight's product line comprehensive and should enhance its
attractiveness to certain large industrial equipment rental companies.
Improve Production Efficiency. UpRight intends to continue to automate and
upgrade production equipment, redesign and reengineer products to standardize
and simplify parts and components, work closely with its suppliers to reduce
parts and components costs, including inventory costs, and enhance quality
control to reduce production and delivery cycles. In addition, UpRight believes
that its new product development and product line extensions will help it
realize economies of scale.
Expand Through Selective Acquisitions. UpRight intends to make selective
acquisitions of complementary companies to accelerate the expansion of its
product line or distribution network or to vertically integrate the manufacture
of certain parts and components used in its products to improve cost efficiency
and enhance product reliability. Management believes many of the parts and
components used in UpRight's products are manufactured by a number of small
companies which, if acquired, could be integrated into UpRight's research,
design and production capabilities while retaining the existing customer base of
such acquired companies.
8
<PAGE> 10
Horizon
Focus on Small- to Mid-Sized Customers. Horizon intends to continue
focusing on small- to mid-sized companies in the construction market, including
users in specialized trades, such as electrical, painting, HVAC and mechanical
contractors, and in the industrial market, including users engaged in the
maintenance of warehouses, manufacturing plants and commercial and institutional
facilities. Management believes that its comprehensive service and technical
support, which includes safety and operational training, 24-hour emergency
repair service, spare part supplies and related services, provides a competitive
advantage with these customers and, further, that focusing on these customers
allows Horizon to achieve higher dollar utilization, more stable day utilization
and higher margins than if Horizon targeted larger end users.
Expand the Number of Locations. Horizon currently operates in 14 locations
dispersed among industrial areas on the East Coast and West Coast and in the
Midwest and Southwest. In late 1995, Horizon began to implement a hub-and-spoke
expansion strategy whereby one branch supports multiple satellite rental offices
to maximize the availability and utilization of its rental fleet within a given
geographic area while cost-efficiently increasing market penetration. Because
many of its customers are small- to mid-sized companies, maintaining a local
presence and relationship is important in retaining customer loyalty. Horizon
has identified several additional markets in which to open branches, as well as
selectively add satellite offices, within the next several years. Satellite
offices are intended to be opened to service existing customers' needs as they
expand or relocate, and to attract new customers. As part of this strategy and
to accelerate its expansion efforts, Horizon may make strategic acquisitions of
regional or local equipment rental and sales companies.
Expand and Upgrade Rental Fleet. Horizon has systematically expanded its
rental fleet primarily to meet the demands of specific markets. Within the next
two fiscal years, Horizon plans to add approximately $11 million (at "dealer
cost," as defined herein) of additional equipment to upgrade its existing fleet
and approximately $6 million (at dealer cost) of additional equipment to offer
greater availability and more comprehensive product mix to its customers. See
"Capital Expansion Program." Horizon does not intend to significantly change the
composition of its rental fleet towards boom lifts, because its existing
customer base has historically utilized scissor lifts and boom lift usage
declines substantially during the winter and poor weather months, which
decreases equipment utilization.
Manage the Revenue Mix of Rentals and Sales. Horizon targets a 50%/40%/10%
mix of revenue generated from (i) rentals, including delivery charges and damage
waivers, (ii) sales of new and used equipment and (iii) miscellaneous sources,
including service revenue on customer-owned equipment, sales of spare parts and
safety training certification fees, respectively. Horizon management believes
this strategy diversifies Horizon's customer base beyond the construction
industry and mitigates the impact of seasonal and economic cycles. Equipment
sales to industrial companies within the latest twelve months ended March 30,
1997 accounted for approximately 70% of total Horizon sales of new and used
equipment. Although Horizon expects that its new branches and satellite offices
will generate higher percentages of rental revenue, until those branches and
satellite offices are more established in their respective markets, Horizon
intends to continue to target a similar revenue mix through an increase in sales
of new and used equipment and spare parts at its existing locations.
9
<PAGE> 11
THE EXCHANGE OFFER
Purpose of the Exchange
Offer...................... The Original Notes were sold in a transaction
exempt from the registration requirements of the
Securities Act by the Company on June 10, 1997 to
CIBC Wood Gundy Securities Corp. and BancAmerica
Securities, Inc. (collectively, the "Initial
Purchasers"). In connection therewith, the Company
executed and delivered, for the benefit of the
holders of the Original Notes, a Registration
Rights Agreement dated June 10, 1997 (the
"Registration Rights Agreement"), which is filed as
an exhibit to the Registration Statement of which
this Prospectus is a part, providing for, among
other things, the Exchange Offer so that the
Exchange Notes will be freely transferable by the
holders thereof without registration or any
prospectus delivery requirements under the
Securities Act, except that a "dealer" or any of
its "affiliates" (as such terms are defined under
the Securities Act), who exchanges Original Notes
held for its own account will be required to
deliver copies of this Prospectus in connection
with any resale of the Exchange Notes issued in
exchange for such Original Notes. See "The Exchange
Offer -- Purposes and Effects of the Exchange
Offer" and "Plan of Distribution."
The Exchange Offer......... The Company is offering to exchange $1,000
principal amount of Exchange Notes for each $1,000
principal amount of Original Notes that are
properly tendered and accepted. The Company will
issue Exchange Notes on or promptly after the
Expiration Date. There is $105,000,000 aggregate
principal amount of Original Notes outstanding. The
Original Notes and the Exchange Notes are
collectively referred to herein as the "Notes." The
terms of the Exchange Notes are substantially
identical in all respects (including principal
amount, interest rate and maturity) to the terms of
the Original Notes for which they may be exchanged
pursuant to the Exchange Offer, except that (i) the
Exchange Notes are freely transferable by holders
thereof (other than as provided herein), and are
not subject to any covenant restricting transfer
absent registration under the Securities Act and
(ii) holders of the Exchange Notes will not be
entitled to certain rights of holders of the
Original Notes under the Registration Rights
Agreement, which rights will terminate upon the
consummation of the Exchange Offer. See "The
Exchange Offer."
The Exchange Offer is not conditioned upon any
minimum aggregate principal amount of Original
Notes being tendered for exchange.
Based on an interpretation by the staff of the
Securities and Exchange Commission (the
"Commission") set forth in no-action letters issued
to third parties, the Company believes that the
Exchange Notes issued pursuant to the Exchange
Offer in exchange for Original Notes may be offered
for resale, resold and otherwise transferred by a
holder thereof (other than (i) a broker-dealer who
purchases such Exchange Notes directly from the
Company to resell pursuant to Rule 144A under the
Securities Act or any other available exemption
under the Securities Act or (ii) a person that is
an affiliate (as defined in Rule 405 under the
Securities Act) of the Company) without compliance
with the registration and prospectus delivery
provisions of the Securities Act, provided that the
holder is acquiring the Exchange Notes in the
ordinary course of its business and is not
participating, and had no arrangement or
understanding with any person to participate, in
the distribution of the
10
<PAGE> 12
Exchange Notes. Each broker-dealer that receives
the Exchange Notes for its own account in exchange
for the Original Notes, where such Notes are
acquired by such broker-dealer as a result of
market-making activities or other trading
activities, must acknowledge that it will deliver a
prospectus in connection with any resale of such
Exchange Notes.
Registration Rights
Agreement.................. The Original Notes were sold by the Company on June
10, 1997 to the Initial Purchasers pursuant to a
Securities Purchase Agreement dated as of June 4,
1997 by and among the Company, the Guarantors named
therein and the Initial Purchasers named therein
(the "Purchase Agreement"). Pursuant to the
Purchase Agreement, the Company and the Initial
Purchasers entered into the Registration Rights
Agreement which grants the holders of the Original
Notes certain exchange and registration rights. See
"The Exchange Offer -- Termination of Certain
Rights." This Exchange Offer is intended to satisfy
such rights, which terminate upon the consummation
of the Exchange Offer. The holders of the Exchange
Notes are not entitled to any exchange or
registration rights with respect to the Exchange
Notes.
Expiration Date............ The Exchange Offer will expire at 5:00 p.m., New
York City time, on , 1997, unless the
Exchange Offer is extended by the Company in its
reasonable discretion, in which case the term
"Expiration Date" shall mean the latest date and
time to which the Exchange Offer is extended.
Accrued Interest on
the Exchange Notes and
Original Notes........... Interest on the Exchange Notes 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
June 10, 1997. Holders whose Original Notes are
accepted for exchange will be deemed to have waived
the right to receive any interest accrued on the
Original Notes.
Conditions to the Exchange
Offer.................... The Exchange Offer is subject to certain customary
conditions, which may be waived by the Company. See
"The Exchange Offer -- Certain Conditions to the
Exchange Offer." The Exchange Offer is not
conditioned upon any minimum aggregate principal
amount of Original Notes being tendered for
exchange. The Company reserves the right to
terminate or amend the Exchange Offer at any time
prior to the Expiration Date upon the occurrence of
any such conditions.
Procedures for Tendering
Original Notes........... Each holder of Original 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 the Original Notes and any other required
documentation to the exchange agent (the "Exchange
Agent") at the address set forth herein. Original
Notes may be physically delivered, but physical
delivery is not required if a confirmation of a
book-entry transfer of such Original Notes to the
Exchange Agent's account at The Depository Trust
Company ("DTC" or the "Depository") is delivered in
a
11
<PAGE> 13
timely fashion. By executing the Letter of
Transmittal, each holder will represent to the
Company that, among other things, the Exchange
Notes acquired pursuant to the Exchange Offer are
being obtained in the ordinary course of business
of the person receiving such Exchange Notes,
whether or not such person is the holder, that
neither the holder nor any such other person is
engaged in, or intends to engage in, or has an
arrangement or understanding with any person to
participate in, the distribution of such Exchange
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.
Each broker or dealer that receives Exchange Notes
for its own account in exchange for Original Notes,
where such Original Notes were acquired by such
broker or dealer as a result of market-making
activities or other trading activities, must
acknowledge that it will deliver a prospectus in
connection with any resale of such Exchange Notes.
See "The Exchange Offer -- Procedures for
Tendering" and "Plan of Distribution."
Special Procedures for
Beneficial
Owners................... Any beneficial owner whose Original Notes are
registered in the name of a broker, dealer,
commercial bank, trust company or other nominee and
who wishes to tender should contact such registered
holder promptly and instruct such registered holder
to tender on such beneficial owner's behalf. If
such beneficial owner wishes to tender on such
owner's own behalf, such owner must, prior to
completing and executing the Letter of Transmittal
and delivering his Original Notes, either make
appropriate arrangements to register ownership of
the Original Notes in such owner's name or obtain a
properly completed bond power from the registered
holder. The transfer of registered ownership may
take considerable time. See "The Exchange
Offer -- Procedures for Tendering."
Guaranteed Delivery
Procedures............... Holders of Original Notes who wish to tender their
Original Notes and whose Original Notes are not
immediately available or who cannot deliver their
Original Notes, the Letter of Transmittal or any
other documents required by the Letter of
Transmittal to the Exchange Agent prior to the
Expiration Date, must tender their Original Notes
according to the guaranteed delivery procedures set
forth in the "The Exchange Offer -- Guaranteed
Delivery Procedures."
Acceptance of the Original
Notes and Delivery of the
Exchange Notes........... Subject to the satisfaction or waiver of the
conditions to the Exchange Offer, the Company will
accept for exchange any and all Original Notes
which are properly tendered in the Exchange Offer
prior to the Expiration Date. The Exchange Notes
issued pursuant to the Exchange Offer will be
delivered on the earliest practicable date
following the Expiration Date. See "The Exchange
Offer -- Terms of the Exchange Offer."
Withdrawal Rights.......... Tenders of the Original Notes may be withdrawn at
any time prior to the Expiration Date. See "The
Exchange Offer -- Withdrawal of Tenders."
Certain Federal Income Tax
Considerations........... For a discussion of certain federal income tax
considerations relating to the exchange of the
Exchange Notes for the Original Notes, see "Certain
Federal Income Tax Considerations."
12
<PAGE> 14
Exchange Agent............. U.S. Trust Company of California, N.A. is serving
as the Exchange Agent in connection with the
Exchange Offer. See "The Exchange Offer -- Exchange
Agent."
Effect on Holders of the
Original Notes............. As a result of the making of, and upon acceptance
for exchange of all validly tendered Original Notes
pursuant to the terms of, this Exchange Offer, the
Company will have fulfilled one of the covenants
contained in the Registration Rights Agreement and,
accordingly, there will be no increase in the
interest rate on the Original Notes pursuant to the
applicable terms of the Registration Rights
Agreement due to the Exchange Offer. Holders of the
Original Notes who do not tender their Original
Notes will be entitled to all the rights and
limitations applicable thereto under the Indenture
dated as of June 10, 1997, among the Company and
U.S. Trust Company of California, N.A., as trustee
(the "Trustee"), relating to the Original Notes and
the Exchange Notes (the "Indenture"), except for
any rights under the Indenture or the Registration
Rights Agreement, which by their terms terminate or
cease to have further effectiveness as a result of
the making of, and the acceptance for exchange of
all validly tendered Original Notes pursuant to,
the Exchange Offer. All untendered Original Notes
will continue to be subject to the restrictions on
transfer provided for in the Original Notes and in
the Indenture. To the extent that Original Notes
are tendered and accepted in the Exchange Offer,
the trading market for untendered Original Notes
could be adversely affected.
Use of Proceeds............ There will be no cash proceeds to the Company from
the exchange pursuant to the Exchange Offer.
THE NOTES
The Exchange Notes......... The Exchange Offer applies to $105,000,000
aggregate principal amount of the Original Notes.
The form and terms of the Exchange Notes are the
same as the form and terms of the Original Notes
except that (i) the exchange will have been
registered under the Securities Act and, therefore,
the Exchange Notes will not bear legends
restricting their transfer pursuant to the
Securities Act, and (ii) holders of the Exchange
Notes will not be entitled to certain rights of
holders of the Original Notes under the
Registration Rights Agreement, which rights will
terminate upon consummation of the Exchange Offer.
The Exchange Notes will evidence the same debt as
the Notes (which they replace) and will be issued
under, and be entitled to the benefits of, the
Indenture. See "Description of the Notes" for
further information and for definitions of certain
capitalized terms used below.
Issuer..................... W.R. Carpenter North America, Inc.
Maturity Date.............. June 15, 2007.
Interest Payment Dates..... Interest will accrue on the Notes from June 10,
1997, the issue date of the Original Notes (the
"Issue Date") and will be payable semiannually on
each June 15 and December 15, commencing December
15, 1997.
Ranking.................... The Notes will be general unsecured obligations of
the Company and will rank subordinate in right of
payment to any existing and future Senior
Indebtedness of the Company and senior in right of
payment to
13
<PAGE> 15
all subordinated indebtedness of the Company. As of
March 30, 1997, after giving pro forma effect to
the offering of the Original Notes and the
application of the net proceeds thereof, the
Company (excluding the indebtedness of its
subsidiaries) would have had no Senior Indebtedness
outstanding. See "Risk Factors -- Substantial
Leverage."
Guarantees................. The Notes will be unconditionally guaranteed on an
unsecured senior subordinated basis, fully and
unconditionally, jointly and severally by each of
the Company's subsidiaries. As of the Issue Date,
UpRight and Horizon comprised all of the operating
subsidiaries of the Company. See "Description of
the Notes -- Certain Covenants -- Limitation on
Creation of Subsidiaries." Each Guarantee will be
subordinated to all Senior Indebtedness of such
Guarantor. As of March 30, 1997, after giving pro
forma effect to the offering of the Original Notes
and the application of the net proceeds thereof,
UpRight and Horizon would have had $5.7 million and
$0.0, respectively, of Senior Indebtedness
outstanding. See "Description of the
Notes -- Guarantees."
Optional Redemption........ The Notes will be redeemable at the option of the
Company, in whole or in part, at any time on or
after June 15, 2002 at the redemption prices set
forth herein, plus accrued and unpaid interest
thereon to the redemption date. In addition, the
Company may redeem in the aggregate up to 35% of
the original principal amount of the Notes at any
time and from time to time prior to June 15, 2000,
at a redemption price equal to 110.625% of the
aggregate principal amount thereof, plus accrued
and unpaid interest thereon to the redemption date,
with the Net Proceeds of one or more Public Equity
Offerings; provided, that at least $75.0 million
aggregate principal amount of the Notes originally
issued remain outstanding immediately after the
occurrence of any such redemption and that any such
redemption occurs within 90 days following the
closing of any such Public Equity Offering. See
"Description of the Notes -- Optional Redemption."
Change of Control.......... Upon a Change of Control (as defined herein), the
Company will be required to make an offer to
purchase all outstanding Notes at a price equal to
101% of the principal amount thereof, plus accrued
and unpaid interest thereon to the purchase date.
See "Description of the Notes -- Change of Control
Offer."
Certain Covenants.......... The Indenture (as defined herein) contains
covenants that, among other things, restrict the
ability of the Company and its Restricted
Subsidiaries (as defined herein) to: (i) incur
additional indebtedness; (ii) pay dividends and
make distributions; (iii) issue stock of
subsidiaries; (iv) make certain investments; (v)
repurchase stock; (vi) create liens; (vii) enter
into transactions with affiliates; (viii) enter
into sale and leaseback transactions; (ix) create
dividend or other payment restrictions affecting
Restricted Subsidiaries; (x) merge or consolidate
the Company or any of the Guarantors; and (xi)
transfer or sell assets. These covenants are
subject to a number of important exceptions. See
"Description of the Notes -- Certain Covenants."
Asset Sales Proceeds....... The Company will be obligated in certain instances
to make offers to purchase the Notes at a purchase
price in cash equal to 100% of the principal amount
thereof plus accrued and unpaid interest to the
date of purchase with the net cash proceeds of
certain asset sales. See "Descrip-
14
<PAGE> 16
tion of the Notes -- Certain
Covenants -- Limitation on Certain Asset Sales."
For more complete information regarding the Notes, including the
definitions of certain capitalized terms used above, see "Description of the
Notes."
RISK FACTORS
Prospective purchasers of the Notes should carefully consider the
information set forth under the caption "Risk Factors," and all other
information set forth in this Prospectus, in evaluating the Notes and the
Company.
15
<PAGE> 17
SUMMARY HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL DATA
The following table sets forth summary historical consolidated financial
data with respect to the Company for the periods ended on and as of the dates
indicated. The summary historical consolidated financial data for fiscal years
1994, 1995 and 1996 are derived from and should be read in conjunction with the
consolidated financial statements of the Company audited by Pannell Kerr
Forster, Certified Public Accountants, A Professional Corporation, Los Angeles,
California, including the Company's consolidated balance sheets at July 2, 1995
and June 30, 1996 and the related consolidated statements of operations and cash
flows for each of the three fiscal years in the period ended June 30, 1996 and
the notes thereto appearing elsewhere in this Prospectus. The summary historical
consolidated financial data for each of the two fiscal years in the period ended
June 27, 1993 have been derived from unaudited financial information prepared by
the Company. The summary historical consolidated financial data for the nine
months ended March 31, 1996 and March 30, 1997 have been derived from the
unaudited condensed financial statements of the Company included elsewhere in
this Prospectus. Such condensed consolidated financial statements, in the
opinion of the Company's management, include all adjustments necessary for a
fair presentation of the financial condition and the results of operations of
the Company for such periods. Operating results for the nine months ended March
30, 1997 are not necessarily indicative of the results that may be expected for
the fiscal year ending June 29, 1997. The unaudited summary pro forma statement
of operations data and other data for the fiscal year ended June 30, 1996, the
nine months ended March 30, 1997 and the twelve months ended March 30, 1997 give
effect to the offering of the Original Notes as if it had been completed on July
3, 1995, July 1, 1996 and April 1, 1996, respectively. The unaudited summary pro
forma balance sheet data give effect to the offering of the Original Notes as if
it had been completed on March 30, 1997. The pro forma data should be read in
conjunction with the Company's consolidated financial statements and the notes
thereto appearing elsewhere in this Prospectus and "Management's Discussion and
Analysis of Financial Condition and Results of Operations." The pro forma
financial data are not necessarily indicative of the results that would have
occurred had the offering of the Original Notes been completed on the dates
indicated or of the Company's actual or future operating results or financial
condition.
<TABLE>
<CAPTION>
NINE MONTHS
FISCAL YEAR ENDED ENDED
-------------------------------------------------- ---------------------
JUNE 28, JUNE 27, JULY 3, JULY 2, JUNE 30, MARCH 31, MARCH 30,
1992(1) 1993(1) 1994(1) 1995 1996 1996 1997
-------- -------- ------- ------- -------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING STATEMENT DATA:
Revenue(2).......................... $ 64,556 $ 67,005 $70,387 $85,157 $117,903 $83,375 $96,084
Cost of revenue..................... 42,851 44,539 47,365 58,217 78,638 55,216 64,813
-------- -------- ------- ------- -------- ------- -------
Gross profit........................ 21,705 22,466 23,022 26,940 39,265 28,159 31,271
Research and development expenses... 1,057 1,457 1,732 1,817 2,865 1,908 3,110
Product liability costs............. 1,506 1,994 1,827 2,094 3,015 2,050 2,396
Selling, general and administrative
expenses.......................... 15,816 15,884 15,051 13,982 15,124 11,039 13,220
-------- -------- ------- ------- -------- ------- -------
Income from operations.............. 3,326 3,131 4,412 9,047 18,261 13,162 12,545
Interest expense, net............... 5,653 4,341 3,214 2,566 2,907 2,126 2,460
Other expense, net(3)............... 877 1,130 4,252 186 539 5 26
-------- -------- ------- ------- -------- ------- -------
Income (loss) before provision for
income taxes...................... (3,204) (2,340) (3,054) 6,295 14,815 11,031 10,059
Provision (benefit) for income
taxes............................. (5) 15 (1,221) 2,608 6,047 4,497 4,069
Cumulative effect on prior years of
accounting change................. -- -- 6,663 -- -- -- --
-------- -------- ------- ------- -------- ------- -------
Net income (loss)................... $ (3,199) $ (2,355) $ 4,830 $ 3,687 $ 8,768 $ 6,534 $ 5,990
======== ======== ======= ======= ======== ======= =======
OTHER DATA:
EBITDA(4)........................... $ 7,610 $ 6,812 $ 8,240 $12,626 $ 22,695 $16,279 $16,762
Depreciation and amortization....... 4,284 3,681 3,828 3,579 4,434 3,117 4,217
Capital expenditures................ 2,036 4,014 8,159 7,949 14,720 11,982 12,717
Gross margin........................ 33.6% 33.5% 32.7% 31.6% 33.3% 33.8% 32.6%
EBITDA margin....................... 11.8 10.2 11.7 14.8 19.3 19.5 17.5
Ratio of EBITDA to interest expense,
net............................... 1.35x 1.57x 2.56x 4.92x 7.81x 7.66x 6.81x
</TABLE>
16
<PAGE> 18
<TABLE>
<CAPTION>
NINE MONTHS
FISCAL YEAR ENDED ENDED
-------------------------------------------------- --------------------
JUNE 28, JUNE 27, JULY 3, JULY 2, JUNE 30, MARCH 31, MARCH 30,
1992(1) 1993(1) 1994(1) 1995 1996 1996 1997
-------- -------- ------- ------- -------- -------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents........... $ 1,971 $ 3,341 $ 1,297 $ 4,314 $ 11,164 $ 6,371 $ 5,984
Working capital (deficit)........... (20,220) (2,183) (1,633) (4,271) 7,995 3,920 14,462
Total assets........................ 72,010 46,556 56,027 55,082 75,985 68,085 88,935
Total debt.......................... 73,998 54,104 26,415 30,456 36,999 35,550 39,297
Stockholder's equity (deficit)...... (17,596) (25,349) 4,611 8,298 17,069 14,832 23,059
</TABLE>
<TABLE>
<CAPTION>
FISCAL YEAR NINE MONTHS TWELVE MONTHS
ENDED ENDED ENDED
JUNE 30, 1996 MARCH 30, 1997 MARCH 30, 1997
------------- -------------- --------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
PRO FORMA OPERATING STATEMENT DATA(6):
EBITDA(4)(5)................................................. $21,815 $ 16,563 $ 22,913
Interest expense, net(7)..................................... 11,466 8,589 11,511
Ratio of EBITDA to interest expense, net..................... 1.90x 1.93x 1.99x
</TABLE>
<TABLE>
<CAPTION>
AS OF MARCH 30, 1997
-------------------------------
ACTUAL AS ADJUSTED(6)
-------------- --------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
PRO FORMA BALANCE SHEET DATA:
Cash and cash equivalents................................................. $ 5,984 $ 70,330
Working capital........................................................... 14,462 94,906
Total assets.............................................................. 88,935 157,631
Total debt................................................................ 39,297 110,236
Stockholder's equity...................................................... 23,059 23,059
</TABLE>
- ---------------
(1) Results include operations and capital expenditures of Bacon-Universal
Company, Inc. ("Bacon"), a former wholly-owned subsidiary of the Company
sold in July 1994. Results of operations and capital expenditures of the
Company excluding the operating results and capital expenditures of Bacon
are as follows:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
-------------------------------
JUNE 28, JUNE 27, JULY 3,
1992 1993 1994
-------- -------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Revenue...................................................................... $46,311 $52,293 $57,429
Gross profit................................................................. 16,250 18,400 19,293
Income from operations....................................................... 3,823 4,419 4,518
EBITDA....................................................................... 6,907 7,101 7,478
Capital expenditures......................................................... 1,603 2,822 7,031
Gross margin................................................................. 35.1% 35.2% 33.6%
EBITDA margin................................................................ 14.9 13.6 13.0
</TABLE>
(2) The following details UpRight's and Horizon's revenue, and the elimination
of intercompany sales for fiscal years 1994, 1995 and 1996 and the nine
months ended March 31, 1996 and March 30, 1997:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED NINE MONTHS ENDED
----------------------------- -------------------
JULY 3, JULY 2, JUNE 30, MARCH 31, MARCH 30,
1994 1995 1996 1996 1997
------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
UpRight..................................................... $40,694 $ 65,593 $ 93,273 $ 66,109 $ 75,016
Horizon..................................................... 25,282 32,236 38,112 27,537 32,950
Intercompany sales.......................................... (8,547) (12,672) (13,482) (10,271) (11,882)
------- ------- -------- ------- -------
$57,429 $ 85,157 $117,903 $ 83,375 $ 96,084
======= ======= ======== ======= =======
</TABLE>
Fiscal 1994 excludes $13.0 million in revenue from Bacon. See footnote (1)
above. For fiscal years 1992 and 1993, Horizon was a division of UpRight and
did not report financial results separately.
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<PAGE> 19
(3) For fiscal 1994, includes $4.0 million loss on sale of Bacon.
(4) EBITDA represents income before extraordinary item, net interest expense,
financing costs, income taxes, depreciation and amortization and other
expenses and income. The Company has included information concerning EBITDA
in this Prospectus because it is used by certain investors as a measure of a
company's ability to service its debt obligations. EBITDA should not be used
as an alternative to, or be considered more meaningful than, operating
income, net income or cash flow as an indicator of the Company's operating
performance.
(5) EBITDA as represented in the Pro Forma Operating Statement Data has been
adjusted for obligations of UpRight and Horizon pursuant to the Corporate
Services Agreements as if the Corporate Services Agreements were in effect
at the beginning of the periods presented. See "Certain Relationships and
Related Transactions." These adjustments total in the aggregate $880, $199
and $265 for the fiscal year ended June 30, 1996, the nine months ended
March 30, 1997 and the twelve months ended March 30, 1997, respectively.
(6) Presented on a pro forma basis as though the Notes had been issued at the
beginning of the periods presented with respect to the Pro Forma Operating
Statement Data and, as of March 30, 1997, with respect to the Pro Forma
Balance Sheet Data, as adjusted. See "Use of Proceeds."
(7) Reflects an interest rate of 10.625% on the Notes and includes amortization
of discount. Interest expense, net excludes the amortization of deferred
financing costs, including the amounts estimated to be incurred in
connection with the issuance of the Notes, and includes actual interest
income for each period.
18
<PAGE> 20
RISK FACTORS
Prospective investors should consider carefully the following risk factors,
as well as the other information set forth elsewhere in this Prospectus, before
making an investment in the Notes.
SUBSTANTIAL LEVERAGE
The Company is highly leveraged. At March 30, 1997, after giving pro forma
effect to the offering of the Original Notes and the application of the net
proceeds thereof, the Company's consolidated indebtedness and stockholder's
equity would have been $110.2 million and $23.1 million, respectively. The
Company's ability to make scheduled payments of the principal of, or interest
on, or to refinance its indebtedness (including the Notes) depends on its future
performance, which to a certain extent is subject to economic, financial,
competitive and other factors beyond its control.
The Company believes that cash flow from operations of its subsidiaries,
together with borrowings under the credit facilities of UpRight and Horizon,
will be adequate to meet its anticipated requirements for working capital,
capital expenditures, interest payments and scheduled principal payments. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources." However, any decline in the
Company's expected operating performance could have a material adverse effect on
the Company's liquidity and on its ability to service its debt and make capital
expenditures. There can be no assurance that the Company's businesses will
generate cash flow at or above expected levels. If the Company is unable to
generate sufficient cash flow from operations in the future to service its debt
and make desired capital expenditures, or if its future earnings are
insufficient to make all required principal or interest payments out of
internally generated funds, the Company may be required to refinance all or a
portion of its existing debt, 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 on terms acceptable to the
Company or at all, particularly in view of the Company's high level of debt.
The Company's high level of debt will have several important effects on its
future operations, including the following: (a) the Company will have
significant cash requirements to service debt, reducing funds available for
operations, expansions and improvements and increasing the Company's
vulnerability to adverse general economic and industry conditions; (b) the
financial covenants and other restrictions contained in the credit facilities of
UpRight and Horizon, the Indenture and other agreements relating to the
Company's indebtedness require the Company to meet certain financial tests and
restrict its ability, and the ability of its Restricted Subsidiaries, to borrow
additional funds and to dispose of assets; and (c) because of the Company's debt
service requirements, funds available for working capital, capital expenditures,
acquisitions and general corporate purposes may be limited. The Company's
leveraged position may increase its vulnerability to competitive pressures and
the seasonality and cyclicality of the aerial work platform and construction
industries.
INDUSTRY CYCLICALITY; DEPENDENCE ON CONSTRUCTION INDUSTRY
Demand for new equipment manufactured by UpRight tends to be cyclical,
responding historically to varying levels of construction and industrial
activity, principally in the United States and, to a lesser extent, in other
countries. Industry growth was adversely affected by the severe downturn in
commercial construction between 1990 and 1992. From 1989 to 1991, according to
data reported by EMI, total industry unit shipments of scissor lifts and boom
lifts fell 34%, from 17,806 units to 11,748 units. During the same period,
UpRight's unit shipments of scissor lifts fell 33%, from 2,259 units to 1,508
units. There can be no assurance that the construction industry will not
experience a downturn in the future and that the Company's results of operations
will not be materially adversely impacted. Other factors affecting demand
include the availability and cost of financing for equipment purchases and the
market availability of used equipment. UpRight's management continuously
monitors these and other factors that affect demand for its equipment and
products; however, predicting levels of demand beyond a short period of time is
necessarily imprecise and demand may at times change dramatically.
19
<PAGE> 21
The equipment rental industry is also dependent upon the level of activity
in the commercial construction and industrial segments. Accordingly, the
equipment rental industry is sensitive to national, regional and local slowdowns
in commercial construction, as well as in particular industries. A significant
portion of Horizon's revenue is derived from customers in the construction
industry, which is highly cyclical and subject to downturns during economic
slowdowns. Consequently, Horizon's operating results may be materially adversely
affected by events or conditions in a particular region where it operates, such
as regional economic slowdowns and other factors. In addition, the Company's
operating results may be materially adversely affected by increases in interest
rates that may lead to a decline in economic activity and by adverse weather
that may lead to a decline in construction activity. There can be no assurance
that economic slowdowns or adverse conditions would not have a material adverse
affect on the Company's operating results and financial condition.
CONSOLIDATING CUSTOMER BASE; DEPENDENCE UPON MAJOR CUSTOMERS
The principal customers for UpRight's new equipment are independent
equipment distributors that primarily rent UpRight's products and provide
service support to equipment users. In recent years, there has been substantial
consolidation in ownership among rental companies, including certain customers
of UpRight, resulting in a more limited number of major customers comprising a
substantial portion of UpRight's revenue. The Company believes this
consolidation may change the relative bargaining leverage between aerial work
platform manufacturers and their customers, thereby increasing unit pricing
pressure. During fiscal years 1994, 1995 and 1996 and during the latest twelve
months ended March 30, 1997, other than Horizon, UpRight's ten largest customers
together accounted for approximately 30%, 43%, 43% and 40%, respectively, of
UpRight's revenue. Unanticipated purchasing decisions by any of these major
customers could materially adversely affect overall demand for UpRight's
products and the Company's financial performance. During recessionary
conditions, demand for equipment by equipment rental companies typically
declines more sharply than demand for equipment purchased by end users. In
addition, rental companies have accelerated the turnover of their rental fleets,
which has increased sales of aerial work platforms. There can be no assurance
that this trend will continue or that current equipment replacement policies
will be maintained.
RISKS RELATING TO GROWTH
A principal component of the Company's strategy is to continue to grow
profitably in both existing and new markets by expanding its facilities and
product lines and acquiring aerial work platform component manufacturing
companies, in the case of UpRight, and expanding its rental fleet and acquiring
or opening new rental locations, in the case of Horizon. The Company's future
growth will be dependent upon a number of factors, including the Company's
ability to successfully implement its capital expansion programs, identify
acceptable acquisition candidates, consummate acquisitions and obtain sites for
startup locations on favorable terms, successfully integrate acquired businesses
and startup locations with the Company's existing operations, expand its
customer base at existing and acquired locations and obtain financing to support
its acquisitions and planned expansion. Given the cyclical nature of demand in
the aerial work platform industry, capital investments to build or acquire
additional manufacturing facilities involve significant risks. The Company may
postpone, delay or forego any or all of its capital expansion programs depending
on market or economic conditions or the Company's financial results or revised
internal forecasts or budgets. There can be no assurance that the intended
benefits of the capital expansion programs will be realized either by
implementing such programs or, alternatively, growing through acquisitions.
As a result of the planned expansion of its facilities and product lines,
acquisitions and the opening of startup locations, the Company will experience
growth in the number of its employees, the scope of its operating and financial
systems and in the geographic area of its operations. This growth will increase
the operating complexity of the Company and the level of responsibility for both
existing and new management personnel. To manage this expected growth, the
Company intends to invest further in its operating and financial systems and to
continue to expand, train and manage its employee base. There can be no
assurance that the Company will be able to attract and retain qualified
management employees, that the Company's
20
<PAGE> 22
current operating and financial systems and controls will be adequate as the
Company grows, or that any steps taken to attract and retain such employees and
to improve such systems and controls will be sufficient.
SIGNIFICANCE OF NEW PRODUCT DEVELOPMENT
UpRight has devoted substantial resources to product development. New
products and models introduced by UpRight since January 1, 1994, accounted for
approximately 76% and 79% of UpRight's revenue during fiscal 1996 and the latest
twelve months ended March 30, 1997, respectively. As part of its growth
strategy, UpRight is developing and introducing additional new products,
including a full line of boom lifts, and is enhancing the functions, features
and options available on its existing products. There can be no assurance that
UpRight will be able to introduce these or any other new products or
enhancements in a timely manner in accordance with customer demand, that such
products will not become obsolete prior to introduction, that the capital
investments made to develop and market new or enhanced products will be
recovered, or that such products will be accepted by the market when introduced.
Successful product innovation by UpRight's competitors that reach the market
prior to comparable innovation by UpRight or that are amenable to patent
protection may materially adversely affect the Company's financial performance.
NEED FOR CONTINUAL CAPITAL EXPENDITURES
A principal component of Horizon's strategy is to provide its rental
customers with relatively new, highquality, well-maintained equipment. Horizon
estimates that to remain competitive it needs to replace approximately 15% of
its rental fleet each year. In addition, Horizon's business strategy
contemplates significant expansion of the size of its rental fleet and the
number of its rental locations. The annual replacement of equipment and the
continued expansion of Horizon's business will require significant capital
expenditures.
Similarly, UpRight's strategy to expand and extend its product lines and to
enhance its manufacturing capacity and efficiency will require significant
capital expenditures. See "Capital Expansion Program." There can be no assurance
that the Company in the future will have capital sufficient to fund such planned
or additional expenditures.
COMPETITION
The Company faces substantial competition, and some of the Company's
competitors are, or in the future may be, owned by larger enterprises that may
have greater financial resources and offer wider product lines than the Company.
The aerial work platform industry is highly competitive. In selling its
aerial work platform products, UpRight experiences two principal types of
competition: from other manufacturers of aerial work platforms and from
alternative equipment. UpRight competes in the aerial work platform industry
primarily with several other manufacturers, including JLG Industries, Grove
Worldwide, Skyjack and Genie Industries, which each manufacture scissor lifts,
boom lifts and portable lifts, Snorkel and Terex, which each manufacture scissor
lifts and boom lifts, and Mayville Engineering Company, which manufactures
scissor lifts and portable lifts. UpRight has recently introduced its first boom
lift product line and is currently developing additional boom lift product
lines. Several of UpRight's competitors currently offer a more comprehensive
boom lift product line. There can be no assurance that UpRight's boom lift
product lines can successfully compete against other leading manufacturers of
boom lifts. UpRight also competes with more traditional means of accomplishing
the tasks performed by aerial work platforms, including truck- and
trailer-mounted booms and, to a more limited extent, ladders, scaffolding and
other devices.
Certain of UpRight's competitors are part of, or are affiliated with,
companies that are larger and have greater financial resources than UpRight.
Several of UpRight's competitors have significantly increased or are in the
process of significantly increasing their manufacturing capacity. There can be
no assurance that this increased manufacturing capacity will not result in
increased unit pricing pressure.
21
<PAGE> 23
The equipment rental industry is highly competitive as well. Horizon's
competitors include national and multiregional companies, such as Prime Service,
US Rentals and Hertz Equipment Rental, regional competitors that operate in a
small number of states, small, independent businesses with one or a few rental
locations, and equipment vendors and dealers which both sell and rent equipment
directly to end users. There can be no assurance that manufacturers of the
equipment that Horizon rents will not commence or increase their efforts to rent
or resell such equipment directly to Horizon's customers. In addition, to the
extent existing or future competitors seek to gain or retain market share by
reducing rental rates and/or sales prices, Horizon may be required to lower its
prices, thereby adversely affecting the operating results of the Company.
The Company may also compete for acquisition candidates, thereby possibly
increasing the price for acquisitions or reducing the number of desirable
acquisition candidates and for startup locations, thereby possibly limiting the
number of attractive locations for expansion. There can be no assurance that
Horizon will not encounter increased competition from existing competitors and
new market entrants.
PRODUCT LIABILITY; INSURANCE
Use of products manufactured by UpRight and sold or rented by Horizon
involves risks of personal injury and property damage for the user and liability
exposure for the Company, UpRight and Horizon. UpRight insures against this
liability through a combination of a self-insurance retention and catastrophic
coverage in excess of the retention. UpRight monitors all incidents of which it
becomes aware involving the use of its products that result in personal injury
or property damage, and establishes accrued liability reserves on its financial
statements based on liability estimates with respect to claims arising from such
incidents. Future or unreported incidents involving personal injury or property
damage or unanticipated variances between actual liabilities for known incidents
and Company estimates may adversely affect the Company's financial performance.
Horizon maintains general liability insurance coverage for its operations
and activities. Each of UpRight and Horizon carries coverage for general and
automobile liability and workers' compensation claims from various insurance
carriers. There can be no assurance, however, that existing or future claims
will not exceed the level of such insurance coverage, or that such insurance
will continue to be available on economically reasonable terms, or at all. In
addition, certain types of claims, such as claims for punitive damages or for
damages arising from intentional misconduct, generally are not covered by
UpRight's or Horizon's insurance. See "Business -- Legal Proceedings,
Environmental and Regulatory Matters and Employees."
AVAILABILITY OF PRODUCT COMPONENTS; RELIANCE ON SUPPLIERS
UpRight obtains raw materials and certain manufactured components from
third-party suppliers, including original equipment manufacturers and
independent distributors. To reduce materials costs and inventories, UpRight
relies on arrangements with preferred vendors as a sole source for just-in-time
delivery of many manufactured components, such as hydraulic motors, power units
and cylinders, custom wheels and tires and castings. Because UpRight maintains
limited raw materials inventories and relies on sole source suppliers for
certain of its components, even brief unanticipated delays in delivery by
suppliers, including due to labor disputes, impaired financial condition of
suppliers, weather conditions or other natural disasters, may materially
adversely affect UpRight's ability to satisfy its customers on a timely basis
and thereby adversely affect UpRight's financial performance.
FOREIGN SALES
During fiscal years 1994, 1995 and 1996 and the twelve months ended March
30, 1997, approximately 31%, 27%, 27% and 37%, respectively, of UpRight's
revenue resulted from export sales to Europe and the Pacific Rim. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations." A key element of UpRight's growth strategy is to continue to
increase export sales, and management expects that export sales as a percentage
of UpRight's revenue will continue to increase. Export sales subject UpRight to
a variety of risks, including changes in political and economic conditions,
differing legal practices, particularly in regard to product liability claims,
extended payment terms and changes in taxation, freight rates
22
<PAGE> 24
and foreign exchange rates. There can be no assurance that the foregoing
factors, individually or in the aggregate, will not have a material adverse
effect on UpRight's future revenue from export sales or its financial
performance.
GOVERNMENT AND ENVIRONMENTAL REGULATION
The Company's operations are subject to various federal, state and local
laws and regulations governing, among other things, worker safety, operation of
its delivery fleet, air emissions, water discharge and the generation, handling,
storage, transportation, treatment and disposal of hazardous substances and
wastes. Under such laws, an owner or operator of a facility may be liable for
the costs of removal or remediation of certain hazardous or toxic substances
located on or in, or emanating from, it and related costs of investigation, as
well as property and other damages. Such laws often impose liability without
regard to whether the owner or operator knew of, or was responsible for, the
presence of such substances at its facility. There can be no assurance that
acquired, leased or other operated facilities have been operated in compliance
with all environmental laws and regulations or that future uses or conditions
will not result in the imposition of environmental liability upon the Company or
expose the Company to third-party actions such as tort suits. See
"Business -- Legal Proceedings, Environmental and Regulatory Matters and
Employees."
LABOR MATTERS
Certain of Horizon's employees are currently represented by a labor union.
See "Business -- Legal Proceedings, Environmental and Regulatory Matters and
Employees -- Employees." Certain of UpRight's employees are approached from time
to time by union representatives. As UpRight and Horizon implement their growth
strategies and becomes larger, they may become the target of increased union
activity. Management of UpRight and Horizon are unable to predict whether, if
solicited, any of their non-union employees will elect to be represented by a
labor union or other collective bargaining organization. Accordingly, there can
be no assurance that the Company will continue to benefit from its current labor
conditions for an extended period of time. On June 27, 1997, the United
Paperworkers International Union petitioned the National Labor Relations Board
to hold an election to certify the union as the exclusive representative for
permanent UpRight employees at its Selma, California facility. While UpRight
management believes that its employee relations are good, in the event that such
an election takes place which results in unionization of UpRight's Selma
employees, there can be no assurance that the effect thereof would not have a
material adverse effect on the Company's business and financial condition.
HOLDING COMPANY STRUCTURE
All of the Company's income is generated by its operating subsidiaries,
UpRight and Horizon. As a result, the Company will be dependent on the earnings
and cash flow of, and dividends and distributions or advances from, its
subsidiaries to provide the funds necessary to meet its debt service
obligations, including the payment of principal of and interest on the Notes. In
particular, the Company is heavily dependent upon the operations of UpRight,
which accounted for approximately 68% and 67% of the Company's revenue (after
giving effect to intercompany elimination with Horizon) for fiscal 1996 and the
latest twelve months ended March 30, 1997, respectively. There can be no
assurance that the Company's subsidiaries will generate sufficient cash flow to
dividend, distribute or advance funds to the Company. Should the Company fail to
satisfy any payment obligation under the Notes, the holders thereof would have a
direct claim therefor against the Guarantors pursuant to the Guarantees.
SUBORDINATION OF THE NOTES AND THE GUARANTEES
The payment of principal of, premium and interest on, and any other amounts
owing in respect of, the Notes is subordinated to the prior payment in full of
all existing and future Senior Indebtedness of the Company. Similarly, the
Guarantees of the Guarantors will be subordinated in right of payment to all
Senior Indebtedness of the respective Guarantors. At March 30, 1997, after
giving pro forma effect to the offering of the Original Notes and the
application of the net proceeds thereof, UpRight and Horizon would have had $5.7
million and $0.0, respectively, of Senior Indebtedness outstanding. In addition,
UpRight and Horizon
23
<PAGE> 25
would have had $4.0 million and $3.0 million, respectively, of undrawn
commitments available under their respective credit facilities. The Indenture
limits, but does not prohibit, the incurrence by the Company and the Guarantors
of indebtedness which constitutes Senior Indebtedness. In the event of the
bankruptcy, liquidation, dissolution, reorganization or other winding up of the
Company or its subsidiaries, the assets of the Company or such subsidiary will
be available to pay obligations on the Notes or the Guarantees, as the case may
be, only after all Senior Indebtedness has been paid in full in cash, and there
may not be sufficient assets remaining to pay amounts due on any or all of the
Notes. In addition, under certain circumstances, the Company and its
subsidiaries may not pay principal of, premium or interest on, or any other
amounts owing in respect of, the Notes, or purchase, redeem or otherwise retire
the Notes, if a payment default or a non-payment default exists with respect to
certain Senior Indebtedness, and, in the case of a non-payment default, a
payment blockage notice has been received by the Trustee (as defined). See
"Description of the Notes -- Subordination."
RESTRICTIONS UNDER DEBT AGREEMENTS
The Indenture contains covenants that, among other things, limit the
ability of the Company and its Restricted Subsidiaries to incur additional
indebtedness, incur liens, pay dividends and make certain other restricted
payments, make investments, consummate certain asset sales, enter into certain
transactions with affiliates, issue subsidiary stock, create dividend or other
payment restrictions affecting Restricted Subsidiaries, consolidate or merge
with any other person or transfer all or substantially all of the assets of the
Company. See "Description of the Notes -- Certain Covenants."
In addition, any credit facilities that the Company and its subsidiaries
may enter into may contain restrictive covenants that will limit the ability of
the Company and its subsidiaries to prepay their indebtedness (including the
Notes and obligations under the Guarantees). Such credit facilities may also
require the borrowers thereunder to maintain specified consolidated financial
ratios and satisfy certain consolidated financial tests. UpRight's and Horizon's
ability to meet applicable financial ratios and financial tests can be affected
by events beyond their control, and there can be no assurance that UpRight or
Horizon will meet those ratios and tests. A breach of any of the covenants under
any credit facilities or the Indenture could result in a default under such
credit facilities and/or the Indenture. If an event of default occurs under any
credit facilities, the respective lenders could elect to declare all amounts
outstanding thereunder, together with accrued interest, to be immediately due
and payable. If the Company, UpRight or Horizon is unable to repay those
amounts, the lenders could proceed against the collateral granted to them to
secure that indebtedness. A substantial portion of the Company's consolidated
assets will be pledged to secure such credit facilities. See "Description of the
Notes" and "Description of Certain Indebtedness."
FRAUDULENT CONVEYANCE
In certain circumstances, the incurrence by the Company of indebtedness
such as the Notes may be subject to review under relevant state and federal
fraudulent conveyance laws if a bankruptcy case or lawsuit is commenced by or on
behalf of unpaid creditors of the Company. Under these laws, if a court were to
find that, after giving effect to the sale of the Notes and the application of
the net proceeds therefrom, either (a) the Company incurred such indebtedness
with the intent of hindering, delaying or defrauding creditors or contemplated
insolvency with a design to prefer one or more creditors to the exclusion in
whole or in part of others or (b) the Company received less than reasonably
equivalent value or consideration for incurring such indebtedness and (i) was
insolvent or rendered insolvent by reason of such transaction, (ii) was engaged
in a business or transaction for which the assets remaining with the Company
constituted unreasonably small capital or (iii) intended to incur, or believed
that it would incur, debts beyond its ability to pay such debts as they matured,
such court may subordinate such indebtedness to presently existing and future
indebtedness of the Company, avoid the issuance of such indebtedness and direct
the repayment of any amounts paid thereunder to the Company's creditors or take
other action detrimental to the holders of such indebtedness.
The Company's obligations under the Notes will be guaranteed by the
Guarantors. In certain circumstances, the incurrence by a Guarantor of a
Guarantee may be subject to review under relevant state and
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<PAGE> 26
federal fraudulent conveyance laws if a bankruptcy case or lawsuit is commenced
by or on behalf of unpaid creditors of such Guarantor. Under these laws, if a
court were to find that either (a) a Guarantee was incurred by a Guarantor with
the intent of hindering, delaying or defrauding creditors or such Guarantor
contemplated insolvency with a design to prefer one or more creditors to the
exclusion in whole or in part of others or (b) such Guarantor received less than
reasonably equivalent value or consideration for incurring such Guarantee and
(i) was insolvent or rendered insolvent by reason of such transaction, (ii) was
engaged in a business or transaction for which the assets remaining with such
Guarantor constituted unreasonably small capital or (iii) intended to incur, or
believed that it would incur, debts beyond its ability to pay such debts as they
matured, such court may subordinate such Guarantee to presently existing and
future indebtedness of such Guarantor, avoid the issuance of such Guarantee and
direct the repayment of any amounts paid thereunder to such Guarantor's
creditors or take other action detrimental to the holders of such Guarantee. A
legal challenge of a Guarantee on fraudulent conveyance grounds, may, among
other things, focus on the benefits, if any, realized by the Guarantor as a
result of the issuance of the Notes by the Company.
To the extent any Guarantee were voided as a fraudulent conveyance or held
unenforceable for any other reason, holders of the Notes would cease to have any
claim in respect of such Guarantor and would be creditors solely of the Company
and any Guarantor whose Guarantee was not voided or held unenforceable. In such
event, the claims of the holders of the applicable Notes against the issuer of
an invalid Guarantee would be subject to the prior payment of all liabilities
and preferred stock claims of such Guarantor. There can be no assurance that,
after providing for all prior claims and preferred stock interests, if any,
there would be sufficient assets to satisfy the claims of the holders of the
applicable Notes relating to any voided portions of any of the Guarantees.
The measure of insolvency for purposes of determining whether a transfer is
voidable as a fraudulent conveyance varies depending upon the law of the
jurisdiction which is being applied. Generally, however, a debtor would be
considered insolvent if the sum of all its liabilities, including contingent
liabilities, were greater than the value of all its property at a fair
valuation, or if the present fair salable value of the debtor's assets were less
than the amount required to repay its probable liabilities on debts, including
contingent liabilities, as they become absolute and matured.
Based upon financial and other information currently available to it,
management of the Company believes that the Notes and the Guarantees are being
incurred for proper purposes and in good faith and that, at the time the Notes
and the Guarantees are issued, the Company and each Guarantor, as the case may
be, will be (i) neither insolvent nor rendered insolvent thereby, (ii) in
possession of sufficient capital to run its business effectively and (iii)
incurring debts within its ability to pay as the same mature or become due. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources." In reaching these conclusions,
the Company has relied upon various valuations and estimates of future cash flow
that necessarily involve a number of assumptions and choices of methodology. No
assurance can be given, however, that the assumptions and methodologies chosen
by the Company would be adopted by a court or that a court would concur with the
Company's conclusions.
CONTROL BY SOLE STOCKHOLDER
All of the Company's common stock is owned by UpRight International
Limited, which has the ability to elect all of the directors and control the
business, policies and affairs of the Company and its subsidiaries. See
"Security Ownership of Certain Beneficial Owners."
CHANGE OF CONTROL
In the event of a Change of Control, the Company will be required to offer
to purchase all of the outstanding Notes at 101% of the principal amount
thereof, plus any accrued and unpaid interest thereon to the date of the
purchase. The exercise by the holders of the Notes of their right to require the
Company to purchase the Notes upon a Change of Control could also cause a
default under other indebtedness of the Company, even if the Change of Control
itself does not, because of the financial effect of such purchase on the
Company. The Company's ability to pay cash to the holders of the Notes upon a
purchase may be limited by
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<PAGE> 27
the Company's then-existing financial resources. There can be no assurance that,
in the event of a Change of Control, the Company will have, or will have access
to, sufficient funds or will be contractually permitted under the terms of
outstanding indebtedness to pay the required purchase price for all Notes
tendered by holders upon a Change of Control. See "Description of the
Notes -- Change of Control Offer."
ABSENCE OF PUBLIC MARKET; RESTRICTIONS ON TRANSFER
There is no existing market for the Notes, and the Company does not intend
to apply for listing of the Notes on any securities exchange. There can be no
assurance as to the liquidity of any markets that may develop for the Notes, the
ability of holders of the Notes to sell their Notes, or the price at which
holders would be able to sell their Notes. Future trading prices of the Notes
will depend on many factors, including, among other things, prevailing interest
rates, the Company's operating results and the market for similar securities.
The Initial Purchasers have advised the Company that they currently intend to
make a market in the Notes. However, the Initial Purchasers are not obligated to
do so and any market making may be discontinued at any time without notice.
PROCEDURES FOR TENDER OF ORIGINAL NOTES
The Exchange Notes will be issued in exchange for Original Notes only after
timely receipt by the Exchange Agent of such Original Notes, a properly
completed and duly executed Letter of Transmittal and all other required
documents. Therefore, holders of Original Notes desiring to tender such Original
Notes in exchange for Exchange Notes should allow sufficient time to ensure
timely delivery. Neither the Exchange Agent nor the Company is under any duty to
give notification of defects or irregularities with respect to tenders of
Original Notes for exchange. Any holder of Original Notes who tenders in the
Exchange Offer for the purpose of participating in a distribution of the
Exchange Notes will be required to comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any resale
transaction. Each broker-dealer that receives Exchange Notes for its own account
in exchange for Original Notes, where such Original Notes were acquired by such
broker-dealer as a result of market-making activities or any other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Notes. See "Plan of Distribution."
CONSEQUENCES OF FAILURE TO EXCHANGE ORIGINAL NOTES
The Original Notes have not been registered under the Securities Act and
are subject to substantial restrictions on transfer. Original Notes that are not
tendered in exchange for Exchange Notes or are tendered but not accepted will,
following consummation of the Exchange Offer, continue to be subject to the
existing restrictions upon transfer thereof. The Company does not currently
anticipate that it will register the Original Notes under the Securities Act. To
the extent that Original Notes are tendered and accepted in the Exchange Offer,
the trading market for untendered and tendered but unaccepted Original Notes
could be adversely affected. See "The Exchange Offer -- Consequences of Failure
to Exchange."
THE EXCHANGE OFFER
PURPOSES AND EFFECTS OF THE EXCHANGE OFFER
The Original Notes were sold by the Company on June 10, 1997 (the "Issue
Date") to the Initial Purchasers pursuant to a Securities Purchase Agreement
dated as of June 4, 1997 (the "Purchase Agreement"). As a condition to the sale
of the Original Notes, the Company and the Initial Purchasers entered into the
Registration Rights Agreement on the Issue Date. Pursuant to the Registration
Rights Agreement, the Company agreed that, unless the Exchange Offer is not
permitted by applicable law or Commission policy, it would (i) file with the
Commission a Registration Statement under the Securities Act with respect to the
Exchange Notes within 45 days after the Issue Date, (ii) use its best efforts to
cause such Registration Statement to become effective under the Securities Act
within 135 days after the Issue Date and (iii) upon effectiveness of the
Registration Statement, commence the Exchange Offer, keep the Exchange
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<PAGE> 28
Offer open for at least 30 days (or a longer period if required by law) and
deliver to the Exchange Agent Exchange Notes in the same aggregate principal
amount at maturity as the Original Notes that were tendered by holders thereof
pursuant to the Exchange Offer. Under existing Commission interpretations, the
Exchange Notes would in general be freely transferable after the Exchange Offer
without further registration under the Securities Act; provided, that in the
case of broker-dealers, a prospectus meeting the requirements of the Securities
Act will be delivered as required. The Company has agreed to make available a
prospectus meeting the requirements of the Securities Act to any broker-dealer
for use in connection with any resale of any such Exchange Notes acquired as
described below for such period of 180 days after the Expiration Date. A broker-
dealer that delivers such a prospectus to purchasers in connection with such
resales will be subject to certain of the civil liability provisions under the
Securities Act, and will be bound by the Registration Rights Agreement
(including certain indemnification rights and obligations). A copy of the
Registration Rights Agreement has been filed as an exhibit to the Registration
Statement of which this Prospectus is a part. The Registration Statement of
which this Prospectus is a part is intended to satisfy certain of the Company's
obligations under the Registration Rights Agreement and the Purchase Agreement.
The Company is generally not required to file any registration statement to
register any outstanding Original Notes. Holders of Original Notes who do not
tender their Original Notes or whose Original Notes are tendered but not
accepted will have to rely on exemptions to registration requirements under the
securities laws, including the Securities Act, if they wish to sell their
Original Notes.
With respect to the Exchange Notes, based upon an interpretation by the
staff of the Commission set forth in certain no-action letters issued to third
parties, the Company believes that a holder (other than (i) a broker-dealer who
purchases such Exchange Notes directly from the Company to resell pursuant to
Rule 144A or any other available exemption under the Securities Act or (ii) any
such holder which is an "affiliate" of the Company (within the meaning of Rule
405 under the Securities Act)) who exchanges Original Notes for Exchange Notes
in the ordinary course of business and who is not participating, does not intend
to participate, and has no arrangement with any person to participate, in the
distribution of the Exchange Notes, will be allowed to resell the Exchange Notes
to the public without further registration under the Securities Act and without
delivering to the purchasers of the Exchange Notes a prospectus that satisfies
the requirements of Section 10 of the Securities Act. However, if any holder
acquires the Exchange Notes in the Exchange Offer for the purpose of
distributing or participating in the distribution of the Exchange Notes or is a
broker-dealer, such holder cannot rely on the position of the staff of the
Commission enumerated in certain no-action letters issued to third parties and
must comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction, unless an exemption
from registration is otherwise available. Each broker-dealer that receives
Exchange Notes for its own account in exchange for Original Notes, where such
Original Notes were acquired by such broker-dealer as a result of market-making
activities or other trading activities, must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Notes. The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of Exchange Notes received in exchange for Original Notes where
such Original Notes were acquired by such broker-dealer as a result of
market-making or other trading activities. Pursuant to the Registration Rights
Agreement, the Company has agreed to make this Prospectus, as it may be amended
or supplemented from time to time, available to broker-dealers for use in
connection with any resale for a period of 180 days after the Expiration Date.
See "Plan of Distribution."
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the accompanying Letter of Transmittal, the Company will accept any and
all Original Notes validly tendered and not withdrawn prior to the Expiration
Date. The Company will issue $1,000 principal amount of Exchange Notes in
exchange for each $1,000 principal amount of outstanding Original Notes
surrendered pursuant to the Exchange Offer. Holders may tender some or all of
their Original Notes pursuant to the Exchange Offer; provided, however,
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<PAGE> 29
that Original Notes may be tendered only in integral multiples of $1,000. The
Exchange Offer is not conditioned upon any minimum aggregate principal amount of
Original Notes being tendered for exchange.
The form and terms of the Exchange Notes are the same as the form and terms
of the Original Notes except that (i) the Exchange Notes will be registered
under the Securities Act and, therefore, will not bear legends restricting their
transfer and (ii) holders of the Exchange Notes will not be entitled to certain
rights of holders of Original Notes under the Registration Rights Agreement,
which rights will terminate upon the consummation of the Exchange Offer. The
Exchange Notes will evidence the same debt as the Original Notes (which they
replace) and will be issued under, and be entitled to the benefits of, the
Indenture, which also authorized the issuance of the Original Notes, such that
all outstanding Notes will be treated as a single class of debt securities under
the Indenture.
Interest on the Exchange Notes will accrue from the most recent date to
which interest has been paid on the Original Notes or, if no interest has been
paid, from June 10, 1997. Accordingly, registered holders of Exchange Notes on
the relevant record date for the first interest payment date following the
consummation of the Exchange Offer will receive interest accruing from the most
recent date to which interest has been paid or, if no interest has been paid,
from June 10, 1997. Original Notes accepted for exchange will cease to accrue
interest from and after the date of the consummation of the Exchange Offer.
Holders whose Original Notes are accepted for exchange will not receive any
payment in respect of interest on such Original Notes otherwise payable on any
interest payment date, the record date for which occurs on or after consummation
of the Exchange Offer.
As of the date of this Prospectus, $105,000,000 aggregate principal amount
of the Original Notes are outstanding and registered in the name of Cede & Co.,
as nominee for The Depository Trust Company (the "Depository" or "DTC"). Only a
registered holder of the Original Notes (or such holder's legal representative
or attorney-in-fact) as reflected on the records of the Trustee under the
Indenture may participate in the Exchange Offer. There will be no fixed record
date for determining registered holders of the Original Notes entitled to
participate in the Exchange Offer.
Holders of the Original Notes do not have any appraisal or dissenters'
rights under the Indenture in connection with the Exchange Offer. The Company
intends to conduct the Exchange Offer in accordance with the provisions of the
Registration Rights Agreement and the applicable requirements of the Securities
Act, the Exchange Act and the rules and regulations of the Commission
thereunder.
The Company shall be deemed to have accepted validly tendered Original
Notes when, as and if the Company has given oral or written notice thereof to
the Exchange Agent. The Exchange Agent will act as agent for the tendering
holders of Original Notes for the purposes of receiving the Exchange Notes from
the Company.
If any tendered Original Notes are not accepted for exchange because of an
invalid tender, or due to the occurrence of certain other events set forth
herein or otherwise, certificates for any such unaccepted Original Notes will be
returned without expense to the tendering holders thereof (or in the case of
Original Notes tendered by book-entry transfer, such Original Notes will be
credited to the account of such holder maintained at the Depository), as
promptly as practicable after the expiration or termination of the Exchange
Offer.
Holders who tender Original Notes in the Exchange Offer will not be
required to pay brokerage commissions or fees or, subject to the instructions in
the Letter of Transmittal, transfer taxes with respect to the exchange of Notes
pursuant to the Exchange Offer. The Company will pay all charges and expenses,
other than certain applicable taxes described below, in connection with the
Exchange Offer. See "-- Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; TERMINATION
The term "Expiration Date" shall mean 5:00 p.m., New York City time, on
, 1997, unless the Company, in its sole discretion, extends the
Exchange Offer, in which case the term "Expiration Date" shall mean the latest
date and time to which the Exchange Offer is extended.
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In order to extend the Exchange Offer, the Company will notify the Exchange
Agent of any extension by oral (promptly confirmed in writing) or written notice
and will make a public announcement thereof, each prior to 9:00 a.m., New York
City time, on the next business day after the previously scheduled expiration
date of the Exchange Offer. Without limiting the manner in which the Company may
choose to make a public announcement of any delay, extension, amendment or
termination of the Exchange Offer, the Company shall have no obligation to
publish, advertise or otherwise communicate any such public announcement, other
than by making a timely release to an appropriate news agency.
The Company reserves the right, in its sole discretion, (i) to delay
accepting any Original Notes, (ii) to extend the Exchange Offer, (iii) if any
conditions set forth below under "-- Certain Conditions to the Exchange Offer"
shall not have been satisfied, to terminate the Exchange Offer by giving oral or
written notice of such delay, extension or termination to the Exchange Agent or
(iv) to amend the terms of the Exchange Offer in any manner. Any such delay in
acceptance, extension, termination or amendment will be followed as promptly as
practicable by oral or written notice thereof to the registered holders. If the
Exchange Offer is amended in a manner determined by the Company to constitute a
material change, the Company will promptly disclose such amendment by means of a
prospectus supplement that will be distributed to the registered holders of
Original Notes, and the Company will extend the Exchange Offer for a period of
five to ten business days, depending upon the significance of the amendment and
the manner of disclosure to such registered holders, if the Exchange Offer would
otherwise expire during such five to ten business day period. The rights
reserved by the Company in this paragraph are in addition to the Company's
rights set forth below under the caption "-- Certain Conditions to the Exchange
Offer."
If the Company extends the period of time during which the Exchange Offer
is open, or if it is delayed in accepting for exchange of, or in issuing and
exchanging the Exchange Notes for, any Original Notes, or is unable to accept
for exchange of, or issue Exchange Notes for, any Original Notes pursuant to the
Exchange Offer for any reason, then, without prejudice to the Company's rights
under the Exchange Offer, the Exchange Agent may, on behalf of the Company,
retain all Original Notes tendered, and such Original Notes may not be withdrawn
except as otherwise provided below in "-- Withdrawal of Tenders." The adoption
by the Company of the right to delay acceptance for exchange of, or the issuance
and the exchange of the Exchange Notes, for any Original Notes is subject to
applicable law, including Rule 14e-1(c) under the Exchange Act, which requires
that the Company pay the consideration offered or return the Original Notes
deposited by or on behalf of the holders thereof promptly after the termination
or withdrawal of the Exchange Offer.
PROCEDURES FOR TENDERING
Only a registered holder of Original Notes may tender such Original Notes
in the Exchange Offer. To tender in the Exchange Offer, a holder must complete,
sign and date the Letter of Transmittal, or facsimile thereof, have the
signature thereon guaranteed if required by the Letter of Transmittal and mail
or otherwise deliver such Letter of Transmittal or such facsimile to the
Exchange Agent at the address set forth below under "-- Exchange Agent" for
receipt prior to the Expiration Date. In addition, either (i) certificates for
such Notes must be received by the Exchange Agent along with the Letter of
Transmittal, or (ii) a timely confirmation of a book-entry transfer of such
Notes, if such procedure is available, into the Exchange Agent's account at DTC
pursuant to the procedure for book-entry transfer described below, must be
received by the Exchange Agent prior to the Expiration Date, or (iii) the holder
must comply with the guaranteed delivery procedures described below. See
"-- Guaranteed Delivery Procedures."
Any financial institution that is a participant in the Depository's
Book-Entry Transfer Facility system may make book-entry delivery of the Original
Notes by causing the Depository to transfer such Original Notes into the
Exchange Agent's account in accordance with the Depository's procedure for such
transfer. Although delivery of Original Notes may be effected through book-entry
transfer into the Exchange Agent's account at the Depository, 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
or confirmed by the Exchange Agent at its addresses set forth below under
"-- Exchange Agent" prior to 5:00 p.m., New York City time, on the Expiration
Date. DELIVERY OF DOCUMENTS TO THE DEPOSITORY IN ACCORDANCE WITH ITS PROCEDURES
DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
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The tender by a holder which is not withdrawn prior to the Expiration Date
will constitute a binding agreement between such holder and the Company in
accordance with the terms and subject to the conditions set forth herein and in
the Letter of Transmittal.
THE METHOD OF DELIVERY OF NOTES AND THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF THE
HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN
OVERNIGHT OR HAND DELIVERY SERVICE, PROPERLY INSURED. IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE
EXCHANGE AGENT BEFORE THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR NOTES
SHOULD BE SENT TO THE COMPANY. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS,
DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT THE ABOVE
TRANSACTIONS FOR SUCH HOLDERS.
Any beneficial owner of the Original Notes whose Original Notes are
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee and who wishes to tender should contact the registered holder
promptly and instruct such registered holder to tender on such beneficial
owner's behalf. If such beneficial owner wishes to tender on such owner's own
behalf, such owner must, prior to completing and executing the Letter of
Transmittal and delivering such owner's Original Notes, either make appropriate
arrangements to register ownership of the Notes in such owner's name (to the
extent permitted by the Indenture) or obtain a properly completed assignment
from the registered holder. The transfer of registered ownership may take
considerable time.
If the Letter of Transmittal is signed by a person other than the
registered holder of any Original Notes (which term includes any participants in
DTC whose name appears on a security position listing as the owner of the
Original Notes) or if delivery of the Exchange Notes is to be made to a person
other than the registered holder, such Original Notes must be endorsed or
accompanied by a properly completed bond power, in either case signed by such
registered holder as such registered holder's name appears on such Original
Notes with the signature on the Original Notes or the bond power guaranteed by
an Eligible Institution (as defined below).
Signatures on a Letter of Transmittal or a notice of withdrawal described
below (see "-- Withdrawal of Tenders"), as the case may be, must be guaranteed
by an Eligible Institution unless the Original Notes tendered pursuant thereto
are tendered (i) by a registered holder who has not completed the box entitled
"Special Delivery Instructions" on the Letter of Transmittal or (ii) for the
account of an Eligible Institution. 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 guarantee must be made by a member firm of a registered
national securities exchange or of the National Association of Securities
Dealers, Inc., a commercial bank or trust company having an office or
correspondent in the United States, or another "Eligible Guarantor Institution"
within the meaning of Rule 17Ad-15 under the Exchange Act (any of the foregoing,
an "Eligible Institution").
If the Letter of Transmittal or any Original Notes or assignments 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, evidence satisfactory to the Company of their authority to so act must
be submitted with the Letter of Transmittal.
The Exchange Agent and the Depository have confirmed that any financial
institution that is a participant in the Depository's system may utilize the
Depository's Automated Tender Offer Program to tender Original Notes.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of tendered Original Notes will be
determined by the Company in its sole discretion, which determination will be
final and binding. The Company reserves the absolute right to reject any and all
Original Notes not properly tendered or any Original Notes, the Company's
acceptance of which would, in the opinion of counsel for the Company, be
unlawful. The Company also reserves the right to waive any defects,
irregularities or conditions of tender as to particular Notes. The Company's
interpretation of the terms and conditions of the Exchange Offer (including the
instructions in the Letter of Transmittal) will be final and binding on all
parties. Unless
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<PAGE> 32
waived, any defects or irregularities in connection with tenders of Original
Notes must be cured within such time as the Company shall determine. Although
the Company intends to request the Exchange Agent to notify holders of defects
or irregularities with respect to tenders of Original Notes, neither the
Company, the Exchange Agent nor any other person shall incur any liability for
failure to give such notification. Tenders of Original Notes will not be deemed
to have been made until such defects or irregularities have been cured or
waived.
While the Company has no present plan to acquire any Original Notes which
are not tendered in the Exchange Offer or to file a registration statement to
permit resales of any Original Notes which are not tendered pursuant to the
Exchange Offer, the Company reserves the right in its sole discretion to
purchase or make offers for any Original Notes that remain outstanding
subsequent to the Expiration Date or, as set forth below under "-- Certain
Conditions to the Exchange Offer," to terminate the Exchange Offer and, to the
extent permitted by applicable law, purchase Original Notes in the open market,
in privately negotiated transactions or otherwise. The terms of any such
purchases or offers could differ from the terms of the Exchange Offer.
By tendering, each holder will represent to the Company that, among other
things, (i) the Exchange Notes to be acquired by the holder of the Original
Notes in connection with the Exchange Offer are being acquired by the holder in
the ordinary course of business of the holder, (ii) the holder has no
arrangement or understanding with any person to participate in the distribution
of Exchange Notes, (iii) the holder acknowledges and agrees that any person who
is a broker-dealer registered under the Exchange Act or is participating in the
Exchange Offer for the purpose of distributing the Exchange Notes must comply
with the registration and prospectus delivery requirements of the Securities Act
in connection with a secondary resale transaction of the Exchange Notes acquired
by such person and cannot rely on the position of the staff of the Commission
set forth in certain no-action letters, (iv) the holder understands that a
secondary resale transaction described in clause (iii) above and any resales of
Exchange Notes obtained by such holder in exchange for Original Notes acquired
by such holder directly from the Company should be covered by an effective
registration statement containing the selling securityholder information
required by Item 507 or Item 508, as applicable, of Regulation S-K of the
Commission, and (v) the holder is not an "affiliate," as defined in Rule 405 of
the Securities Act, of the Company. If the holder is a broker-dealer that will
receive Exchange Notes for its own account in exchange for Original Notes that
were acquired as a result of market-making activities or other trading
activities, the holder is required to acknowledge in the Letter of Transmittal
that it will deliver a prospectus in connection with any resale of such Exchange
Notes; however, by so acknowledging and by delivering a prospectus, the holder
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act.
RETURN OF NOTES
If any tendered Original Notes are not accepted for any reason set forth in
the terms and conditions of the Exchange Offer or if Original Notes are
withdrawn or are submitted for a greater principal amount than the holders
desire to exchange, such unaccepted, withdrawn or non-exchanged Original Notes
will be returned without expense to the tendering holder thereof (or, in the
case of Original Notes tendered by book-entry transfer into the Exchange Agent's
account at the Depository pursuant to the book-entry transfer procedures
described below, such Original Notes will be credited to an account maintained
with the Depository) as promptly as practicable.
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with respect
to the Original Notes at the Depository for purposes of the Exchange Offer
within two business days after the date of this Prospectus, and any financial
institution that is a participant in the Depository's system may make book-entry
delivery of Original Notes by causing the Depository to transfer such Original
Notes into the Exchange Agent's account at the Depository in accordance with the
Depository's procedures for transfer. However, although delivery of Original
Notes may be effected through book-entry transfer at the Depository, the Letter
of Transmittal or facsimile thereof, with any required signature guarantees and
any other required documents, must, in any case,
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be transmitted to and received by the Exchange Agent at the address set forth
below under "-- Exchange Agent" on or prior to the Expiration Date or pursuant
to the guaranteed delivery procedures described below. See "-- Guaranteed
Delivery Procedures."
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Original Notes and (i) whose Original
Notes are not immediately available or (ii) who cannot deliver their Original
Notes (or complete the procedures for book-entry transfer), the Letter of
Transmittal or any other required documents to the Exchange Agent prior to the
Expiration Date, may effect a tender if:
(a) the tender is made through an Eligible Institution;
(b) prior to the Expiration Date, the Exchange Agent receives from
such Eligible Institution a properly completed and duly executed 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, the certificate number(s) of such Original Notes (if
available) and the principal amount of Original Notes tendered, stating
that the tender is being made thereby and guaranteeing that, within five
New York Stock Exchange trading days after the Expiration Date, the Letter
of Transmittal (or a facsimile thereof) together with the certificate(s)
representing the Original Notes in proper form for transfer (or a
confirmation of a book-entry transfer into the Exchange Agent's account at
the Depository of Original Notes delivered electronically), and any other
documents required by the Letter of Transmittal will be deposited by the
Eligible Institution with the Exchange Agent; and
(c) such properly executed Letter of Transmittal (or facsimile
thereof), as well as the certificate(s) representing all tendered Original
Notes in proper form for transfer (or a confirmation of a book-entry
transfer into the Exchange Agent's account at the Depository of Original
Notes delivered electronically), and all other documents required by the
Letter of Transmittal are received by the Exchange Agent within five New
York Stock Exchange trading days after the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to holders who wish to tender their Original Notes according to the
guaranteed delivery procedures set forth above.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Original Notes may be
withdrawn at any time prior to the Expiration Date.
To withdraw a tender of Original Notes in the Exchange Offer, a written or
facsimile transmission notice of withdrawal must be received by the Exchange
Agent at its address set forth herein prior to the Expiration Date. Any such
notice of withdrawal must (i) specify the name of the person having deposited
the Original Notes to be withdrawn (the "Depositor"), (ii) identify the Original
Notes to be withdrawn (including the certificate number or numbers (if
applicable) and principal amount of such Original Notes), and (iii) be signed by
the holder in the same manner as the original signature on the Letter of
Transmittal by which such Original Notes were tendered (including any required
signature guarantees). All questions as to the validity, form and eligibility
(including time of receipt) of such notices will be determined by the Company in
its sole discretion, whose determination shall be final and binding on all
parties. Any Original Notes so withdrawn will be deemed not to have been validly
tendered for purposes of the Exchange Offer and no Exchange Notes will be issued
with respect thereto unless the Original Notes so withdrawn are validly
retendered. Properly withdrawn Notes may be retendered by following one of the
procedures described above under "-- Procedures for Tendering" at any time prior
to the Expiration Date.
CERTAIN CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other term of the Exchange Offer, the Company shall not
be required to accept for exchange, or exchange the Exchange Notes for, any
Original Notes not theretofore accepted for exchange, and
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may terminate or amend the Exchange Offer as provided herein before the
acceptance of such Original Notes, if any of the following conditions exist:
(a) any action or proceeding is instituted or threatened in any court
or by or before any governmental agency with respect to the Exchange Offer
which, in the reasonable judgment of the Company, might impair the ability
of the Company to proceed with the Exchange Offer or have a material
adverse effect on the contemplated benefits of the Exchange Offer to the
Company or there shall have occurred any material adverse development in
any existing action or proceeding with respect to the Company or any of its
subsidiaries; or
(b) there shall have been any material change, or development
involving a prospective change, in the business or financial affairs of the
Company or any of its subsidiaries which, in the reasonable judgment of the
Company, could reasonably be expected to materially impair the ability of
the Company to proceed with the Exchange Offer or materially impair the
contemplated benefits of the Exchange Offer to the Company; or
(c) there shall have been proposed, adopted or enacted any law,
statute, rule or regulation which, in the judgment of the Company, could
reasonably be expected to materially impair the ability of the Company to
proceed with the Exchange Offer or materially impair the contemplated
benefits of the Exchange Offer to the Company; or
(d) any governmental approval which the Company shall, in its
reasonable discretion, deem necessary for the consummation of the Exchange
Offer as contemplated hereby shall have not been obtained.
If the Company determines in its reasonable discretion that any of these
conditions is not satisfied, the Company may (i) refuse to accept any Original
Notes and return all tendered Original Notes to the tendering holders, (ii)
extend the Exchange Offer and retain all Original Notes tendered prior to the
expiration of the Exchange Offer, subject, however, to the rights of holders to
withdraw such Original Notes (see "-- Withdrawal of Tenders") or (iii) waive
such unsatisfied conditions with respect to the Exchange Offer and accept all
properly tendered Original Notes which have not been withdrawn. If such waiver
constitutes a material change to the Exchange Offer, the Company will promptly
disclose such waiver by means of a prospectus supplement that will be
distributed to the registered holders of the Original Notes, and the Company
will extend the Exchange Offer for a period of five to ten business days,
depending upon the significance of the waiver and the manner of disclosure to
the registered holders, if the Exchange Offer would otherwise expire during such
five to ten business day period.
Holders may have certain rights and remedies against the Company under the
Registration Rights Agreement should the Company fail to consummate the Exchange
Offer, notwithstanding a failure of the conditions stated above. Such conditions
are not intended to modify those rights or remedies in any respect.
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 such
condition or may be waived by the Company in whole or in part at any time and
from time to time in the Company's reasonable discretion. The failure by the
Company at any time to exercise the foregoing rights shall not be deemed a
waiver of any such right and each such right shall be deemed an ongoing right
which may be asserted at any time and from time to time.
TERMINATION OF CERTAIN RIGHTS
All rights under the Registration Rights Agreement (including registration
rights) of holders of the Original Notes eligible to participate in this
Exchange Offer will terminate upon consummation of the Exchange Offer except
with respect to the Company's continuing obligations (i) to indemnify the
holders (including any broker-dealers) and certain parties related to the
holders against certain liabilities (including liabilities under the Securities
Act), (ii) to provide, upon the request of any holder of a transfer-restricted
Original Note, the information required by Rule 144A(d)(4) under the Securities
Act in order to permit resales of such Original Notes pursuant to Rule 144A,
(iii) to use its best efforts to keep the Registration Statement effective to
the extent necessary to ensure that it is available for resales of
transfer-restricted
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Original Notes by broker-dealers for a period of 180 days from the date on which
the Registration Statement is declared effective and (iv) to provide copies of
the latest version of the Prospectus to broker-dealers upon their request for a
period of 180 days from the date on which the Registration Statement is declared
effective. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted pursuant to the foregoing provisions, the
Company has been informed that, in the opinion of the Commission, such
indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable.
EXCHANGE AGENT
U.S. Trust Company of California, N.A. has been appointed as Exchange Agent
for the Exchange Offer. All questions and requests for assistance as well as all
correspondence in connection with the Exchange Offer and the Letter of
Transmittal should be addressed to the Exchange Agent, as follows:
By Facsimile:
(212) 420-6155
(For Eligible Institutions Only)
Confirm by Telephone:
(800) 225-2398
By Overnight Courier:
U.S. Trust Company of California, N.A.
c/o United States Trust Company of New York
111 Broadway, Lower Level
New York, New York 10006
Attention: Corporate Trust and Agency Services
By Hand:
U.S. Trust Company of California, N.A.
c/o United States Trust Company of New York
111 Broadway, Lower Level
New York, New York 10006
Attention: Corporate Trust and Agency Services
By Mail:
(insured or registered recommended)
U.S. Trust Company of California, N.A.
c/o United States Trust Company of New York
P.O. Box 841, Peter Cooper Station
New York, New York 10276-0841
Attention: Corporate Trust and Agency Services
Requests for additional copies of this Prospectus, the Letter of
Transmittal or the Notice of Guaranteed Delivery should be directed to the
Exchange Agent.
FEES AND EXPENSES
The expenses of soliciting tenders will be borne by the Company. The
principal solicitation is being made by mail; however, additional solicitation
may be made by telegraph, telephone or in person by officers and regular
employees of the Company and its affiliates.
The Company has not retained any dealer-manager or other soliciting agent
in connection with the Exchange Offer and will not make any payments to brokers,
dealers or others soliciting acceptance of the Exchange Offer. The Company,
however, will pay the Exchange Agent reasonable and customary fees for its
services and will reimburse it for its reasonable out-of-pocket expenses in
connection therewith.
The cash expenses to be incurred in connection with the Exchange Offer will
be paid by the Company and are estimated in the aggregate to be approximately
$200,000. Such expenses include fees and expenses of the Exchange Agent and
Trustee, accounting and legal fees and printing costs, among others.
The Company will pay all transfer taxes, if any, applicable to the exchange
of Original Notes pursuant to the Exchange Offer. If, however, certificates
representing Exchange Notes, or Original Notes for principal amounts not
tendered or acceptable for exchange, are to be delivered to, or are to be issued
in the name of, any person other than the registered holders of the Original
Notes tendered, or if tendered Original Notes are registered in the name of any
person other than the person signing the Letter of Transmittal, or if a transfer
tax is imposed for any reason other than the exchange of Original Notes pursuant
to the Exchange Offer, then the amount of any such transfer taxes (whether
imposed on the registered holder or any other persons) will be payable by the
tendering holder. If satisfactory evidence of payment of such taxes or exemption
therefrom is
34
<PAGE> 36
not submitted with the Letter of Transmittal, the amount of such transfer taxes
will be billed directly to such tendering holder of Original Notes.
ACCOUNTING TREATMENT
The Exchange Notes will be recorded at the same carrying value as the
Original Notes 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 expenses of the Exchange Offer will be amortized over the term
of the Exchange Notes.
CONSEQUENCES OF FAILURE TO EXCHANGE
Participation in the Exchange Offer is voluntary. Holders of the Original
Notes are urged to consult their financial and tax advisors in making their own
decisions on what action to take.
The Original Notes which are not exchanged for the Exchange Notes pursuant
to the Exchange Offer will remain restricted securities. Accordingly, such
Original Notes may be resold only (i) to a person whom the seller reasonably
believes is a qualified institutional buyer (as defined in Rule 144A under the
Securities Act) in a transaction meeting the requirements of Rule 144A, (ii) in
a transaction meeting the requirements of Rule 144 under the Securities Act,
(iii) outside the United States to a foreign person in a transaction meeting the
requirements of Rule 904 under the Securities Act, (iv) in accordance with
another exemption from the registration requirements of the Securities Act (and
based upon an opinion of counsel if the Company so requests), (v) to the Company
or (vi) pursuant to an effective registration statement and, in each case, in
accordance with any applicable securities laws of any state of the United States
or any other applicable jurisdiction.
USE OF PROCEEDS
The Company will not receive any cash proceeds from the issuance of the
Exchange Notes offered hereby. In consideration for issuing the Exchange Notes
as contemplated in this Prospectus, the Company will receive in exchange
Original Notes in like principal amount, the terms of which are substantially
identical to the Exchange Notes. The Original Notes surrendered in exchange for
Exchange Notes will be retired and cancelled and cannot be reissued.
Accordingly, issuance of the Exchange Notes will not result in any increase in
the indebtedness of the Company.
The net proceeds to the Company from the sale of the Original Notes was or
will be used to: (i) repay $1.2 million of outstanding revolving credit
indebtedness of Horizon with a maturity of November 1997 and with an interest
rate of 8.5% as of March 30, 1997; (ii) repay $18.0 million in the aggregate of
various term loans of Horizon with maturities ranging from July 2000 to July
2001 and with interest rates ranging from 8.5% to 9.0%; (iii) repay $9.6 million
of demand indebtedness and accrued interest thereon through March 30, 1997 of
the Company from its parent company, UpRight International Limited, with an
interest rate of 8.25%; (iv) repay $6.9 million of various capital lease
obligations and other debt of UpRight and Horizon with maturities ranging from
June 1997 to February 2002 and with interest rates ranging from 8.0% to 14.4%;
(v) finance its capital expansion program at UpRight, which management currently
estimates will cost approximately $20 million over the next two fiscal years
(see "Capital Expansion Program -- UpRight"); (vi) finance its capital expansion
program at Horizon, which management currently estimates will cost approximately
$13.5 million over the next two fiscal years (see "Capital Expansion
Program -- Horizon"); and (vii) capitalize with up to $5.0 million a floor plan
financing program (see "Capital Expansion Program -- UpRight"). The balance of
the net proceeds of the offering of the Original Notes was or will be used for
general corporate purposes, including acquisitions in complementary, ancillary
or related businesses, in accordance with the terms of the Indenture. The
Company may also use all or a portion of the amounts allocated to fund the
capital expansion programs at UpRight and Horizon to fund any such acquisitions.
However, no agreement with respect to any acquisition has been entered into at
the date of this Prospectus. To the extent an acquisition is consummated
utilizing funds originally allocated to the capital expansion programs or which
provides manufacturing capacity, product lines or locations which were otherwise
intended to be
35
<PAGE> 37
developed or started by the Company, the Company's capital expansion programs
may be delayed, modified or reduced accordingly, and the Company may require
additional financing to complete its planned capital expansion.
CAPITAL EXPANSION PROGRAM
UPRIGHT
Since the beginning of fiscal 1995, UpRight has invested approximately
$14.9 million in its capital expenditure program to develop a boom lift product
line, extend its line of scissor lift products by developing new models, modify
existing scissor lifts to enhance product quality, safety and reliability and to
automate and upgrade its manufacturing facilities. In the aggregate, UpRight
spent $4.8 million on fixtures and equipment, including a horizontal machining
center, powder coat paint equipment, overhead cranes, welding fixtures and
turning centers, to manufacture new products; $3.7 million for buildings and
improvements, including 80,000 square feet for boom lift assembly and
production, 38,000 square feet for large scissor lift production and 33,000
square feet for a new powder coat paint facility; $2.6 million for machine shop
equipment; $3.6 million on other manufacturing equipment; and $0.2 million on
engineering work stations and equipment.
UpRight intends to develop a full line of articulated and telescopic boom
lifts over the next five years. In addition, UpRight intends to continue to
modernize and upgrade its manufacturing facilities. UpRight's capital
expenditure program anticipates spending approximately $20.0 million over the
next two fiscal years, including the following: $12.6 million on fixtures and
equipment to manufacture new products, including boom lifts and new scissor lift
models; $3.6 million for additional land, buildings and improvements related to
production expansion; $2.0 million for machine shop equipment; and $1.8 million
on quality control, other manufacturing and engineering.
The following table details the capital expenditures incurred by UpRight
for fiscal years 1995 and 1996 and the nine months ended March 30, 1997, and
UpRight's anticipated capital expenditures for the three months ending June 29,
1997 and fiscal years 1998 and 1999.
<TABLE>
<CAPTION>
NINE THREE
FISCAL YEAR ENDED MONTHS MONTHS FISCAL YEAR ENDING
-------------------- ENDED ENDING ---------------------
JULY 2, JUNE 30, MARCH 30, JUNE 29, JUNE 28, JUNE 27,
1995 1996 1997 1997 1998 1999
------- -------- --------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Land............................. $ -- $ -- $ -- $ -- $ 600 $ --
Building Improvements............ 358 1,980 1,322 250 1,500 1,500
Machinery and Equipment.......... 3,080 4,488 3,675 2,750 7,900 8,500
------ ------ ------ ------ ------ --------
$ 3,438 $6,468 $ 4,997 $3,000 $ 10,000 $ 10,000
====== ====== ====== ====== ====== ========
</TABLE>
UpRight's management believes that one of the reasons supporting the growth
in North American sales of aerial work platform equipment has been the
availability of financing for both distributors and end users of the
manufactured equipment. In North America, there are multiple sources available
to finance the purchase of industrial equipment. However, UpRight's management
believes that there is not the range of financing options available
internationally to provide for all the potential needs of its foreign
distributors, particularly given (i) the large number of countries to which
UpRight exports, (ii) the average size of transactions and (iii) the unit price
of the equipment. As a result, UpRight intends to introduce a floor plan
financing program to allow its foreign distributors to finance their inventory
of UpRight aerial work platforms on extended terms. UpRight intends to invest up
to $5.0 million to capitalize this floor plan financing program. UpRight's
management believes this will be of increasing importance with the introduction
of its boom lift line of products, which have higher unit prices.
36
<PAGE> 38
HORIZON
Since the beginning of fiscal 1995, Horizon has invested approximately
$24.6 million in its capital expenditure program, including the following:
approximately $1.4 million (at dealer cost) to fund the startup of its Raleigh,
North Carolina, Charleston, South Carolina and Charleston, West Virginia
satellite locations; approximately $8.8 million (at dealer cost) to purchase
approximately 640 units to upgrade and replace equipment in its rental fleet;
approximately $14.0 million (at dealer cost) to purchase new equipment to expand
its rental fleet from approximately 1,900 units to more than 2,400 units; and
approximately $0.4 million for equipment related to its acquisition of a
forklift rental and sales operation in Brea, California which totaled $1.2
million.
Horizon's capital expansion program anticipates spending approximately
$17.0 million (at dealer cost) over the next two years, including the following:
approximately $2.3 million for the continued expansion of the number of its
locations through the development of satellite rental offices linked to an
existing branch and the strategic acquisition of small regional equipment rental
and sales companies; approximately $4.2 million (at dealer cost) to add
additional equipment, particularly scissor lifts, to increase the size of its
rental fleet; and approximately $10.6 million (at dealer cost) to replace
existing equipment.
The following table details the capital expenditures (at dealer cost)
incurred by Horizon for fiscal years 1995 and 1996 and the nine months ended
March 30, 1997, and Horizon's anticipated capital expenditures (at dealer cost)
for the three months ending June 29, 1997 and fiscal years 1998 and 1999.
"Dealer cost" means the price paid by Horizon to purchase equipment from
equipment manufacturers, including from UpRight on arm's-length terms.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED NINE MONTHS THREE MONTHS FISCAL YEAR ENDING
----------------------------- ENDED ENDING -----------------------------
JULY 2, 1995 JUNE 30, 1996 MARCH 30, 1997 JUNE 29, 1997 JUNE 28, 1998 JUNE 27, 1999
------------- ------------- -------------- ------------- ------------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Replacement
Equipment(1)........ $ 2,833 $ 2,299 $3,659 $ 920 $ 4,750 $ 5,800
Additional
Equipment(2)........ 4,238 6,079 3,686 307 2,750 1,450
Investment in New
Satellite
Locations........... -- 735 641 271 1,000 750
Acquisitions.......... -- -- 442 -- -- 500
------ ------ ------ ------ ------ ------
$ 7,071 $ 9,113 $8,428 $ 1,498 $ 8,500 $ 8,500
====== ====== ====== ====== ====== ======
</TABLE>
- ---------------
(1) Horizon anticipates purchasing approximately $7.4 million of replacement
equipment in fiscal years 1998 and 1999 from UpRight at dealer cost. On a
consolidated basis, the Company expects to record these capital purchases at
approximately $5.2 million, which reflects UpRight's cost to manufacture the
equipment.
(2) Horizon anticipates purchasing approximately $4.0 million of additional
equipment in fiscal years 1998 and 1999 from UpRight at dealer cost. On a
consolidated basis, the Company expects to record these capital purchases at
approximately $2.8 million, which reflects UpRight's cost to manufacture the
equipment.
37
<PAGE> 39
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
March 30, 1997, and as adjusted to give effect to the offering of the Original
Notes and the application of the net proceeds thereof. See "Use of Proceeds."
This table should be read in conjunction with the Consolidated Financial
Statements of the Company and the Notes thereto included elsewhere in this
Prospectus.
<TABLE>
<CAPTION>
MARCH 30, 1997
--------------------
AS
ACTUAL ADJUSTED
------- --------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Debt outstanding:
Revolving credit facilities(1)........................ $ 1,209 $ --
Industrial revenue bonds(2)........................... 5,717 5,717
Term indebtedness..................................... 18,020 --
Capital leases and other.............................. 6,889 --
Note payable -- related party......................... 7,462 --
Notes offered hereby, net of discount................. -- 104,519
------- --------
Total debt outstanding........................ 39,297 110,236
Stockholder's equity.................................... 23,059 23,059
------- --------
Total capitalization.......................... $62,356 $133,295
======= ========
</TABLE>
- ---------------
(1) Upon consummation of the offering of the Original Notes and the application
of the net proceeds thereof, UpRight and Horizon had $4.0 million and $3.0
million available under their respective revolving credit facilities. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."
(2) An additional $0.9 million was funded prior to June 29, 1997. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."
38
<PAGE> 40
SELECTED HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL DATA
The following table sets forth selected historical consolidated financial
data with respect to the Company for the periods ended on and as of the dates
indicated. The selected historical consolidated financial data for fiscal years
1994, 1995 and 1996 are derived from and should be read in conjunction with the
consolidated financial statements of the Company audited by Pannell Kerr
Forster, Certified Public Accountants, A Professional Corporation, Los Angeles,
California, including the Company's consolidated balance sheets at July 2, 1995
and June 30, 1996 and the related consolidated statements of operations and cash
flows for each of the three fiscal years in the period ended June 30, 1996 and
the notes thereto appearing elsewhere in this Prospectus. The selected
historical financial data for each of the two fiscal years in the period ended
June 27, 1993 have been derived from unaudited financial information prepared by
the Company. The selected historical consolidated financial data for the nine
months ended March 31, 1996 and March 30, 1997 have been derived from the
unaudited condensed financial statements of the Company included elsewhere in
this Prospectus. Such condensed consolidated financial statements, in the
opinion of the Company's management, include all adjustments necessary for a
fair presentation of the financial condition and the results of operations of
the Company for such periods. Operating results for the nine months ended March
30, 1997 are not necessarily indicative of the results that may be expected for
the fiscal year ending June 29, 1997. The unaudited summary pro forma statement
of operations data and other data for the fiscal year ended June 30, 1996, the
nine months ended March 30, 1997 and the twelve months ended March 30, 1997 give
effect to the offering of the Original Notes as if it had been completed on July
3, 1995, July 1, 1996 and April 1, 1996, respectively. The unaudited summary pro
forma balance sheet data give effect to the offering of the Original Notes as if
it had been completed on March 30, 1997. The pro forma data should be read in
conjunction with the Company's consolidated financial statements and the notes
thereto appearing elsewhere in this Prospectus and "Management's Discussion and
Analysis of Financial Condition and Results of Operations." The pro forma
financial data are not necessarily indicative of the results that would have
occurred had the offering of the Original Notes been completed on the dates
indicated or of the Company's actual or future operating results or financial
condition.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
------------------------------------------------- NINE MONTHS ENDED
JUNE ---------------------
28, JULY 27, JULY 3, JULY 2, JUNE 30, MARCH 31, MARCH 30,
1992(1) 1993(1) 1994(1) 1995 1996 1996 1997
------- -------- ------- ------- -------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING STATEMENT DATA:
Revenue(2)............................. $64,556 $ 67,005 $70,387 $85,157 $117,903 $ 83,375 $96,084
Cost of revenue........................ 42,851 44,539 47,365 58,217 78,638 55,216 64,813
------- ------- ------- ------- -------- ------- -------
Gross profit........................... 21,705 22,466 23,022 26,940 39,265 28,159 31,271
Research and development expenses...... 1,057 1,457 1,732 1,817 2,865 1,908 3,110
Product liability costs................ 1,506 1,994 1,827 2,094 3,015 2,050 2,396
Selling, general and administrative
expenses............................. 15,816 15,884 15,051 13,982 15,124 11,039 13,220
------- ------- ------- ------- -------- ------- -------
Income from operations................. 3,326 3,131 4,412 9,047 18,261 13,162 12,545
Interest expense, net.................. 5,653 4,341 3,214 2,566 2,907 2,126 2,460
Other expense, net(3).................. 877 1,130 4,252 186 539 5 26
------- ------- ------- ------- -------- ------- -------
Income (loss) before provision for
income taxes......................... (3,204) (2,340) (3,054) 6,295 14,815 11,031 10,059
Provision (benefit) for income taxes... (5) 15 (1,221) 2,608 6,047 4,497 4,069
Cumulative effect on prior years of
accounting change.................... -- -- 6,663 -- -- -- --
------- ------- ------- ------- -------- ------- -------
Net income (loss)...................... $(3,199) $ (2,355) $ 4,830 $ 3,687 $ 8,768 $ 6,534 $ 5,990
======= ======= ======= ======= ======== ======= =======
OTHER DATA:
EBITDA(4).............................. $ 7,610 $ 6,812 $ 8,240 $12,626 $ 22,695 $ 16,279 $16,762
Depreciation and amortization.......... 4,284 3,681 3,828 3,579 4,434 3,117 4,217
Capital expenditures................... 2,036 4,014 8,159 7,949 14,720 11,982 12,717
Gross margin........................... 33.6% 33.5% 32.7% 31.6% 33.3% 33.8% 32.6%
EBITDA margin.......................... 11.8 10.2 11.7 14.8 19.3 19.5 17.5
Ratio of EBITDA to interest expense,
net.................................. 1.35x 1.57x 2.56x 4.92x 7.81x 7.66x 6.81x
Ratio of earnings to fixed
charges(9)........................... --(6) --(6) --(6) 3.24 5.56 5.63 4.63
</TABLE>
39
<PAGE> 41
<TABLE>
<CAPTION>
FISCAL YEAR ENDED NINE MONTHS ENDED
---------------------------------------------------------- -----------------------
JUNE 28, JUNE 27, JULY 3, JULY 2, JUNE 30, MARCH 31, MARCH 30,
1992(1) 1993(1) 1994(1) 1995 1996 1996 1997
-------- -------- ------- ------- -------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash
equivalents............. $ 1,971 $ 3,341 $ 1,297 $ 4,314 $ 11,164 $ 6,371 $ 5,984
Working capital
(deficit)............... (20,220) (2,183) (1,633) (4,271) 7,995 3,920 14,462
Total assets.............. 72,010 46,556 56,027 55,082 75,985 68,085 88,935
Total debt................ 73,998 54,104 26,415 30,456 36,999 35,550 39,297
Stockholder's equity
(deficit)............... (17,596) (25,349) 4,611 8,298 17,069 14,832 23,059
</TABLE>
<TABLE>
<CAPTION>
FISCAL YEAR NINE MONTHS TWELVE MONTHS
ENDED ENDED ENDED
JUNE 30, 1996 MARCH 30, 1997 MARCH 30, 1997
------------- -------------- --------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
PRO FORMA OPERATING STATEMENT DATA(7):
EBITDA(4)(5)............................................. $21,815 $ 16,563 $ 22,913
Interest expense, net(8)................................. 11,466 8,589 11,511
Ratio of EBITDA to interest expense, net................. 1.90x 1.93x 1.99x
Ratio of earnings to fixed charges(9).................... 1.40 1.37 1.39
</TABLE>
<TABLE>
<CAPTION>
AS OF MARCH 30, 1997
--------------------------------
ACTUAL AS ADJUSTED(7)
-------------- --------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
PRO FORMA BALANCE SHEET DATA:
Cash and cash equivalents................................................ $ 5,984 $ 70,330
Working capital.......................................................... 14,462 94,906
Total assets............................................................. 88,935 157,631
Total debt............................................................... 39,297 110,236
Stockholder's equity..................................................... 23,059 23,059
</TABLE>
- ---------------
(1) Results include operations and capital expenditures of Bacon. Results of
operations and capital expenditures of the Company excluding the operating
results and capital expenditures of Bacon are as follows:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
-------------------------------
JUNE 28, JUNE 27, JULY 3,
1992 1993 1994
------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Revenue.............................................................. $46,311 $52,293 $57,429
Gross profit......................................................... 16,250 18,400 19,293
Income from operations............................................... 3,823 4,419 4,518
EBITDA............................................................... 6,907 7,101 7,478
Capital expenditures................................................. 1,603 2,822 7,031
Gross margin......................................................... 35.1% 35.2% 33.6%
EBITDA margin........................................................ 14.9 13.6 13.0
</TABLE>
(2) The following details UpRight's and Horizon's revenue, and the elimination
of intercompany sales for fiscal years 1994, 1995 and 1996 and the nine
months ended March 31, 1996 and March 30, 1997:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED NINE MONTHS ENDED
--------------------------------- ---------------------
JULY 3, JULY 2, JUNE 30, MARCH 31, MARCH 30,
1994 1995 1996 1996 1997
------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
UpRight..................................... $40,694 $ 65,593 $ 93,273 $ 66,109 $ 75,016
Horizon..................................... 25,282 32,236 38,112 27,537 32,950
Intercompany sales.......................... (8,547) (12,672) (13,482) (10,271) (11,882)
------- -------- -------- -------- --------
$57,429 $ 85,157 $117,903 $ 83,375 $ 96,084
======= ======== ======== ======== ========
</TABLE>
Fiscal 1994 excludes $13.0 million in revenue from Bacon. See footnote (1)
above. For fiscal years 1992 and 1993, Horizon was a division of UpRight and
did not report financial results separately.
40
<PAGE> 42
(3) For fiscal 1994, includes $4.0 million loss on sale of Bacon.
(4) EBITDA represents income before extraordinary item, net interest expense,
financing costs, income taxes, depreciation and amortization and other
expenses and income. The Company has included information concerning EBITDA
in this Prospectus because it is used by certain investors as a measure of a
company's ability to service its debt obligations. EBITDA should not be used
as an alternative to, or be considered more meaningful than, operating
income, net income or cash flow as an indicator of the Company's operating
performance.
(5) EBITDA as represented in the Pro Forma Operating Statement Data has been
adjusted for obligations of UpRight and Horizon pursuant to the Corporate
Services Agreements as if the Corporate Services Agreements were in effect
at the beginning of the periods presented. See "Certain Relationships and
Related Transactions." These adjustments total in the aggregate $880, $199
and $265 for the fiscal year ended June 30, 1996, the nine months ended
March 30, 1997 and the twelve months ended March 30, 1997, respectively.
(6) Earnings were insufficient to cover fixed charges by $3,204 in fiscal 1992,
$2,340 in fiscal 1993 and $3,054 in fiscal 1994.
(7) Presented on a pro forma basis as though the Notes had been issued at the
beginning of the periods presented with respect to the Pro Forma Operating
Statement Data and, as of March 30, 1997, with respect to the Pro Forma
Balance Sheet Data, as adjusted. See "Use of Proceeds."
(8) Reflects an interest rate of 10.625% on the Notes and includes amortization
of discount. Interest expense, net excludes the amortization of deferred
financing costs, including the amounts estimated to be incurred in
connection with the issuance of the Notes, and includes actual interest
income for each period.
(9) For purposes of this computation, earnings are defined as income (loss)
before provision for income taxes and fixed charges. Fixed charges are the
sum of (i) interest costs, (ii) amortization of deferred financing costs and
(iii) the portion of operating lease rental expense that is representative
of the interest factor (deemed to be one-third).
41
<PAGE> 43
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of the financial condition and the
results of operations should be read in conjunction with the historical
consolidated financial statements of the Company and notes thereto included
elsewhere in this Prospectus.
GENERAL
The Company's strategy is to create shareholder value by providing capital,
strategic and financial direction and management support to its wholly-owned
operating subsidiaries, UpRight and Horizon. Prior to fiscal 1994, Horizon was a
division of UpRight, operating as a captive equipment dealer and industrial
equipment rental company in certain markets. In fiscal 1994, the Company decided
each business would be managed and operated separately. Fiscal 1994 reflects the
loss on the sale by the Company of its wholly-owned subsidiary, Bacon-Universal
Company, Inc. ("Bacon"). The discussion of the fiscal year ended July 2, 1995
compared to the fiscal year ended July 3, 1994 excludes the results of Bacon.
All intercompany transactions between UpRight and Horizon are currently, and are
intended to continue to be, conducted on an arm's-length basis. UpRight sells
equipment to Horizon for the same price it would otherwise charge a comparable
distributor. Horizon purchases equipment from UpRight, as well as from other
major manufacturers, including certain models and product lines which may be
produced by UpRight. The Company intends to maintain the distributor/supplier
relationship between the two subsidiaries. Sales to Horizon accounted for
approximately 21%, 19%, 14%, 16% and 16% of UpRight's revenue for fiscal years
1994, 1995 and 1996 and the nine months ended March 31, 1996 and March 30, 1997,
respectively. Purchases from UpRight accounted for 58%, 72%, 49%, 45%, and 50%
of Horizon's total capital purchases of equipment for fiscal years 1994, 1995
and 1996 and the nine months ended March 31, 1996 and March 30, 1997,
respectively. UpRight and Horizon maintain stand-alone financial statements.
Sales from UpRight to Horizon are reflected in UpRight's stand-alone financial
statements at the actual arm's-length price charged. Purchases by Horizon from
UpRight are reflected in Horizon's stand-alone financial statements at dealer
cost. "Dealer cost" means the price paid by Horizon to purchase equipment from
equipment manufacturers, including from UpRight on arm's-length terms. All
significant intercompany balances and transactions are eliminated in
consolidation.
Revenue growth in the aerial work platform and industrial equipment rental
industries has been historically related to the cyclical levels of construction
and industrial activity in North America. UpRight has adopted just-in-time
inventory procedures and build-to-order production scheduling and has instituted
flexible labor and staffing practices to manage volume cycles, all of which
management believes will enable UpRight to respond in a timely manner to
possible downturns in the North American construction market. The foregoing
strategies also allow UpRight to respond quickly to periods of strong growth in
demand, which have characterized the industry. Horizon responds to downturns in
the United States construction market by delaying expansion capital expenditures
and adjusting the timing of replacement capital expenditures. The Company
expects the aerial work platform industry will continue to be dependent upon
North American construction and industrial activity, although international
sales are comprising a greater proportion of total industry revenues. The
Company believes UpRight has among the highest percentages of revenue from
international sales of any aerial work platform manufacturer. All sales outside
of the United States are denominated and paid in U.S. dollars.
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<PAGE> 44
The following table sets forth for the periods indicated certain historical
revenue and percentages from customer geographical segments:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED NINE MONTHS ENDED
------------------------------------------------- -------------------------------
JULY 3, JULY 2, JUNE 30, MARCH 31, MARCH 30,
1994(1) 1995 1996 1996 1997
-------------- -------------- --------------- -------------- --------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
United States,
Canada, Latin
America............ $44.7 77.9% $67.5 79.3% $ 92.8 78.7% $63.9 76.6% $64.4 67.0%
Europe............... 6.1 10.6 12.9 15.1 19.6 16.6 15.3 18.3 26.1 27.2
Pacific Rim.......... 6.6 11.5 4.8 5.6 5.5 4.7 4.2 5.1 5.6 5.8
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
$57.4 100.0% $85.2 100.0% $117.9 100.0% $83.4 100.0% $96.1 100.0%
===== ===== ===== ===== ===== ===== ===== ===== ===== =====
</TABLE>
- ---------------
(1) Excludes revenue of Bacon.
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated certain historical
income statement data derived from the Company's consolidated statements of
operations expressed in dollars and as a percentage of net revenue.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
-------------------------------------------------------------- NINE MONTHS NINE MONTHS
JULY 3, JULY 2, JUNE 30, ENDED ENDED
1994(1) 1995 1996 MARCH 31, 1996 MARCH 30, 1997
----------------- ----------------- ------------------ ----------------- -----------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue............. $57,429 100.0% $85,157 100.0% $117,903 100.0% $83,375 100.0% $96,084 100.0%
Cost of revenue..... 38,136 66.4 58,217 68.4 78,638 66.7 55,216 66.2 64,813 67.5
------- ----- ------- ----- -------- ----- ------- ----- ------- -----
Gross profit........ 19,293 33.6 26,940 31.6 39,265 33.3 28,159 33.8 31,271 32.5
Operating
expenses.......... 14,775 25.7 17,893 21.0 21,004 17.8 14,997 18.0 18,726 19.5
------- ----- ------- ----- -------- ----- ------- ----- ------- -----
Operating income.... 4,518 7.9 9,047 10.6 18,261 15.5 13,162 15.8 12,545 13.0
Interest expense,
net............... 3,111 5.4 2,566 3.0 2,907 2.5 2,126 2.6 2,460 2.6
Other (income)
expense........... (411) 0.7 186 0.2 539 0.5 5 0.0 26 0.0
Income taxes
(benefit)......... (870) 1.5 2,608 3.1 6,047 5.1 4,497 5.4 4,069 4.2
------- ----- ------- ----- -------- ----- ------- ----- ------- -----
Income before loss
on sale of Bacon
and cumulative
effect of
accounting
change............ 2,688 4.7 3,687 4.3 8,768 7.4 6,534 7.8 5,990 6.2
Loss on sale of
Bacon............. 3,991 6.9 -- -- -- -- -- -- -- --
Cumulative effect of
accounting
change............ (4,063) (7.1) -- -- -- -- -- -- -- --
------- ----- ------- ----- -------- ----- ------- ----- ------- -----
Net income.......... $ 2,760 4.8% $ 3,687 4.3% $ 8,768 7.4% $ 6,534 7.8% $ 5,990 6.2%
======= ===== ======= ===== ======== ===== ======= ===== ======= =====
EBITDA.............. $ 7,478 13.0% $12,626 14.8% $ 22,695 19.2% $16,279 19.5% $16,762 17.4%
Depreciation &
amortization...... 2,960 3,579 4,434 3,117 4,217
</TABLE>
- ---------------
(1) Excludes results of operations for Bacon.
As total revenue has increased, the Company has experienced a corresponding
improvement in EBITDA and EBITDA margins. From fiscal 1994 through fiscal 1996,
the Company's EBITDA and EBITDA margins have improved from $7.5 million and
13.0%, respectively, to $22.7 million and 19.2%, respectively. Margin
improvement has been due primarily to manufacturing efficiencies related to
greater production volume and from a lower rate of growth in selling, general
and administrative expenses as compared to the rate of growth in revenue. From
the nine months ended March 31, 1996 to the nine months ended March 30, 1997,
the Company's EBITDA improved from $16.3 million to $16.8 million, respectively;
however, EBITDA margins declined from 19.5% to 17.4%, respectively. The
improvement in EBITDA was primarily due to increased revenue, while the margin
declined due to increased operating expenses as a percentage of revenue,
including
43
<PAGE> 45
higher research and development and higher selling, general and administrative
expenses, and lower gross margins.
NINE MONTHS ENDED MARCH 30, 1997 COMPARED TO NINE MONTHS ENDED MARCH 31, 1996
Revenue increased by 15.2% to $96.1 million for the nine months ended March
30, 1997 from $83.4 million for the nine months ended March 31, 1996. The
increase of $12.7 million was attributable to increased revenue from sales of
new UpRight equipment of $11.0 million (including sales of UpRight equipment by
Horizon) and increased rental and service revenue for Horizon of $1.7 million.
The increase in revenue from new equipment sales was primarily attributable to
an increase in export sales by UpRight to dealers in European and Pacific Rim
countries of 62.6% to $31.7 million for the nine months ended March 30, 1997
from $19.5 million for the nine months ended March 31, 1996. The increased sales
to Europe primarily reflect improved economic conditions in the United Kingdom,
while the increased sales to Pacific Rim countries primarily reflect growing
economic activity in Asia generally. Sales of new equipment to the United
States, Canada and Latin America, decreased 2.5% to $47.1 million for the nine
months ended March 30, 1997 from $48.3 million for the nine months ended March
31, 1996. This decrease in North American sales of new equipment was primarily
due to a significant decrease in sales to a single customer at UpRight, which
was offset in part by higher rental and service revenue at Horizon. For the nine
months ended March 30, 1997, 60.9% of the Company's revenue was attributable to
new products and new models introduced since January 1, 1994.
Gross profit increased by $3.1 million, or 11.0%, to $31.3 million for the
nine months ended March 30, 1997 from $28.2 million for the nine months ended
March 31, 1996, while gross margin decreased to 32.5% for the nine months ended
March 30, 1997 from 33.8% for the nine months ended March 31, 1996. The increase
in gross profit is attributable to higher revenue; however, margins contracted
due to: (i) costs associated with the introduction of UpRight's boom lift
product line; (ii) the buildup of Horizon's rental fleet and related costs; and
(iii) lower dollar utilization on Horizon's rental fleet as competitive factors
and inclement weather negatively impacted rental rates and equipment
utilization.
Operating expenses, consisting of selling, general and administrative
expenses, product liability and research and development expenses, increased to
$18.7 million for the nine months ended March 30, 1997 from $15.0 million for
the nine months ended March 31, 1996. As a percentage of revenue, operating
expenses increased to 19.5% for the nine months ended March 30, 1997 from 18.0%
for the nine months ended March 31, 1996. Research and development expenses
increased $1.2 million due primarily to the expansion of UpRight's boom lift
development program. In addition, the Company commenced payment of corporate
services fees totaling $0.6 million for the nine months ended March 30, 1997
pursuant to the terms of the Corporate Services Agreements (as herein defined).
Other selling, general and administrative expenses increased by $1.6 million,
but were generally flat as a percentage of revenue.
Interest expense, net of interest income, increased to $2.5 million for the
nine months ended March 30, 1997 from $2.1 million for the nine months ended
March 31, 1996 as the result of an increase in outstanding debt and lower cash
balances.
As a result of the above, net income decreased by 7.7% to $6.0 million for
the nine months ended March 30, 1997 from $6.5 million for the nine months ended
March 31, 1996.
FISCAL YEAR ENDED JUNE 30, 1996 COMPARED TO FISCAL YEAR ENDED JULY 2, 1995
Revenue increased by 38.4% to $117.9 million in fiscal 1996 from $85.2
million in fiscal 1995. The increase of $32.7 million was attributable to
increased revenue from North American and European sales of new equipment of
$29.7 million and increased rental and service revenue for Horizon of $3.0
million. Sales of new equipment increased due to (i) a general increase in sales
by UpRight to North American customers, including sales to a single new customer
of approximately $8.0 million, (ii) sales of new products introduced by UpRight
in its large scissor lift product line totaling $7.4 million, (iii) an increase
in export sales primarily to European customers of $6.7 million, and (iv) an
increase in sales of new equipment by Horizon from
44
<PAGE> 46
manufacturers other than UpRight of approximately $2.0 million. Sales by UpRight
of new products and new models introduced since January 1, 1994 accounted for
60.0% of the Company's revenue in fiscal 1996.
Gross profit increased by $12.3 million, or 45.6%, to $39.3 million for
fiscal 1996 from $27.0 million for fiscal 1995, while gross margin increased to
33.3% for fiscal 1996 from 31.6% for fiscal 1995. The increase in gross profit
was attributable to increased revenue and higher margins. Margin improvement was
due to elimination of manufacturing inefficiencies related to the production of
the MX and X series and TM-12 scissor lifts in fiscal 1995 by UpRight and higher
dollar utilization of rental equipment by Horizon.
Operating expenses increased to $21.0 million for fiscal 1996 from $17.9
million for fiscal 1995. However, as a percentage of revenue, operating expenses
decreased to 17.8% from 21.0%. For fiscal 1996, research and development
expenses increased by $1.1 million, or 57.7%, which was primarily attributable
to the development by UpRight of its large scissor lift product line. Product
liability expenses increased by $0.9 million, or 44.0%, but were virtually flat
as a percentage of revenue.
Interest expense, net of interest income, increased to $2.9 million for
fiscal 1996 from $2.6 million for fiscal 1995 as the result of an increase in
outstanding debt. Income tax expense increased to $6.0 million for fiscal 1996
from $2.6 million for fiscal 1995 as a result of increased pre-tax income.
As a result of the above, net income increased to $8.8 million for fiscal
1996 from $3.7 million for fiscal 1995, representing an increase of 137.8%.
FISCAL YEAR ENDED JULY 2, 1995 COMPARED TO FISCAL YEAR ENDED JULY 3, 1994
Fiscal 1994 included the contribution of Bacon. Bacon's revenue for fiscal
1994 was $13.0 million, comprising $8.4 million in new and used equipment sales
and $4.5 million in rental, parts and service revenue. After eliminating the
contribution of Bacon, the comparative figures for fiscal 1995 and fiscal 1994
for the Company's ongoing operations were as follows:
Revenue increased by 48.4% to $85.2 million for fiscal 1995 from $57.4
million for fiscal 1994. The increase of $27.8 million was primarily
attributable to increased revenue from sales of new UpRight equipment of $24.8
million (including increased sales by Horizon) and increased rental and service
revenues for Horizon of $2.5 million. Horizon's sales of new UpRight equipment
increased by 47.7% to $9.6 million in fiscal 1995 from $6.5 million in fiscal
1994. The increase in revenue from new equipment sales was due to increased
demand for UpRight's products in the United States, Canada, Latin America and
Europe as a result of growth generally in the aerial work platform industry and
the introduction of new products, including a full fiscal year's revenue from
sales of new products, including the MX and X series and TM-12 scissor lifts
introduced in the third quarter of fiscal 1994, which generated $35.1 million in
revenue in fiscal 1995, as compared to $10.8 million in fiscal 1994. The
increase in sales to the United States, Canada, Latin America and Europe more
than offset a $1.2 million decrease in sales to the Pacific Rim due to
recessionary conditions in Japan. Increased size of the rental fleet and
increased dollar utilization accounted for the increase in Horizon's rental and
service revenues.
Gross profit increased by $7.6 million, or 39.4%, to $26.9 million for
fiscal 1995 from $19.3 million for fiscal 1994. Gross margin decreased to 31.6%
for fiscal 1995 from 33.6% for fiscal 1994. The increase in gross profit was
attributable to higher revenue, while margin contraction was due to preliminary
manufacturing inefficiencies associated with the simultaneous production of the
MX and X series and TM-12 scissor lifts at UpRight.
Operating expenses increased to $17.9 million for fiscal 1995 from $14.8
million for fiscal 1994, but as a percentage of revenue, operating expenses
decreased to 21.0% for fiscal 1995 from 25.7% in fiscal 1994. Operating expenses
declined as a percentage of revenue as revenue growth significantly outpaced
growth in operating expenses.
Interest expense, net of interest income, decreased to $2.6 million for
fiscal 1995 from $3.1 million for fiscal 1994 as the result of lower interest
rates on lower average outstanding debt. Income tax expense
45
<PAGE> 47
increased to $2.6 million for fiscal 1995 from a benefit of $1.2 million for
fiscal 1994 as the Company fully utilized in fiscal 1994 certain net operating
loss carryforwards from previous years.
As a result of the above, net income increased to $3.7 million for fiscal
1995 from $2.7 million for fiscal 1994 before the inclusion of a $4.0 million
loss on the sale of Bacon in fiscal 1994 and a $4.1 million benefit in fiscal
1994 from the cumulative effect on prior years of an accounting change.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash flow requirements are for working capital, capital
expenditures and debt service.
The Company has met its liquidity needs to date through internally
generated funds and committed finance facilities available to its subsidiaries,
UpRight and Horizon. UpRight and Horizon have revolving lines of credit from
major financial institutions of $4.0 million and $3.0 million, respectively,
which shall remain available following the offering of the Original Notes.
UpRight has various capital lease arrangements with finance companies to finance
new and re-engineered equipment, which are being repaid out of the net proceeds
of the offering of the Original Notes. Through the issuance of City of Selma
industrial revenue bonds in 1994, UpRight had available to it $8.0 million to
finance the purchase of buildings and equipment and to develop and improve
certain of the Company's real property infrastructure, $5.7 million of which was
outstanding at March 30, 1997 and an additional $0.9 million of which was funded
by June 29, 1997. See "Description of Certain Indebtedness." At March 30, 1997,
Horizon had outstanding term debt of approximately $18.0 million with a major
financial institution, which has been repaid with the proceeds of the offering
of the Original Notes. See "Description of Certain Indebtedness."
The Company's working capital was $21.5 million and $11.2 million at June
30, 1996 and July 2, 1995, respectively, and $21.9 million at March 30, 1997,
after eliminating the note payable to its parent company of $13.5 million, $15.4
million and $7.5 million, respectively. The increase in working capital is the
result of growth in revenue, generating higher levels of receivables and
inventory. For the nine months ended March 30, 1997, receivables increased by
$7.6 million, or 48.9%, from June 30, 1996 due primarily to increased export
sales (which typically have longer payment terms) at UpRight.
The Company's borrowings increased by $6.5 million for fiscal 1996 from
fiscal 1995 which were offset by an increase in cash from operations of $6.9
million for the same period. New borrowings were $12.4 million, comprising $2.4
million from the issuance of industrial revenue bonds, $3.2 million from the
drawdown of capital leases and $6.8 million from the drawdown of bank debt.
Repayments in the aggregate were $5.9 million for fiscal 1996, including $2.0
million repaid by the Company to its parent company. Net proceeds of the
borrowings were used to fund capital expenditures related to the expansion of
manufacturing capacity for UpRight's new boom lift product line, extension of
UpRight's scissor lift product line and expansion of Horizon's rental fleet (see
"Capital Expansion Program"). For the nine months ended March 30, 1997, cash
decreased by $5.2 million to fund capital expenditures and debt decreased by
$0.3 million.
Net cash provided by operating activities was $12.4 million and $5.5
million for the fiscal years 1996 and 1995, respectively, and $3.4 million for
the nine months ended March 30, 1997 as compared to $7.2 million for the nine
months ended March 31, 1996, primarily due to funding increased receivables
(which typically have longer payment terms) associated with increased export
revenue at UpRight.
Net cash used in investing activities was $8.9 million and $4.8 million in
the fiscal years 1996 and 1995, respectively, and $8.2 million for the nine
months ended March 30, 1997, primarily to fund the Company's capital expenditure
program associated with the expansion of UpRight's manufacturing facilities at
Selma, California, and the upgrading and expansion of Horizon's rental fleet.
Over the next two fiscal years, the Company anticipates spending approximately
$33.5 million on capital expenditures and up to $5.0 million to capitalize a
floor plan financing operation (see "Capital Expansion Program -- UpRight")
which will be funded from the proceeds of the Original Notes (see "Use of
Proceeds").
Net cash provided (used) by financing activities was $3.3 million and $2.3
million in fiscal 1996 and 1995, respectively, and ($0.3) million for the nine
months ended March 30, 1997 after repayments of debt to
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<PAGE> 48
its parent company of $2.0 million, $7.2 million and $6.0 million, respectively.
The Company has paid no dividends since July 3, 1994.
In addition to certain proceeds of the Original Notes, the Company believes
that internally generated funds and amounts available to UpRight and Horizon
under revolving credit facilities are and will continue to be sufficient to
satisfy its operating cash requirements and planned capital expenditures. The
Company may, however, require additional capital through borrowings if the
Company undertakes acquisitions.
SEASONALITY
The Company's revenue and operating results historically have fluctuated
from quarter to quarter, and the Company expects that they will continue to do
so in the future. These fluctuations have been caused by a number of factors,
including seasonal purchasing patterns of UpRight's customers and seasonal
rental patterns of Horizon's customers (principally due to the effect of weather
on construction activity). The operating results of any historical period are
not necessarily indicative of results for any future period.
47
<PAGE> 49
BUSINESS
The Company was incorporated in 1975 under the laws of Delaware and serves
as the holding company for its two operating subsidiaries, UpRight and Horizon.
The Company's headquarters are located at 1775 Park Street, Selma, California
93662, telephone (209) 891-5344. UpRight's headquarters are located at 1775 Park
Street, Selma, California 93662, telephone (209) 896-5150. Horizon's
headquarters are located at 1540 East Shaw Avenue, Suite 123, Fresno, California
93710, telephone (209) 248-8180.
UpRight's stock was publicly traded from 1980 until 1988, when it was
acquired by an affiliate of the Company. In 1988, through a corporate
reorganization, UpRight became a wholly-owned subsidiary of the Company. Prior
to 1989, Horizon was an independent company in the business of renting and
selling aerial work platform equipment in Southern California. In 1989, UpRight
acquired the assets of Horizon which were merged into the retail division of
UpRight's North American Operations. In 1994, Horizon became a wholly-owned
subsidiary of the Company. Although Horizon distributes UpRight products, the
two companies have separate management teams and operate on an independent
basis.
UPRIGHT
UpRight is a leading manufacturer of aerial work platforms, including
scissor lifts, boom lifts and portable lifts, and aluminum scaffolding, which
are distributed through a network of domestic and international dealers and
industrial equipment rental companies to end users in North America and
increasingly in Europe, Asia and Latin America.
UpRight has been manufacturing scissor lifts since 1974 as an outgrowth of
its leadership in the development and sale of aluminum scaffolding. The industry
developed in and is predominantly based in North America. Based on unit shipment
data reported by EMI, an industry trade organization, UpRight's management
estimates that of the world's eight largest aerial work platform manufacturers,
seven are headquartered in North America, generating approximately 90% of the
$1.4 billion in worldwide aerial work platform sales in 1996. According to
historical data reported by EMI, the aerial work platform industry has
experienced compound annual growth rates in total unit shipments of scissor
lifts and boom lifts from 1986 to 1996 of 20% and from 1991 to 1996 of 33%.
UpRight's management believes that the principal factors driving the growth
of the industry are (i) aerial work platforms provide significant cost and
safety advantages over alternative equipment (primarily scaffolding and
ladders), and (ii) the increasing awareness of the benefits of aerial work
platforms and the growth of the industrial equipment rental industry is
expanding the availability of aerial work platforms to more numerous smaller
businesses and from larger industrial metropolitan centers to more
geographically diverse and smaller industrial and non-industrial areas. In
addition, management believes that the industry's pattern of growth in North
America will be repeated in other industrialized regions of the world as labor-
efficient equipment becomes more readily available.
UpRight sells its products through an extensive network of over 140
equipment dealers and rental companies, including national, regional and local
distributors located throughout the United States and 76 distributors located in
51 countries internationally. For the latest twelve months ended March 30, 1997,
approximately 37% of UpRight's revenue was generated by sales to customers in
Europe and the Pacific Rim, which UpRight's management believes is among the
highest percentages of revenue from international sales of any aerial work
platform manufacturer. Other than Horizon, UpRight's ten largest customers for
such period accounted for approximately 40% of UpRight's revenue. UpRight's
customers sell and/or rent its aerial work platforms to end users in
construction, industrial, commercial and institutional markets who use the
equipment for a wide variety of applications, including for the construction,
repair and maintenance of industrial plants, shopping malls, office buildings,
schools, hotels, hospitals, elevated roadways, bridges and other industrial,
commercial and institutional structures. UpRight believes its customer service,
including technical support for dealers and rental companies, repair and
maintenance services, spare parts availability, product upgrades and operational
and safety training, enhances its reputation and improves its competitive
position versus other manufacturers.
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<PAGE> 50
Since the beginning of fiscal 1994, UpRight has executed an aggressive
research and product development program, investing in excess of $9.5 million
to: (i) extend existing product lines, particularly in scissor lifts, where
UpRight's management believes that the introduction of numerous new scissor lift
models of various platform sizes, weight capacities and heights has made
UpRight's product line as extensive as that of any other manufacturer in the
industry and has positioned UpRight among the top three scissor lift
manufacturers worldwide; (ii) add new features and enhancements to continually
improve the reliability and operational capability of UpRight's existing
products; and (iii) broaden UpRight's product mix, principally by introducing a
line of boom lifts. UpRight's new products and new models introduced since
January 1, 1994 accounted for approximately 79% of UpRight's revenue for the
latest twelve months ended March 30, 1997. UpRight has demonstrated product
development leadership with regard to product enhancements, many of which are
now commonly used by other manufacturers, including speed leveling, tight
turning and easy platform loading, and intends to continue to develop
improvements to existing aerial work platform products. UpRight also recently
introduced its first boom lift product line and is currently developing
additional boom lift models, replicating the line extension strategy it
successfully utilized in scissor lifts and leveraging its domestic and
international distribution capabilities to accelerate market acceptance. Based
on historical unit shipment data reported by EMI, UpRight's management estimates
that boom lifts accounted for approximately $847 million of the $1.4 billion in
worldwide aerial work platform shipments in 1996.
Since the beginning of fiscal 1994, in addition to the $9.5 million
invested in research and product development, UpRight has invested approximately
$15.1 million in the construction of modern, highly efficient production
facilities incorporating state-of-the-art equipment, has adopted "just-in-time"
inventory procedures and modified cellular production techniques and has
instituted flexible labor and staffing practices to manage peak volume cycles.
UpRight continually redesigns its products to create cost efficiencies and
improve product reliability by standardizing production components and by
reducing the number of parts in its products. These design improvements reduce
UpRight's total cost of purchased components, minimize assembly time and
simplify repairs and maintenance. UpRight believes that its product designs and
operational efficiencies give it a cost advantage over its competitors and that
its revenue per employee is among the highest in the industry.
THE AERIAL WORK PLATFORM INDUSTRY
The aerial work platform industry began in the United States in the late
1960s with the introduction of scissor lifts, boom lifts and portable lifts.
Since that time, aerial work platforms have gained increasing acceptance as an
economical and safe alternative to scaffolding and ladders. According to
historical data reported by EMI, the aerial work platform industry has
experienced compound annual growth rates in total unit shipments of scissor
lifts and boom lifts from 1986 to 1996 of 20% and from 1991 to 1996 of 33%. In
addition, exports of scissor lifts and boom lifts accounted for 17% and 20%,
respectively, of total unit shipments in 1996 compared to 10% and 1%,
respectively, of total unit shipments in 1986. Based on unit shipment data
reported by EMI, UpRight's management estimates that worldwide sales of aerial
work platforms totaled $1.4 billion in 1996. Despite the growth in export
shipments, the working population of aerial work platform equipment remains
significantly lower internationally than in North America. The Company's
management expects that in the next several years as the cost of labor increases
and labor-efficient equipment becomes more readily available, sales of aerial
work platforms will experience substantial growth internationally, similar to
that experienced in the United States over the past several years.
Scissor lifts and boom lifts are the two principal aerial work platform
industry products, accounting for approximately 97% of total aerial work
platform sales in 1996, according to data reported by EMI and management
estimates. A scissor lift consists of a work platform mounted on top of a
hydraulically actuated scissor-type lifting mechanism. A boom lift consists of a
generally smaller work platform supported from the tip of a telescopic or
articulated boom. The lifting mechanisms of both types of machines are mounted
on a self-propelled, steerable, mobile, four-wheeled chassis. Scissor lifts and
boom lifts can be driven by the operator from the platform while in an elevated
position, thus enabling the operator to move from one location to another
without having to return to the ground. This feature, coupled with the
elimination of the time-
49
<PAGE> 51
consuming and more labor-intensive task of erecting, disassembling and moving
scaffolding, generates substantial labor savings and reduces hazards to workers.
Scissor lifts generally are capable of supporting 500 to 2,000 pounds of
payload and can elevate to heights ranging from 12 to 50 feet. Boom lifts
generally are capable of supporting 500 to 750 pounds of payload and can elevate
to heights ranging from 30 to 150 feet.
Aerial work platforms are used in a variety of applications that require
workers to access elevated work areas. The ability to elevate the worker,
equipment and material on a platform which the worker can position while
elevated improves worker safety and productivity. Self-propelled aerial work
platforms are now commonly used by end users in construction, industrial,
commercial and institutional markets who use the equipment for a wide variety of
applications, including for the construction, repair and maintenance of
industrial plants, shopping malls, office buildings, schools, hotels, hospitals,
elevated roadways, bridges and other industrial, commercial and institutional
structures. During the construction of certain large commercial and industrial
projects, contractors can often require in excess of one hundred aerial work
platforms at one time. The wide acceptance of aerial work platforms as a
cost-effective, safe alternative to scaffolding and ladders in the United
States, Canada and parts of Europe has influenced both the design of certain
buildings and construction methods. For example, the construction, maintenance
and usefulness of high-ceilinged warehouses have been made more practical
through the wide acceptance of aerial work platforms.
The aerial work platform industry is cyclical and historically has been
dependent on the United States construction industry. However, several other
factors have affected the growth in total unit shipments, including the
following:
- - New product introductions, new usage applications and the continued expansion
into international markets have increased demand. The aerial work platform
industry has historically been concentrated in North America and has primarily
served the non-residential construction market. As a result, industry growth
was adversely affected by the severe downturn in commercial construction
between 1990 and 1992. However, according to data reported by EMI, scissor
lift unit shipments exported from North America have increased by a compound
annual growth rate of approximately 25% since 1986. Several new products have
been introduced that are specifically designed for nonconstruction
applications, such as narrow aisle boom lifts which accounted for
approximately 8% of total boom lift unit shipments in 1996.
- - Significant changes in the industrial equipment rental industry. UpRight's
management believes that increasing demand for rentals is helping to fuel the
growth in demand for aerial work platform products. In addition, companies in
the equipment rental industry are reducing the average age of their rental
fleets by accelerating the turnover of their equipment, thereby increasing
sales of aerial work platforms. At the same time, the consolidation of the
historically fragmented equipment rental industry in the United States has led
to the emergence of several national and regional equipment rental companies
which have greater access to capital. In addition, these large industrial
equipment rental companies are expanding the availability of aerial work
platforms from larger industrial metropolitan centers to more geographically
diverse and smaller industrial and non-industrial areas.
- - Safety regulations are increasing. Product liability concerns in the United
States and an increase in the number and scope of government-mandated safety
regulations, especially in developing countries, have spurred an increase in
the development of safety features and improved the cost effectiveness of
aerial work platforms compared to scaffolding, cranes, forklifts and ladders.
BUSINESS STRATEGY
The Company believes that UpRight is well positioned to realize continued
growth in net sales and EBITDA. UpRight expects to continue its growth and
enhance its industry leadership by implementing a continuation of this strategy
based on the following elements:
Continually Introduce New Products and Extend Product Line. UpRight
management believes that it is among the leaders in new product development in
the industry. In addition to its extensive scissor lift product line, UpRight
intends to systematically expand its product offerings with a line of
articulated and telescopic
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boom lifts, the first of which was introduced in February 1997. UpRight expects
to leverage its existing domestic and international distribution capabilities to
accelerate market acceptance and market share of its boom lifts. The line
extension strategy will be targeted to the most frequently utilized models with
broad end user applications and to less frequently utilized models servicing
underserved niches with specific end user applications. UpRight has recently
completed the construction of approximately 80,000 square feet of additional
assembly and production capacity and intends to add over time an additional
300,000 square feet of manufacturing facilities to accommodate the anticipated
growth in its boom lift sales.
Enhance Product Reliability. UpRight believes its products are well
regarded in the industry for their quality, features and reliability and have
among the highest resale values in the used equipment aftermarket. In addition,
management believes that repair and maintenance costs for its equipment compare
favorably to those of its competitors within the industry. UpRight has increased
and expects to continue to increase its research, development and engineering
efforts to integrate new components and materials technology into its products
in order to further enhance product quality and reliability.
Provide High Level of Customer Service. UpRight believes that its level of
customer service is among the highest in the industry and that its reputation
for service is excellent. UpRight's customer service includes technical support
for dealers and rental companies, repair and maintenance services, spare parts
availability, product upgrades and operational and safety training. UpRight
intends to continue to provide operational training, safety instruction and
other services to enhance customer loyalty.
Expand Distribution Network. UpRight intends to expand its distribution
network of domestic and international dealers and industrial equipment rental
companies primarily by (i) adding dealers in existing markets to increase
penetration and market presence, (ii) adding dealers in new markets,
particularly outside the United States, (iii) following existing dealers'
expansion into a greater number of locations, and (iv) expanding its boom lift
line which will make UpRight's product line comprehensive and should enhance its
attractiveness to certain large industrial equipment rental companies.
Improve Production Efficiency. UpRight intends to continue to automate and
upgrade production equipment, redesign and reengineer products to standardize
and simplify parts and components, work closely with its suppliers to reduce
parts and components costs, including inventory costs, and enhance quality
control to reduce production and delivery cycles. In addition, UpRight believes
that its new product development and product line extensions will help it
realize economies of scale.
Expand Through Selective Acquisitions. UpRight intends to make selective
acquisitions of complementary companies to accelerate the expansion of its
product line or distribution network or to vertically integrate the manufacture
of certain parts and components used in its products to improve cost efficiency
and enhance product reliability. Management believes many of the parts and
components used in UpRight's products are manufactured by a number of small
companies which, if acquired, could be integrated into UpRight's research,
design and production capabilities while retaining the existing customer base of
such acquired companies.
PRODUCTS
UpRight's product line consists of four major categories of equipment:
scissor lifts, boom lifts, portable lifts and aluminum scaffolding.
Scissor Lifts. UpRight is a leader in the manufacture and sale of scissor
lifts, offering nine product lines consisting of more than 127 scissor lift
models, with elevation capabilities of up to 50 feet and various platform sizes
up to 6 feet by 14 feet, including some models with an available option that
extends the deck horizontally up to six feet, and rated lift capacities ranging
from 500 to 2,000 pounds. Scissor lifts are intended to safely lift and support
workers, their tools and materials. These models are available for indoor and
outdoor applications, including a rough-terrain series of scissor lifts with a
patented leveling apparatus which provides for fast platform leveling on uneven
ground and slopes. The uses and applications for scissor lifts are varied and
include non-residential construction, warehousing, renovations and retooling and
maintenance of large manufacturing plants and institutional facilities.
Currently, dealer net prices for UpRight's standard models
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range from approximately $7,750 to $45,000. UpRight's two largest scissor lift
lines, consisting of models ranging from 15 to 31 feet, accounted for 42% of
UpRight's revenue for the latest twelve months ended March 30, 1997.
Each of UpRight's self-propelled units is powered by either a
battery-powered DC electric motor or an internal combustion engine (propane,
gasoline or diesel). UpRight's DC electric-powered scissor lifts are capable of
climbing grades of up to 25%, which allows them to climb most inclines and ramps
and to tolerate certain uneven floor conditions. UpRight's engine-driven
machines are also available with two- and four-wheel drive and can climb grades
of up to 35%, which makes these machines capable of traversing difficult
terrain.
Boom Lifts. In February 1997, UpRight introduced its first line of
articulating boom lifts and intends to introduce certain other boom lift lines
in the future. UpRight offers nine boom lift models, and distributes an
additional two boom lift models which are manufactured by an affiliate, with
rated lift capacities up to 500 pounds. The applications for boom lifts are
extensive, due to their mobility, and include non-residential construction,
manufacturing, renovations and retooling of large manufacturing plants and
facilities maintenance. Boom lifts are designed to reach over machinery and
equipment that is mounted on floors and for reaching other elevated positions
not easily accessed by a vertical lifting device. The boom may be rotated up to
360 degrees in either direction, raised or lowered from vertical to below
horizontal and extended, while the work platform remains horizontal and stable.
Boom lifts may be maneuvered forward or backward and steered in any direction by
the operator from the elevated work platform. Currently, dealer net prices for
UpRight's standard models, including the two models manufactured by its
affiliate, range from approximately $28,000 to $43,000.
Each of UpRight's boom lifts is powered by either battery-powered DC
electric motors or an internal combustion engine (propane, gasoline or diesel).
UpRight's boom lifts are capable of climbing grades of up to 36%, which allows
them to climb most inclines and ramps, as well as allowing for the ability to
negotiate certain uneven floor conditions.
Portable Lifts. UpRight offers two product lines consisting of more than
36 models of manually-propelled portable lifts, which consist of a work platform
attached to an aluminum or steel mast that extends vertically. These machines,
while in their retracted position, can be rolled through standard door openings.
They have maximum elevation capabilities of up to 48 feet and rated lift
capacities range from 250 to 350 pounds. The applications for portable lifts are
more limited than for self-propelled machines and include many indoor uses such
as maintenance of commercial buildings, municipal and governmental institutions,
industrial plants and theaters. Currently, dealer net prices for UpRight's
standard models range from approximately $3,000 to $9,500.
Scaffolding. UpRight first introduced aluminum scaffolding in 1947 and
today is considered to be the North American leader in this product segment.
Scaffolding height can be adjusted by mounting individual sections on top of one
another up to a maximum height of approximately 100 feet. Today, scaffolding is
still a major rental and sales item for use on certain construction and
maintenance projects, although it represents a declining portion of UpRight's
business. Revenue from scaffolding in fiscal year 1996 was $4.0 million,
representing approximately 4% of UpRight's revenue.
PRODUCT DEVELOPMENT STRATEGY
UpRight's products compete in a price-conscious, utilitarian-oriented
market on the basis of product quality, cost, reliability and customer service.
The primary design challenge with aerial work platforms is to achieve the
maximum lift (height and work load) capacity and machine stability with minimum
machine dimensions, weight and cost. UpRight employs 12 engineers who use
computer assisted design ("CAD") to facilitate faster design, redesign and
improvement of machines. In addition, new machine models and related
modifications are often tested by conducting accelerated service life cycle
tests of actual machines under load, during which time critically stressed
machine components are monitored using state-of-the-art strain measuring
technology. These capabilities, among others, enable UpRight to quickly and
safely improve the designs of its existing and future aerial work platform
models.
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UpRight's product development process is customer driven, beginning with
market research of customer needs and requirements. UpRight's development
process utilizes concurrent engineering and cross-functional teams, which
combine personnel from marketing, design, engineering, manufacturing, purchasing
and quality assurance. As a result of this approach, UpRight's product
development cycle for scissor lift models is approximately 11 months. To develop
the boom lift line, UpRight utilized its existing technology and engineering
capabilities from its scissor lifts and supplemented its product development
staff with engineers experienced in the design, development and manufacture of
boom lifts. In February 1997, UpRight introduced its first boom lift product,
with a line of 45-foot articulated booms. UpRight chose this model as its first
product line in booms because 45-foot articulated models are the largest single
segment within the boom lift market, accounting for 22% of estimated total boom
lift sales, according to EMI data and management estimates. UpRight intends to
introduce additional boom lift models following a similar business strategy of
initially targeting the most frequently utilized product sizes or serving an
underserved market niche in the boom lift market.
Since the early days of the aerial work platform industry, UpRight
engineers have been actively involved in creating and writing various industry
safety standards. In addition to meeting these requirements, UpRight has often
exceeded them, adopting features, such as interlocking outriggers on portable
lifts and pothole protection and tilt interlocks on scissor lifts, before they
were incorporated into industry safety standards.
SALES AND MARKETING
UpRight's products are distributed through a network of domestic and
international dealers and industrial equipment rental companies to end users in
North America and increasingly in Europe, the Pacific Rim and Latin America. The
North American network consists of over 140 companies, several of whom have
large nationwide branch networks, operating in all 50 states and Canada. In
Europe, Africa and the Middle East, UpRight's distribution network consists of
49 dealers in 32 countries. UpRight also has 21 distributors in 13 countries in
the Pacific Rim and has six distributors in six countries of Latin America.
UpRight's distributors sell and/or rent its products and provide service
support.
UpRight supports the sales, service and rental programs of its distributors
with product advertising, cooperative promotional programs, major trade show
participation and distributor personnel training in service, safety and product
attributes. UpRight supports the sales, service and rental programs of its
distributors with product specific advertising, cooperative promotional
programs, national and regional trade show participation and distributor
personnel training in sales, service, safety and product attributes. In order to
better serve differing channels of distribution and end use applications,
UpRight has structured its North American sales organization along product
lines, with one team serving boom and scissor lift distributors and rental
companies, including large national rental companies, and the other group
supporting the distribution of portable lifts. Internationally, UpRight's sales
force is regionally structured with separate organizations serving European,
Pacific Rim and Latin American distributors. UpRight's sales and service support
to its customers in Europe is supplemented through UpRight's affiliate in
Ireland.
During fiscal years 1994, 1995 and 1996 and for the latest twelve months
ended March 30, 1997, other than Horizon, UpRight's ten largest customers
together accounted for approximately 30%, 43%, 43% and 40% of UpRight's revenue,
respectively. No single customer of UpRight accounted for 10% or more of the
Company's revenue during fiscal years 1994, 1995 and 1996. During the latest
twelve months ended March 30, 1997 one customer of UpRight, Instant Zip-Up
Limited, accounted for approximately 16% of UpRight's revenue and approximately
14% of the Company's revenue. An affiliate of the Company owns a minority voting
interest in Instant Zip-Up Limited. See "Certain Relationships and Related
Transactions."
MANUFACTURING
UpRight's headquarters and manufacturing facility is located in a 335,000
square foot complex in Selma, California, of which approximately 150,000 square
feet of manufacturing space was added since January 1, 1995. UpRight has spent
more than $15.1 million since the beginning of fiscal 1994 to upgrade and expand
its manufacturing facilities, to install several new machine tools, including
computer numerically controlled
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("CNC") turning and machining centers, plasma cutting and welding robots,
flexible manufacturing system ("FMS"), including CNC punching and laser cutting
centers, as well as a state-of-the-art powder coat paint finishing system, which
management believes is among the largest on the West Coast. These capital
expenditures have more than doubled UpRight's manufacturing throughput since the
beginning of fiscal 1994 and increased labor productivity.
The manufacturing process involves welding and fabrication of raw steel and
aluminum into various components, machining, assembly and painting. To the
extent practical, a cellular approach is used to manufacture major components on
a just-in-time basis. Products are assembled, including purchased finished
components, on a build-to-order basis utilizing continuous flow processes. These
approaches give UpRight the flexibility to quickly respond to changing customer
demand while effectively managing its inventory levels. In-process inspection is
utilized to control and ensure quality.
UpRight employed 476 employees in the manufacturing process as of March 30,
1997, of which 196 were "temporary" or contract personnel. This mix of
"permanent" and "temporary" personnel gives UpRight the flexibility to quickly
and efficiently adjust production levels during periods of changing market
demand. This flexible staffing policy also gives management the opportunity to
selectively add quality permanent employees from the temporary ranks. UpRight
believes this pre-employment trial has contributed to a very low employee
turnover rate. At present, during an average week, UpRight operates one 40-hour
assembly shift and multiple shifts of a smaller number of employees performing
certain machining, painting and fabrication functions.
To support its product line expansion strategy, UpRight plans to add
additional facilities at its existing Selma, California complex, including boom
lift manufacturing and shipping buildings. However, full implementation of the
boom lift product line extension strategy over the next five years will require
the purchase of approximately 20 additional acres in the Selma area, at an
estimated cost of approximately $600,000.
SUPPLIERS
UpRight's scissor lifts and boom lifts are fabricated primarily from steel.
Portable lifts and scaffolds are fabricated primarily from aluminum. These raw
materials are obtained from large company mills or service centers. Most
purchased finished components, including electric motors, batteries and
hydraulic motors, cylinders and valves, are obtained directly from small- to
mid-sized United States manufacturing companies. Engines are supplied through
independent distributors. UpRight relies on arrangements with preferred vendors
as a sole source for just-in-time delivery of many manufactured components.
Depending on the particular product, purchased finished components account for
approximately 60% to 65% of the total average unit cost. UpRight has instituted
a comprehensive supplier certification program, in which a team of UpRight
personnel work closely with supplier partners to ensure quality and reduce
costs. To the extent feasible, just-in-time deliveries are used to minimize
inventories and support UpRight's continuous flow production processes.
COMPETITION
In selling its aerial work platform products, UpRight experiences two
principal types of competition: from alternative equipment and from other
manufacturers of aerial work platforms. UpRight competes with more traditional
means of accomplishing the tasks performed by aerial work platforms, including
truck- and trailer-mounted booms and, to a more limited extent, ladders,
scaffolding and other devices. UpRight's management believes that its aerial
work platforms in many applications are safer, more versatile and more
efficient, taking into account labor costs, than those traditional methods and
that its aerial work platforms enjoy competitive advantages when the job
requires frequent movement from one location to another at the same site or when
there is a need to return to the ground frequently for tools and materials.
UpRight competes in the aerial work platform industry primarily with
several other manufacturers, including JLG Industries, Grove Worldwide, Skyjack
and Genie Industries, which each manufacture scissor lifts, boom lifts and
portable lifts, Snorkel and Terex, which each manufacture scissor lifts and boom
lifts, and Mayville Engineering Company, which manufactures scissor lifts and
portable lifts. UpRight's scissor lift product line is as extensive as that of
any other manufacturer in the industry and management believes
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UpRight is among the top three scissor lift manufacturers worldwide. UpRight has
recently introduced its first boom lift product line and is currently developing
additional boom lift models. Several of UpRight's competitors currently offer a
more comprehensive boom lift product line. Certain of UpRight's competitors are
part of, or are affiliated with, companies that are larger and have greater
financial resources than UpRight. Several of UpRight's competitors have
significantly increased or are in the process of significantly increasing their
manufacturing capacity. See "Risk Factors -- Competition." However, UpRight
believes that its product quality, customer service, distribution network and
reputation for leadership in product improvement and development enhance
UpRight's competitive position.
PROPERTIES
UpRight maintains its headquarters and manufacturing operations at its
owned facilities at 1775 Park Street, Selma, California 93662, telephone (209)
896-5150. UpRight leases a sales office and training facility in Cincinnati,
Ohio with a five-year term and a storage facility in Selma, California with a
six-month term with optional six-month renewals.
HORIZON
Horizon is a leading industrial equipment rental, sales and service company
specializing in aerial work platforms, including scissor lifts, boom lifts and
portable lifts, and forklifts and scaffolding, serving a diverse range of more
than 11,000 active customers from 14 domestic locations. Horizon offers a full
service, integrated approach to serving its customers' needs by providing
rentals of equipment, sales of new and used equipment, sales of spare parts and
repair and maintenance services. For the latest twelve months ended March 30,
1997, approximately 51% of Horizon's revenue was generated by equipment rentals,
approximately 45% of Horizon's revenue was generated by sales of new and used
equipment, and the remainder was generated by training services, sales of spare
parts and certain related customer services. Management believes that, among
major industrial equipment rental companies, Horizon has one of the highest
ratios of sales to rentals in the industry. Within the last three fiscal years,
Horizon has strategically expanded its product offerings to include, in addition
to UpRight products, certain additional product lines from other leading
manufacturers. Horizon acts as a distributor for UpRight products in most of
Horizon's designated market areas. Horizon and UpRight operate independently,
and all transactions between them are conducted on an arm's-length basis.
Horizon's strategy is to focus on small- to mid-sized companies and
contractors, particularly in the construction market, including users in
specialized trades, such as electricians, painters, HVAC and mechanical
contractors, and in the industrial market, including users engaged in the
maintenance of warehouses, manufacturing plants and commercial and institutional
facilities. Management believes that its customers within its target markets are
less price sensitive, more dependent upon service and equipment availability,
less sensitive to economic cycles and more diversified in number than are the
larger end users typically targeted by Horizon's primary competitors. In
addition, small- to mid-sized contractors tend to rent equipment on shorter
notice for shorter periods of time. As a result of the higher turnover of
equipment and Horizon's pricing structure, management believes Horizon generates
higher margins and higher dollar utilization than if Horizon targeted larger end
users. Horizon's rental strategy is complemented by Horizon's sales efforts,
which primarily target small- to mid-sized companies that often purchase the
most frequently utilized equipment models and rent additional equipment or
specialized equipment for particular projects.
The equipment rental industry serves a wide variety of commercial and
residential construction, industrial and homeowner customers. According to a
survey conducted by AED, an industry trade organization, the United States
equipment rental industry has grown from approximately $610 million in revenue
in 1982 to an estimated $13 billion in revenue in 1995, a compound annual growth
rate of approximately 27%. Horizon's management estimates that the aerial work
platform segment constitutes approximately 10% to 15% of such industry revenue.
Management believes that the growth in the industry reflects, in part, (i) an
increase in outsourcing by commercial and industrial customers seeking to reduce
their capital invested in equipment and to reduce the costs associated with
maintaining and servicing such equipment by renting rather than
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purchasing equipment, (ii) an increase in the number of equipment rental
locations and the corresponding increase in availability of equipment, and (iii)
a general decline in inflation-adjusted rental rates.
According to the Rental Equipment Register, an industry publication,
Horizon is the 34th largest rental equipment company in the United States based
on 1996 rental revenue; however, within the aerial work platform segment,
Horizon is the eighth largest rental equipment company. Horizon's rental fleet
as of March 30, 1997 exceeded 2,400 self-propelled and portable aerial work
platforms and forklifts with an original equipment cost of approximately $38.0
million, and included aluminum scaffolding with an original equipment cost of
approximately $950,000.
Horizon provides a complete range of customer services through its network
of offices and field support personnel, including safety and operational
training, technical and maintenance support, 24-hour emergency repair service,
spare parts supplies and related services. Management believes Horizon is
recognized as a leader in customer service, a significant factor for many of
Horizon's customers, which are generally more dependent on each piece of
equipment and which cannot afford downtime associated with unscheduled
maintenance. Horizon was among the first aerial work platform rental companies
to offer service and maintenance contracts and training programs, and was one of
the first in the industry to comply with all of the safety and operational
standards of ANSI.
BUSINESS STRATEGY
Focus on Small- to Mid-Sized Customers. Horizon intends to continue
focusing on small- to mid-sized companies in the construction market, including
users in specialized trades, such as electrical, painting, HVAC and mechanical
contractors, and in the industrial market, including users engaged in the
maintenance of warehouses, manufacturing plants and commercial and institutional
facilities. Management believes that its comprehensive service and technical
support, which includes safety and operational training, 24-hour emergency
repair service, spare part supplies and related services, provides a competitive
advantage with these customers and, further, that focusing on these customers
allows Horizon to achieve higher dollar utilization, more stable day utilization
and higher margins than if Horizon targeted larger end users.
Expand the Number of Locations. Horizon currently operates in 14 locations
dispersed among industrial areas on the East Coast and West Coast and in the
Midwest and Southwest. In late 1995, Horizon began to implement a hub-and-spoke
expansion strategy whereby one branch supports multiple satellite rental offices
to maximize the availability and utilization of its rental fleet within a given
geographic area while cost-efficiently increasing market penetration. Because
many of its customers are small- to mid-sized companies, maintaining a local
presence and relationship is important in retaining customer loyalty. Horizon
has identified several additional markets in which to open branches, as well as
selectively add satellite offices, within the next several years. Satellite
offices are intended to be opened to service existing customers' needs as they
expand or relocate, and to attract new customers. As part of this strategy and
to accelerate its expansion efforts, Horizon may make strategic acquisitions of
regional or local equipment rental and sales companies.
Expand and Upgrade Rental Fleet. Horizon has systematically expanded its
rental fleet primarily to meet the demands of specific markets. Within the next
two fiscal years, Horizon plans to add approximately $11 million (at dealer
cost) of additional equipment to upgrade its existing fleet and approximately $6
million (at dealer cost) of additional equipment to offer greater availability
and more comprehensive product mix to its customers. See "Capital Expansion
Program." Horizon does not intend to significantly change the composition of its
rental fleet towards boom lifts, because its existing customer base has
historically utilized scissor lifts and boom lift usage declines substantially
during the winter and poor weather months, which decreases equipment
utilization.
Manage the Revenue Mix of Rentals and Sales. Horizon targets a 50%/40%/10%
mix of revenue generated from (i) rentals, including delivery charges and damage
waivers, (ii) sales of new and used equipment and (iii) miscellaneous sources,
including service revenue on customer-owned equipment, sales of spare parts and
safety training certification fees, respectively. Horizon management believes
this strategy diversifies Horizon's customer base beyond the construction
industry and mitigates the impact of seasonal and economic cycles. Equipment
sales to industrial companies within the latest twelve months ended March 30,
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1997 accounted for approximately 70% of total Horizon sales of new and used
equipment. Although Horizon expects that its new branches and satellite offices
will generate higher percentages of rental revenue, until those branches and
satellite offices are more established in their respective markets, Horizon
intends to continue to target a similar revenue mix through an increase in sales
of new and used equipment and spare parts at its existing locations.
PRODUCTS AND SERVICES
Equipment rental represents Horizon's principal line of business. In fiscal
1996, equipment rental revenue, together with rental-related revenue, such as
repair services, delivery charges and damage waiver income, accounted for
approximately 50% of Horizon's revenue. Horizon also acts as a distributor of
new equipment on behalf of UpRight and certain other nationally known equipment
manufacturers. Approximately 43% of Horizon's fiscal 1996 revenue was derived
from the sale of new and used equipment, of which approximately 69% was
equipment manufactured by UpRight. Revenue from the sale of parts and
merchandise accounted for approximately 7% of Horizon's revenue in fiscal 1996.
Rental Equipment. Horizon rents over 105 different models of aerial work
platforms and other industrial equipment as of March 30, 1997, consisting of
scissor lifts, boom lifts (including one truck-mounted boom lift model),
portable lifts and forklifts, with a total exceeding 2,400 pieces of equipment
(excluding scaffolding). The original equipment cost of Horizon's rental fleet
was approximately $38.0 million as of such date. In addition, Horizon maintains
a comprehensive inventory of aluminum scaffolding with an original equipment
cost of approximately $950,000 as of such date. The distribution of Horizon's
total rental equipment fleet (based on original equipment cost) as of March 30,
1997 was: (i) scissor lifts (58%); (ii) boom lifts (34%); (iii) portable lifts
(1%); (iv) forklifts (3%); (v) scaffolding (2%); and (vi) other equipment (2%).
The mix of rental equipment at each of Horizon's 14 domestic locations is
tailored to meet the demands of the local customer base.
Horizon seeks to maintain a modern, high-quality rental fleet through
regular sales of used rental equipment and ongoing capital investment in new
equipment. As of March 30, 1997, the average age of Horizon's rental equipment
fleet was approximately 42 months. Horizon currently expects to replace
approximately 15% of its rental fleet annually, subject to market, economic and
other conditions. In addition, Horizon has an advanced preventive maintenance
program, which complies with ANSI requirements and requires that scheduled
maintenance be performed in compliance with manufacturers' guidelines. This
program extends the useful life of Horizon's rental equipment, which management
believes results in higher resale prices in the industrial equipment
aftermarket.
Sales of New Equipment. In addition to equipment rental, Horizon is a
distributor for various equipment manufacturers in certain of its designated
market areas, including UpRight (scissor lifts, boom lifts, portable lifts and
aluminum scaffolding), Simon Aerials (boom lifts), Denka Lift (specialized
manually-propelled boom lifts), Mitsubishi (forklifts) and Elliott
(truck-mounted boom lifts). Horizon also sells equipment manufactured by Genie
Industries (boom lifts). Horizon believes that, by offering new equipment for
sale, it strengthens its relationships with its existing rental customers who
may want to purchase certain pieces of often-utilized equipment, and it enables
Horizon to develop new rental customer relationships as it sells new equipment
to customers who rent equipment to supplement their owned machines.
Sales of Used Equipment. Horizon routinely sells used equipment to adjust
the size and composition of its rental fleet to changing market conditions and
as part of its ongoing commitment to maintain a modern, high-quality rental
fleet. Horizon believes it achieves favorable sales prices for its used
equipment as a result of its preventive maintenance program and its practice of
selling used equipment before it becomes irreparable or obsolete. Horizon's
management attempts to optimize the timing of sales of used equipment by taking
into account maintenance costs, rental demand patterns and resale prices.
Horizon sells used equipment to its existing rental customers as well as to
other used equipment buyers.
Sales of Parts and Merchandise. Horizon also sells a wide range of repair
and replacement parts, supplies and safety equipment, including harnesses, belts
and lanyards, as a complement to its equipment
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rental and sales businesses. Management believes that the sales of parts,
supplies and safety equipment enhance the ability of Horizon to attract and
retain customers.
Service. Horizon also generates revenue from maintenance service by
providing various options to its customers, including service on a contract or
time-and-materials basis for customers who own their equipment and over the life
of a lease for customers who lease their equipment. Horizon's trained personnel
perform both the maintenance and service work on Horizon's rental fleet and to
customers who own equipment. Horizon's safety department also provides safety
training and operator training courses, including operator certification and
"train-the-trainer" programs.
OPERATIONS
Horizon's sales and rental functions are managed at each of its locations.
Each year, location managers budget expected new equipment sales and rental
equipment expenditures and parts and service needs for their respective markets.
Horizon recently centralized equipment purchasing at a single location in an
effort to achieve greater volume discounts and better manage its inventory.
Horizon distributes equipment from its Dallas location to all other Horizon
locations or customers upon order, except for West Coast shipments, which are
distributed from its Sacramento, California location.
Horizon seeks to manage its rental fleet to optimize the return on its
investment in rental equipment. Senior management regularly interacts with
branch managers to monitor equipment utilization rates and indicated demand at
each location in order to determine and react to trends and imbalances between
supply and demand for equipment. In late 1995, Horizon began implementing a
"hub-and-spoke" network among certain of its branch and satellite locations
whereby, through its information systems, employees at locations within a
certain hub-and-spoke network are able to locate a specific item within that
network's geographic region and determine whether that item is currently rented
to a customer, undergoing maintenance or available for delivery. Once the item
is identified, the employee is able to reserve such equipment for a customer and
schedule delivery to the job site.
Horizon utilizes an integrated AS400 information system which allows both
the corporate headquarters and the branch and satellite locations to have
instantaneous access to all inventory and rental information. The system also
provides immediate access to customer records and needs and management believes
enables Horizon to move its assets among locations to optimize equipment
utilization and maximize customer service. Management believes that its
information systems are an integral component in its ability to manage new
locations effectively.
CUSTOMERS
Horizon serves a diverse range of more than 11,000 active customers. Other
than one customer who accounted for approximately 4% of Horizon's revenue, no
single customer of Horizon accounted for more than 1% of Horizon's revenue
during the latest twelve months ended March 30, 1997. No single customer of
Horizon accounted for 1% or more of the Company's revenue during fiscal years
1994, 1995 and 1996. Horizon classifies its customers as either construction or
industrial end users. For fiscal 1996, approximately 53% of Horizon's revenue
was derived from construction end users, with the remaining 47% being derived
from industrial end users. Construction customers include users in specialized
trades, such as electricians, painters, HVAC and mechanical contractors.
Industrial customers include users engaged in the maintenance of warehouses,
manufacturing plants and commercial and institutional facilities.
SUPPLIERS
Each Horizon branch carries a comprehensive line of UpRight equipment in
its rental fleet, including scissor lifts, portable lifts and aluminum
scaffolding, and each location also carries a variety of equipment from other
manufacturers, including boom lifts and forklifts. Other than Genie Industries
boom lifts, which are purchased from distributors, Horizon purchases all of its
equipment directly from the original equipment manufacturer. UpRight accounted
for approximately 58%, 72%, 49%, 45%, and 50% of Horizon's total capital
purchases of equipment for fiscal years 1994, 1995 and 1996 and the nine months
ended March 31, 1996 and
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March 30, 1997, respectively. Horizon believes it could readily replace any of
its suppliers for rental equipment if it were necessary.
SALES AND MARKETING
In the sales and rental of aerial work platforms, Horizon's strategy is to
focus on small- to mid-sized end users. Horizon concentrates on providing a wide
selection of equipment choices to a large, diversified customer base while
providing comprehensive customer service and technical support.
There are currently 34 employees in Horizon's sales force, including
specialists who focus on the construction industry, with a primary focus on
equipment rentals, specialists who focus on the industrial market, with a
primary focus on equipment sales, and special account managers who focus on
specialized industries and end users. Horizon's sales force has been with
Horizon an average of approximately six years. Sales personnel are compensated
on a salary-plus-commission basis and report directly to branch managers.
Horizon promotes its services through a combination of direct sales
contacts, telemarketing, listings in telephone directories, subscriptions to
industry data base lists and pursuing leads obtained from manufacturers. In
addition, each Horizon field office annually participates in approximately five
informational trade shows in their market area and, combined with the
manufacturers' national shows, Horizon sales representatives annually attend
approximately 50 trade shows on a company-wide basis.
PROPERTIES
Horizon's corporate headquarters are located at 1540 East Shaw Avenue,
Suite 123, Fresno, California 93710, telephone (209) 248-8180. Horizon currently
has 11 branch facilities at the following locations: Atlanta, Georgia;
Charlotte, North Carolina; Beltsville, Maryland; Oakland, Sacramento and Brea,
California; Elmhurst, Illinois; Morgantown, West Virginia; Houston and Dallas,
Texas; and Ridgefield Park, New Jersey. In addition, Horizon currently has three
satellite facilities at the following locations: Raleigh, North Carolina
(Charlotte); Charleston, South Carolina (Charlotte); and Charleston, West
Virginia (Morgantown). Horizon owns no properties. Horizon's corporate
headquarters are leased for a term expiring in August 2000. Generally, Horizon's
branches are leased for terms ranging from three to five years with options to
extend or renew. Horizon's satellite facilities are leased for terms of less
than one year. Horizon's management believes it would be able to relocate its
branches or satellites to alternate locations on comparable lease terms.
LEGAL PROCEEDINGS, ENVIRONMENTAL AND REGULATORY
MATTERS AND EMPLOYEES
LEGAL PROCEEDINGS; PRODUCT LIABILITY; INSURANCE
Use of products manufactured by UpRight and sold or rented by Horizon
involves exposure to personal injury as well as property damage, particularly if
operated carelessly or without proper maintenance, and liability exposure for
the Company, UpRight and Horizon.
There are various claims and litigation pending against UpRight and Horizon
for personal injury and property damage arising out of incidents involving the
use of UpRight products and, in the case of Horizon, products of UpRight and
other manufacturers. The Company believes that litigation of this type is common
in the businesses of UpRight and Horizon and for other manufacturers and
distributors in the aerial work platform industry. Although the outcome of such
litigation cannot be predicted with certainty, it is the opinion of management,
based on the advice of legal counsel and other considerations, that all claims,
legal actions, complaints and proceedings which have been filed or are pending
against UpRight and Horizon, as well as possible future claims, are adequately
covered by reserves and insurance.
UpRight's insurance against exposure to such litigation is currently
comprised of a self-insurance retention of $100,000 per occurrence and
catastrophic coverage of $101 million per occurrence and in an annual aggregate
in excess of the retention.
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Horizon's insurance currently provides for an annual aggregate of $10.0
million in respect of general liability with a deductible of $10,000 per
occurrence for the first $1.0 million of coverage. The Company has accrued what
management believes are adequate reserves with respect to pending and potential
claims. Management believes that UpRight's and Horizon's potential exposure to
product liability/general claims may be affected by the substantial growth in
usage of aerial work platforms over the past several years, which has
dramatically increased machine population and the number of users. There can be
no assurance that existing or future claims will not exceed the level of
UpRight's and Horizon's insurance, or that such insurance will continue to be
available on economically reasonable terms, or at all. In addition, certain
types of claims, such as claims for punitive damages or for damages arising from
intentional misconduct, generally are not covered by insurance. Since the
acquisitions of UpRight and Horizon by the Company, neither subsidiary has been
required to pay any claim for punitive damages. Product liability costs incurred
by the Company, including premiums, self-insurance retention payments,
unreimbursed judgments and settlements not covered by insurance, for fiscal
years 1994, 1995 and 1996, approximated 2.6%, 2.5% and 2.6% of revenue,
respectively. Various legal actions (in areas other than product liability) may
arise in the ordinary course of business from time to time against the Company,
UpRight or Horizon. Other than with respect to product liability, there is no
litigation currently pending against the Company, UpRight or Horizon. None of
the litigation pending against UpRight or Horizon, individually or collectively,
is expected to have a material adverse effect on the Company's financial
condition, results of operations or liquidity.
ENVIRONMENTAL AND REGULATORY MATTERS
UpRight and Horizon are subject to environmental regulation by federal,
state and local governmental authorities. Although the Company does not believe
that the operations of UpRight and Horizon involve activities likely to create
significant environmental risks, their operations do involve the use of diesel
and gasoline fuel, hydraulic fluid, coolants, paint and other chemicals and
solvents that must be stored, handled, used and disposed of in accordance with
environmental laws and regulations. The Company believes that its operations
have been and are in compliance in all material respects with applicable
environmental laws and regulations. To date, environmental requirements have not
had a material adverse effect on the Company's operations or financial
condition. Expenditures by the Company for environmental matters were $0.3
million in fiscal 1996 and are estimated to be $0.3 million in each of the
fiscal years 1997 and 1998.
Since the late 1980s, UpRight has been engaged in ongoing clean up and
monitoring of soil and groundwater contamination at its Selma, California
facility. UpRight is currently in the process of preparing a remediation
proposal to the Regional Water Quality Control Board. Management of UpRight does
not believe that its proposal or other alternative remedial actions are likely
to have a material adverse effect on UpRight's financial condition or results of
operations. UpRight and Horizon are also subject to worker and product safety
regulations by the Occupational Safety and Health Administration ("OSHA") and by
the safety regulations of various states. OSHA has adopted many of the safety
standards developed by ANSI and enforces these standards for the industry.
UpRight employees have been on ANSI committees since 1979 and have assisted in
the drafting and development of those standards. Management of the Company
believes that it is currently in compliance with all applicable worker and
product safety requirements and that such laws and regulations have not, to
date, had a material adverse effect on the Company's operations or financial
condition.
EMPLOYEES
UpRight had 364 full-time and 205 temporary persons employed as of March
30, 1997. None of UpRight's employees is subject to collective bargaining
agreements. UpRight believes its employee relations are good, and it has
experienced no work stoppages as a result of labor problems.
As of March 30, 1997, Horizon had a total of 175 full-time employees,
including nine personnel in the Fresno headquarters who provide administrative
and accounting services. Each branch location averages 12 to 18 people,
typically structured as follows: one manager, three to four office persons, two
to four sales persons, five to seven mechanics and two truck drivers. The 10
mechanics and drivers at the Ridgefield Park, New Jersey facility are members of
the International Brotherhood of Operating Engineers and are the only union
employees at Horizon. Horizon believes its employee relations are good, and it
has experienced no work stoppages as a result of labor problems.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY, UPRIGHT AND HORIZON
The following table sets forth certain information concerning the directors
and executive officers of the Company, UpRight and Horizon:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------ --- --------------------------------------
<S> <C> <C>
Robert F. Stowe............... 53 Chairman of the Board of Directors of
the Company
David K. Sargent.............. 58 President and Chief Executive Officer
of the Company, UpRight and Horizon
and Director of the Company
Graham D. Croot............... 42 Chief Financial Officer of the Company
Kenneth M. A. Murphy.......... 31 Controller of the Company
Noel Corcoran................. 51 Secretary of the Company
Peter B. Sawdy................ 65 Director of the Company
James T. Dillon............... 49 Vice President and General Manager of
UpRight
Shaun Flanagan................ 56 Vice President and General Manager of
Horizon
</TABLE>
Robert F. Stowe has served as Chairman of the Board of Directors of the
Company since 1985. He is the founder of various trusts, the beneficiaries of
which are the family, relations and other descendants of Mr. Stowe (the "Stowe
Family Trusts"). Since 1974, Mr. Stowe has served as Chairman of various
companies which are owned by the Stowe Family Trusts and which are affiliates of
the Company. Mr. Stowe is a Fellow of the Institute of Chartered Accountants in
Australia.
David K. Sargent has served as President and Chief Executive Officer of the
Company, UpRight and Horizon since 1989 and as a Director of the Company since
1994. Prior to joining the Company, Mr. Sargent was President of Instant Zip-Up
Limited, a distributor of UpRight products in the United Kingdom. Mr. Sargent is
currently a director of Instant Zip-Up Limited.
Graham D. Croot has served as Chief Financial Officer of the Company since
1990. He served as the Company's Treasurer from 1981 to 1989. In addition to his
responsibilities with the Company, Mr. Croot serves as chief financial officer
of various companies owned by the Stowe Family Trusts. Mr. Croot is a member of
The Australian Society of Certified Practicing Accountants.
Kenneth M. A. Murphy has served as Controller of the Company since 1996. In
addition to his responsibilities with the Company, since 1996, Mr. Murphy has
served as controller of various companies owned by the Stowe Family Trusts.
Prior to joining the Company, from 1992 to 1996, Mr. Murphy was an accountant
with Arthur Andersen LLP, serving as a Manager in the Contract Audit Services
Division from 1995 to 1996. Mr. Murphy is a member of the Institute of Chartered
Accountants in Ireland.
Noel Corcoran has served as Secretary of the Company since April 1997. In
addition to his responsibilities with the Company, since 1994, Mr. Corcoran has
served as secretary and in other capacities of various companies owned by the
Stowe Family Trusts. From 1990 to 1994, Mr. Corcoran served as the Financial
Controller of European Operations of UpRight. Mr. Corcoran is a Fellow of the
Association of Chartered Certified Accountants.
Peter B. Sawdy has served as a Director of the Company since April 1997.
Mr. Sawdy is currently the Chairman of Peter Sawdy Associates, a business
consultancy. From 1990 to 1993, Mr. Sawdy was Chairman of Costain Group. Mr.
Sawdy has served in various director and advisory capacities with the Stowe
Family Trusts since 1985.
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James T. Dillon has served as Vice President and General Manager of UpRight
since 1991. Mr. Dillon joined UpRight in 1987 as Chief Financial Officer. Prior
to joining UpRight, he served as Vice President and Controller of Equatorial
Communications, Inc.
Shaun Flanagan has served as Vice President and General Manager of Horizon
since 1989. Mr. Flanagan was the founder and President of Horizon from 1982
until 1989 when Horizon was acquired by UpRight. Mr. Flanagan served as the Vice
President and General Manager of the Horizon Division of UpRight from 1989 until
1994 when Horizon became a wholly-owned subsidiary of the Company.
EXECUTIVE COMPENSATION
The following table sets forth for the last three fiscal years certain
compensation information about the Company's chief executive officer and the
other persons who served as executive officers of the Company, UpRight or
Horizon during fiscal 1996 and earned in excess of $100,000 during such year.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL
COMPENSATION
---------------------
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS
----------------------------------------------- ---- -------- --------
<S> <C> <C> <C>
David K. Sargent............................... 1996 $175,000 $ 50,000
President and Chief Executive Officer 1995 141,667 50,000
of the Company, UpRight and Horizon 1994 125,000 25,000
James T. Dillon................................ 1996 $220,320 $159,750
Vice President and General 1995 200,000 129,520
Manager of UpRight 1994 150,000 60,000
Shaun Flanagan................................. 1996 $175,000 $ 60,000
Vice President and General 1995 100,640 50,000
Manager of Horizon 1994 101,736 --
</TABLE>
DIRECTORS
Directors of the Company are elected annually and hold office until the
next annual meeting of stockholders or until their successors are duly elected
and qualified.
Directors of the Company do not receive any fees for services on the Board
of Directors. Directors are reimbursed for their expenses for each meeting
attended.
EMPLOYEE BENEFIT PLANS
Employees of UpRight participate in a Taxsaver's Investment Plan (the
"UpRight 401(k) Plan"). The UpRight 401(k) Plan was originally adopted effective
as of January 1, 1984 as an addition to the Company's Employee Stock Ownership
Plan, originally adopted in January 1, 1975. The Company's Employee Stock
Ownership Plan was terminated in 1987. UpRight makes fixed contributions to the
UpRight 401(k) Plan for each year in an amount equal to 4% of the compensation
of all eligible participants, plus up to an additional 2% matching of
participants' contributions. The UpRight 401(k) Plan also contains features that
allow employees to save money before paying Federal income tax on the amount
saved. The UpRight 401(k) Plan covers all employees who have at least one year
of service, and is administrated by a Plan Committee, whose members are
appointed by UpRight's Board of Directors. The UpRight 401(k) Plan is intended
to conform to the provisions of the Employee Retirement Income Security Act of
1974. Contributions to the UpRight 401(k) Plan are fully vested as of December
31 in the year in which such contributions were made.
Employees of Horizon participate in the Horizon High Reach 401(k) Plan (the
"Horizon 401(k) Plan"). Participation in this defined contribution plan is
available to all full-time employees who have completed at least one year of
service and attained the age of 21. Horizon makes fixed contributions to the
Horizon 401(k) Plan for each year in an amount up to 4% of the compensation of
all eligible participants. In addition to the fixed annual contribution, Horizon
is required to make a matching contribution equal to the participant's elective
contribution up to 2% of the participant's compensation for the calendar year.
Employee
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contributions to the Horizon 401(k) Plan are fully vested. Employer
contributions are vested in 20% annual increments beginning after the second
year of participation in the Horizon 401(k) Plan, with full vesting occurring
after the sixth year of participation. Employees are fully vested upon their
65th birthday. Employees of Horizon who had been employed by UpRight or Horizon
for one year as of December 31, 1993 are fully vested in the Horizon 401(k)
Plan.
INCENTIVE COMPENSATION
The Company has in effect various arrangements pursuant to which certain
officers may receive incentive cash bonuses based upon the achievement of
financial performance objectives. The amounts of incentive bonuses, and
performance criteria for such bonuses, are determined by the Company's Board of
Directors.
DIRECTORS' AND OFFICERS' INSURANCE
UpRight International Limited, the parent of the Company, has purchased
liability insurance for the directors and officers of its subsidiaries,
including the Company, UpRight and Horizon, effective January 1, 1996, for an
aggregate 21 months' premium of $112,500. No part of this premium will be paid
by directors and executive officers of the Company. The aggregate insurance
coverage under the policy is limited to $5.0 million per policy year, and a
$100,000 deductible for each claim is payable under the policy by UpRight
International Limited in respect of any claim made against a director or officer
for which UpRight International Limited has indemnified such director or
officer. UpRight International Limited intends to increase the aggregate
insurance coverage under the policy.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of the date hereof, information with
respect to the beneficial ownership of shares of the Company's Common Stock by
each stockholder known by the Company to be the beneficial owner of more than 5%
of such shares. No executive officers or directors of the Company own any shares
of the Company's Common Stock.
<TABLE>
<CAPTION>
PERCENTAGE
NAME AND ADDRESS OF STOCKHOLDER(1) CLASS SHARES OF CLASS
- ------------------------------------------------ --------------------- ------- ----------
<S> <C> <C> <C>
UpRight International Limited(2)................ Class A Common Stock 55,000 100%
Class B Common Stock 5,000 100
Preferred Stock 25,000 100
</TABLE>
- ---------------
(1) The principal business address of UpRight International Limited is Le Forum
2 degrees Etage, 28 Boulevard Princesse Charlotte, MC-98000, Monaco.
(2) All of the capital stock of UpRight International Limited is owned
beneficially by the Stowe Family Trusts. The trustees of the trusts are
appointed by Mr. Stowe, who is not a beneficiary thereunder.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During fiscal 1997, each of UpRight and Horizon entered into a separate
corporate services agreement (the "Corporate Services Agreements") with Griffin
Group International Management Ltd. ("Griffin"), an affiliate of the Company.
Pursuant to the Corporate Services Agreements, Griffin provides consulting
services to UpRight and Horizon in various areas including operations, finance
and accounting, asset management, strategic planning and policy, management
organization, marketing, technology and communications and public relations.
During fiscal 1997, UpRight and Horizon will pay Griffin $604,000 and $276,000,
respectively, for services rendered by Griffin, including the services of
Messrs. Croot, Murphy and Corcoran and others, pursuant to the Corporate
Services Agreements, of which $435,000 and $180,000, respectively, have been
paid through March 30, 1997. The Corporate Services Agreements terminated on
June 29, 1997. On May 12, 1997, the Company entered into a corporate services
agreement with Griffin (the "Company Corporate Services Agreement") pursuant to
which Griffin, for a term of one fiscal year commencing June 30,
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1997, provides consulting services to the Company, UpRight and Horizon in
various areas including operations, finance and accounting, asset management,
strategic planning and policy, management organization, marketing, technology,
communications, public relations and SEC compliance and reporting, including the
services of Messrs. Croot, Murphy and Corcoran and others. The term of the
Company Corporate Services Agreement is automatically extended for additional
one year periods, unless either party gives notice of termination 180 days prior
to the end of such fiscal year. The Indenture provides that amounts payable
under the Company Corporate Services Agreement shall be for actual services
rendered and shall not exceed the amounts that would be payable to unaffiliated
third parties for such services. Any amounts payable under the Company Corporate
Services Agreement in excess of 8.5% of the Company's EBITDA on a consolidated
basis are subject to the limitation on restricted payments covenant. See
"Description of the Notes -- Certain Covenants -- Limitation on Restricted
Payments."
Upon consummation of the offering of the Original Notes, the Company paid
Griffin $700,000 for reimbursement of expenses incurred in connection with the
offering of the Original Notes.
UpRight International Manufacturing Ltd. ("UpRight Ireland"), an affiliate
of the Company located in Ireland, Vectur GmbH ("Instant Deutschland"), an
affiliate of the Company located in Germany, and Instant Access Australia Pty.
Ltd. ("Instant Australia"), an affiliate of the Company located in Australia,
each purchase and distribute products for UpRight in their respective market
areas. UpRight Ireland purchases products from UpRight on extended terms to
maintain a strategic sales inventory in Europe and provides sales, marketing and
warranty support to UpRight in Europe. UpRight management believes that each of
the foregoing arrangements are conducted on an arm's-length basis and on terms
at least as favorable to UpRight as those generally available from unaffiliated
third parties. During fiscal 1994, the Company's revenue from UpRight Ireland,
Instant Deutschland and Instant Australia were $1.3 million, $2.1 million and
$0.6 million, respectively. During fiscal 1995, the Company's revenue from
UpRight Ireland, Instant Deutschland and Instant Australia were $4.2 million,
$0.8 million and $1.0 million, respectively. During fiscal 1996, the Company's
revenue from UpRight Ireland, Instant Deutschland and Instant Australia were
$3.6 million, $1.5 million and $1.1 million, respectively. In addition, UpRight
and Horizon purchase and UpRight distributes in the United States certain
products manufactured by UpRight Ireland. During fiscal years 1994, 1995 and
1996, the Company's purchases from UpRight Ireland totaled approximately $0.6
million, $0.9 million and $1.7 million, respectively. During fiscal years 1994,
1995 and 1996, UpRight paid UpRight Ireland $458,000, $600,000 and $740,000,
respectively, for participation in UpRight Ireland's cooperative marketing
programs.
During fiscal years 1995 and 1996, the Company had revenue from Instant
Zip-Up Limited of approximately $5.9 million and $8.3 million, respectively. An
affiliate of the Company owns a minority voting interest in Instant Zip-Up
Limited.
At the end of fiscal years 1994, 1995 and 1996, the Company was indebted to
UpRight International Limited for an aggregate principal amount of approximately
$19.2 million, $15.5 million and $13.5 million, respectively. As of March 30,
1997, such indebtedness and accrued interest thereon totaled approximately $9.6
million, which amount was repaid upon consummation of the offering of the
Original Notes. See "Use of Proceeds."
DESCRIPTION OF CERTAIN INDEBTEDNESS
TERM INDEBTEDNESS
On July 15, 1996, Horizon entered into a term note with a financial
institution in the amount of approximately $6.0 million, plus interest thereon
computed either at a fluctuating rate per annum equal to the prime rate or at a
fixed rate per annum determined by the lender to be 2.10% above its money market
funds rate. Interest on the note is payable monthly, together with principal of
$99,996, and the outstanding principal balance on the note is due and payable in
full on July 15, 2001. As of March 30, 1997, $5.2 million was outstanding on
this note.
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On July 1, 1996, Horizon entered into a term commitment note with a
financial institution in the amount of $7.75 million, plus interest thereon
computed either at a variable rate per annum equal to the prime rate or at a
fixed rate per annum determined by the lender to be 2.10% above its money market
funds rate. Interest on the note is payable monthly, and the outstanding
principal balance on the note is due and payable in full on July 15, 2002. As of
March 30, 1997, $5.95 million was outstanding on this note.
On July 14, 1995, Horizon entered into a term note with a financial
institution in the amount of $5.6 million, plus interest thereon computed at
either a fluctuating rate per annum 0.5% above the prime rate or at a fixed rate
per annum determined by the lender to be 2.1% above its money market funds rate.
Interest on the note is payable monthly, together with principal of $93,333, and
the outstanding principal balance on the note is due and payable in full on July
15, 2000. As of March 30, 1997, $3.45 million was outstanding on this note.
On June 15, 1994, Horizon entered into a term note with a financial
institution in the amount of $6.0 million, plus interest thereon computed at
either a fluctuating rate per annum 0.5% above the prime rate or at a fixed rate
per annum determined by the lender to be 2.1% above its money market funds rate.
Interest on the note is payable monthly, together with principal of $83,333, and
the outstanding principal balance on the note is due and payable in full on
August 5, 2000. As of March 30, 1997, $3.42 million was outstanding on this
note.
All of the above-described term indebtedness has been repaid, and the
related notes and agreements were cancelled and terminated, following
consummation of the offering of the Original Notes. See "Use of Proceeds."
BONDS
On October 27, 1994, UpRight finalized a bonds payable agreement for two
bond issues with the Community Redevelopment Agency of the City of Selma,
California, pursuant to which a total of $7.1 million is available to UpRight
for purchases of buildings, equipment and tooling. The bonds bear interest
ranging from 7.0% to 11.0% per annum. As of March 30, 1997, the Company has
received in the aggregate $6.2 million in bond proceeds, and made principal
payments in the aggregate of $0.5 million on the bonds. The remaining $0.9
million is expected to be fully funded by June 29, 1997. The Company is
scheduled to repay one series of the bond financing in bi-annual payments of
principal and interest through December 2014 and is scheduled to repay the other
series of bond financing in monthly payments of principal and interest through
December 2014.
On October 27, 1994, UpRight also entered into an agreement with the City
of Selma to develop and improve, at the Company's expense, certain of the
Company's real property infrastructure. The improvements project was financed by
the issuance of Limited Obligation Improvement Bonds for Assessment District No.
1994-1. The total project cost including aggregate bond fees of $504,000 was not
to exceed $1.4 million. As of March 30, 1997, the Company has received in the
form of bond financing a total of $1.4 million. The bonds bear interest at an
average interest rate of 7.5%. The Company is scheduled to repay the bond
financing in bi-annual payments of principal and interest through December 2014.
Due to the structure of the agreement with the City of Selma, the Company is
issued bi-annual property tax bills as the bond payments are due. The Company
records the bond payments as property tax expense as each one accrues. As a
consequence of this treatment, the Company's financial statements do not reflect
the bond payable balance.
REVOLVING INDEBTEDNESS
On October 16, 1996, UpRight entered into a revolving loan agreement with a
financial institution which allows it to borrow in amounts in the aggregate not
to exceed $4.0 million. Interest accrues on amounts borrowed at a fixed or
variable rate, at UpRight's option, of 2.25% per annum in excess of the lender's
adjusted London Interbank Offered Rate ("LIBOR") rate for the interest period or
at the lender's reference rate, respectively. The loan is payable in monthly
installments and matures on December 30, 1998. As of March 30, 1997, total
borrowings were zero and available funds were $4.0 million.
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In November 1996, Horizon entered into a revolving line of credit note with
a financial institution in the amount of $3.0 million, not to exceed 80% of
eligible receivables plus 25% of its inventory. Interest accrues on such
revolving line of credit at the lender's prime lending rate (8.5% at March 30,
1997). As of March 30, 1997, total borrowings were $1.2 million and available
funds were $1.8 million. The $1.2 million balance was repaid upon consummation
of the offering of the Original Notes. See "Use of Proceeds."
RELATED PARTY INDEBTEDNESS
During fiscal 1994, the Company issued an unsecured note payable to UpRight
International Limited for approximately $19.2 million. The note is due on demand
and bears interest at either 0.5% above the prime rate or 2% above the LIBOR
(adjusted annually) at the election of the Company. Accrued interest is payable
quarterly. As of March 30, 1997, $7.5 million was outstanding on this note. This
note was repaid upon consummation of the offering of the Original Notes. See
"Use of Proceeds."
OTHER INDEBTEDNESS
The Company's subsidiaries have capital lease and other debt obligations
for rental equipment, computers and other equipment. The capital lease
obligations are due in monthly installments of various amounts, with maturities
ranging from July 1998 to February 2002 and with interest rates per annum
ranging from 8.0% to 14.4%. Such capital lease and other debt obligations
totaled approximately $6.9 million as of March 30, 1997. These capital lease and
other debt obligations have been or will be repaid upon consummation of the
offering of the Original Notes. See "Use of Proceeds."
DESCRIPTION OF THE NOTES
The Original Notes were, and the Exchange Notes will be, issued under an
Indenture, dated as of June 10, 1997 (the "Indenture") among the Company and
U.S. Trust Company of California, N.A., as trustee (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, as amended (the
"Trust Indenture Act") as in effect on the date of the Indenture. The Notes are
subject to all such terms, and holders of the Notes are referred to the
Indenture and the Trust Indenture Act for a statement of them. The following is
a summary of the material terms and provisions of the Notes. This summary does
not purport to be a complete description of the Notes and is subject to the
detailed provisions of, and qualified in its entirety by reference to, the Notes
and the Indenture (including the definitions contained therein). Definitions
relating to certain capitalized terms are set forth under "-- Certain
Definitions" and throughout this description. Capitalized terms that are used
but not otherwise defined herein have the meanings assigned to them in the
Indenture, and such definitions are incorporated herein by reference. The
Indenture has been filed as an exhibit to the Registration Statement of which
this Prospectus is a part. The form of the Exchange Notes and the Original Notes
are identical in all material respects except that the Exchange Notes will have
been registered under the Securities Act and, therefore, will not bear legends
restricting their transfer. The Exchange Notes will not represent new
indebtedness of the Company, will be entitled to the benefits of the same
Indenture which governs the Original Notes and will rank pari passu with the
Original Notes. Any provisions of the Indenture which require actions by or
approval of a specified percentage of Original Notes shall require the approval
of the holders of such percentage of principal amount of Original Notes and
Exchange Notes, in the aggregate.
The Indenture provides for the issuance of the $105 million principal
amount of Original Notes and additional series of notes in aggregate principal
amounts of not less than $20 million per series, subject to compliance with the
covenant described below under "-- Certain Covenants -- Limitation on Additional
Indebtedness" and provided that no Default or Event of Default exists under the
Indenture at the time of issuance or would result therefrom and that the
aggregate principal amount of notes issued under the Indenture does not exceed
$150 million. All notes will be substantially identical in all material respects
other than issuance dates.
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GENERAL
The Notes are general unsecured obligations of the Company, subordinated in
right of payment to Senior Indebtedness of the Company and senior in right of
payment to any future subordinated indebtedness of the Company.
The Notes are unconditionally guaranteed, on a senior subordinated
unsecured basis, as to payment of principal, premium, if any, and interest,
jointly and severally, by the Guarantors (together with each other Restricted
Subsidiary which guarantees payment of the Notes pursuant to the covenant
described under "-- Certain Covenants -- Limitation on Creation of
Subsidiaries."
MATURITY, INTEREST AND PRINCIPAL
The Notes will mature on June 15, 2007. The Notes are limited in aggregate
principal amount to $150 million. Any Notes issued after the Issue Date can only
be issued in compliance with the covenant described under "-- Certain
Covenants -- Limitation on Additional Indebtedness." The Notes will bear
interest at a rate of 10 5/8% per annum from the date of original issuance until
maturity. Interest is payable semi-annually in arrears on June 15 and December
15 commencing December 15, 1997, to holders of record of the Notes at the close
of business on the immediately preceding June 1 and December 1, respectively.
Interest on the Exchange Notes 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 June 10, 1997.
The interest rate on the Notes is subject to increase, and such Additional
Interest will be payable on the payment dates set forth above, in certain
circumstances, if the Notes (or other securities substantially similar to the
Notes) are not registered with the Commission within the prescribed time
periods. Upon consummation of the Exchange Offer, such registration requirements
will have been met and no Additional Interest will be payable with respect the
Notes, except as set forth below. In the event that the Company does not
exchange Exchange Notes for all Original Notes validly tendered in accordance
with the terms of the Exchange Offer on or prior to 60 days after the date of
this Prospectus or the Registration Statement of which this Prospectus forms a
part ceases to be effective at any time prior to the consummation of the
Exchange Offer (either such event, a "Registration Default"), the sole remedy
available to holders of the Notes will be the immediate assessment of additional
interest ("Additional Interest") as follows: the per annum interest rate on the
Notes will increase by .50% during the first 90-day period following the
occurrence of a Registration Default and until it is waived or cured; and the
per annum interest rate will increase by an additional .25% for each subsequent
90-day period during which the Registration Default remains uncured, up to a
maximum additional interest rate of 2.0% per annum in excess of the interest
rate on the cover of this Prospectus. All Additional Interest will be payable to
holders of the Notes in cash on the same original issue payment dates as the
Notes, commencing with the first such date occurring after any such Additional
Interest commences to accrue, until such Registration Default is cured. After
the date on which such Registration Default is cured, the interest rate on the
Notes will revert to the interest rate originally borne by the Notes (as shown
on the cover of this Prospectus).
The summary herein of certain provisions of the Registration Rights
Agreement does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, all the provisions of the Registration Rights
Agreement, which has been filed as an exhibit to the Registration Statement of
which this Prospectus forms a part, a copy of which will be available to holders
of the Notes upon request to the Company.
OPTIONAL REDEMPTION
The Notes are redeemable at the option of the Company, in whole or in part,
at any time on or after June 15, 2002 at the following redemption prices
(expressed as a percentage of principal amount), together, in
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each case, with accrued and unpaid interest to the redemption date, if redeemed
during the twelve-month period beginning on June 15, of each year listed below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
-------------------------------------------------- ----------
<S> <C>
2002.............................................. 105.313%
2003.............................................. 103.542%
2004.............................................. 101.771%
2005 and thereafter............................... 100.000%
</TABLE>
Notwithstanding the foregoing, the Company may redeem in the aggregate up
to 35% of the original principal amount of Notes at any time and from time to
time prior to June 15, 2000 at a redemption price equal to 110.625% of the
aggregate principal amount so redeemed, plus accrued interest to the redemption
date out of the Net Proceeds of one or more Public Equity Offerings; provided,
that at least $75 million of the principal amount of Notes originally issued
remain outstanding immediately after the occurrence of any such redemption and
that any such redemption occurs within 90 days following the closing of any such
Public Equity Offering.
In the event of redemption of fewer than all of the Notes, the Trustee
shall select by lot or in such other manner as it shall deem fair and equitable
the Notes to be redeemed. The Notes are redeemable in whole or in part upon not
less than 30 nor more than 60 days' prior written notice, mailed by first class
mail to a holder's last address as it shall appear on the register maintained by
the Registrar of the Notes. On and after any redemption date, interest will
cease to accrue on the Notes or portions thereof called for redemption unless
the Company shall fail to redeem any such Note.
SUBORDINATION
The indebtedness represented by the Notes is, to the extent and in the
manner provided in the Indenture, subordinated in right of payment to the prior
indefeasible payment and satisfaction in full in cash of all existing and future
Senior Indebtedness of the Company. As of March 30, 1997, after giving pro forma
effect to the application of the net proceeds of the offering of the Original
Notes, the Company would have had $0.0 of Senior Indebtedness outstanding and
the Guarantors would have had approximately $5.7 million of Senior Indebtedness
outstanding.
In the event of any insolvency or bankruptcy case or proceeding, or any
receivership, liquidation, arrangement, reorganization or other similar case or
proceeding in connection therewith, relative to the Company or to its creditors,
as such, or to its assets, whether voluntary or involuntary, or any liquidation,
dissolution or other winding-up of the Company, whether voluntary or involuntary
and whether or not involving insolvency or bankruptcy, or any general assignment
for the benefit of creditors or other marshalling of assets or liabilities of
the Company (except in connection with the merger or consolidation of the
Company or its liquidation or dissolution following the transfer of
substantially all of its assets, upon the terms and conditions permitted under
the circumstances described under "-- Merger, Consolidation or Sale of Assets")
(all of the foregoing referred to herein individually as a "Bankruptcy
Proceeding" and collectively as "Bankruptcy Proceedings"), the holders of Senior
Indebtedness of the Company will be entitled to receive payment and satisfaction
in full in cash of all amounts due on or in respect of all Senior Indebtedness
of the Company before the holders of the Notes are entitled to receive or retain
any payment or distribution of any kind (other than a payment or distribution in
the form of Permitted Junior Securities) on account of the Notes. In the event
that, notwithstanding the foregoing, the Trustee or any holder of Notes receives
any payment or distribution of assets of the Company of any kind, whether in
cash, property or securities, including, without limitation, by way of set-off
or otherwise, in respect of the Notes before all Senior Indebtedness of the
Company is paid and satisfied in full in cash, then such payment or distribution
(other than a payment or distribution in the form of Permitted Junior
Securities) will be held by the recipient in trust for the benefit of holders of
Senior Indebtedness and will be immediately paid over or delivered to the
holders of Senior Indebtedness or their representative or representatives to the
extent necessary to make payment in full of all Senior Indebtedness remaining
unpaid, after giving effect to any concurrent payment or distribution, or
provision therefor, to or for the holders of Senior Indebtedness. By reason of
such subordination, in the
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event of liquidation or insolvency, creditors of the Company who are holders of
Senior Indebtedness may recover more, ratably, than other creditors of the
Company, and creditors of the Company who are not holders of Senior Indebtedness
or of the Notes may recover more, ratably, than the holders of the Notes.
No payment or distribution (other than a payment or distribution in the
form of Permitted Junior Securities) of any assets or securities of the Company
or any Restricted Subsidiary of any kind or character (including, without
limitation, cash, property and any payment or distribution which may be payable
or deliverable by reason of the payment of any other Indebtedness of the Company
being subordinated to the payment of the Notes by the Company) may be made by or
on behalf of the Company or any Restricted Subsidiary, including, without
limitation, by way of set-off or otherwise, for or on account of the Notes, or
for or on account of the purchase, redemption or other acquisition of the Notes,
and neither the Trustee nor any holder or owner of any Notes shall take or
receive from the Company or any Restricted Subsidiary, directly or indirectly in
any manner, payment in respect of all or any portion of Notes following the
delivery by the representative of the holders of Designated Senior Indebtedness
(the "Representative") to the Trustee of written notice of the occurrence of a
Payment Default, and in any such event, such prohibition shall continue until
such Payment Default is cured, waived in writing or ceases to exist. At such
time as the prohibition set forth in the preceding sentence shall no longer be
in effect, subject to the provisions of the following paragraph, the Company
shall resume making any and all required payments in respect of the Notes,
including any missed payments.
Upon the occurrence of a Non-Payment Event of Default on Designated Senior
Indebtedness, no payment or distribution (other than a payment or distribution
in the form of Permitted Junior Securities) of any assets of the Company of any
kind may be made by the Company, including, without limitation, by way of
set-off or otherwise, on account of the Notes, or on account of the purchase or
redemption or other acquisition of Notes, for a period (a "Payment Blockage
Period") commencing on the date of receipt by the Trustee of written notice from
the Representative of such Non-Payment Event of Default unless and until
(subject to any blockage of payments that may then be in effect under the
preceding paragraph) the earliest of (x) more than 179 days shall have elapsed
since receipt of such written notice by the Trustee, (y) such Non-Payment Event
of Default shall have been cured or waived in writing or shall have ceased to
exist or such Designated Senior Indebtedness shall have been paid in full or (z)
such Payment Blockage Period shall have been terminated by written notice to the
Company or the Trustee from such Representative, after which, in the case of
clause (x), (y) or (z), the Company shall resume making any and all required
payments in respect of the Notes, including any missed payments. Notwithstanding
any other provision of the Indenture, in no event shall a Payment Blockage
Period commenced in accordance with the provisions of the Indenture described in
this paragraph extend beyond 179 days from the date of the receipt by the
Trustee of the notice referred to above (the "Initial Blockage Period"). Any
number of additional Payment Blockage Periods may be commenced during the
Initial Blockage Period; provided, however, that no such additional Payment
Blockage Period shall extend beyond the Initial Blockage Period. After the
expiration of the Initial Blockage Period, no Payment Blockage Period may be
commenced until at least 180 consecutive days have elapsed from the last day of
the Initial Blockage Period. Notwithstanding any other provision of the
Indenture, no event of default with respect to Designated Senior Indebtedness
(other than a Payment Default) which existed or was continuing on the date of
the commencement of any Payment Blockage Period initiated by the Representative
shall be, or be made, the basis for the commencement of a second Payment
Blockage Period initiated by the Representative, whether or not within the
Initial Blockage Period, unless such event of default shall have been cured or
waived for a period of not less than 90 consecutive days.
Each Guarantee is, to the extent set forth in the Indenture, subordinated
in right of payment to the prior payment in full of all Senior Indebtedness of
the respective Guarantor, including obligations of such Guarantor with respect
to the Credit Facilities, and is subject to the rights of holders of Designated
Senior Indebtedness of such Guarantor to initiate blockage periods, upon terms
substantially comparable to the subordination of the Notes to all Senior
Indebtedness of the Company.
If the Company or any Guarantor fails to make any payment on the Notes or
any Guarantee, as the case may be, when due or within any applicable grace
period, whether or not on account of payment blockage
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provisions, such failure would constitute an Event of Default under the
Indenture and would enable the holders of the Notes to accelerate the maturity
thereof. See "-- Events of Default."
A holder of Notes by his acceptance of Notes agrees to be bound by such
provisions and authorizes and expressly directs the Trustee, on his behalf, to
take such action as may be necessary or appropriate to effectuate the
subordination provided for in the Indenture and appoints the Trustee his
attorney-in-fact for such purpose.
CERTAIN COVENANTS
The Indenture contains, among others, the following covenants. Except as
otherwise specified, all of the covenants described below appear in the
Indenture.
Limitation on Additional Indebtedness
The Company will not, and will not permit any Restricted Subsidiary of the
Company to, directly or indirectly, incur (as defined) any Indebtedness
(including Acquired Indebtedness) unless (a) after giving effect to the
incurrence of such Indebtedness and the receipt and application of the proceeds
thereof, the Company's Fixed Charge Coverage Ratio (determined on a pro forma
basis for the last four fiscal quarters of the Company for which financial
statements are available at the date of determination) is greater than 2.0 to 1
if the Indebtedness is incurred prior to June 15, 1999 and 2.25 to 1 if the
Indebtedness is incurred thereafter; provided, however, that if the Indebtedness
which is the subject of a determination under this provision is Acquired
Indebtedness, or Indebtedness incurred in connection with the simultaneous
acquisition of any Person, business, property or assets or Indebtedness of an
Unrestricted Subsidiary being designated as a Restricted Subsidiary, then such
ratio shall be determined by giving effect to (on a pro forma basis, as if the
transaction had occurred at the beginning of the four-quarter period) both the
incurrence or assumption of such Acquired Indebtedness or such other
Indebtedness by the Company or such Restricted Subsidiary and the inclusion in
the Company's EBITDA of the EBITDA of the acquired Person, business, property or
assets or redesignated Subsidiary, and (b) no Default or Event of Default shall
have occurred and be continuing at the time or as a consequence of the
incurrence of such Indebtedness.
Notwithstanding the foregoing, the Company and its Restricted Subsidiaries
may incur Permitted Indebtedness; provided that the Company will not incur any
Permitted Indebtedness that ranks pari passu or junior in right of payment to
the Notes and that has a maturity or mandatory sinking fund payment prior to the
maturity of the Notes unless it meets the Fixed Charge Coverage Ratio test
specified in the previous paragraph.
Limitation on Restricted Payments
The Company will not make, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, make, any Restricted Payment, unless:
(a) no Default or Event of Default shall have occurred and be
continuing at the time of or immediately after giving effect to such
Restricted Payment;
(b) immediately after giving pro forma effect to such Restricted
Payment, the Company could incur $1.00 of additional Indebtedness (other
than Permitted Indebtedness) under the covenant set forth under "--
Limitation on Additional Indebtedness"; and
(c) immediately after giving effect to such Restricted Payment, the
aggregate of all Restricted Payments declared or made after the Issue Date
does not exceed the sum of (1) 50% of the cumulative consolidated Net
Income of the Company subsequent to the Issue Date (or minus 100% of any
cumulative deficit in Consolidated Net Income during such period), (2) 100%
of the aggregate Net Proceeds and the fair market value of securities or
other property received by the Company from the issue or sale, after the
Issue Date, of Capital Stock (other than Disqualified Capital Stock or
Capital Stock of the Company issued to any Subsidiary of the Company) of
the Company or any Indebtedness or other securities of the Company
convertible into or exercisable or exchangeable for Capital Stock (other
than
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Disqualified Capital Stock) of the Company which has been so converted or
exercised or exchanged, as the case may be and (3) $2,000,000. For purposes
of determining under this clause (c) the amount expended for Restricted
Payments, cash distributed shall be valued at the face amount thereof and
property other than cash shall be valued at its fair market value (as
determined in good faith by the Company's board of directors, and evidenced
by a board resolution).
The provisions of this covenant shall not prohibit (i) the payment of any
distribution within 60 days after the date of declaration thereof, if at such
date of declaration such payment would comply with the provisions of the
Indenture, (ii) the retirement of any shares of Capital Stock of the Company or
subordinated Indebtedness by conversion into, or by or in exchange for, shares
of Capital Stock (other than Disqualified Capital Stock), or out of, the Net
Proceeds of the substantially concurrent sale (other than to a Subsidiary of the
Company) of other shares of Capital Stock of the Company (other than
Disqualified Capital Stock), (iii) the redemption or retirement of Indebtedness
of the Company subordinated to the Notes in exchange for, by conversion into, or
out of the Net Proceeds of, a substantially concurrent sale or incurrence of
Indebtedness (other than any Indebtedness owed to a Subsidiary) of the Company
that is contractually subordinated in right of payment to the Notes to at least
the same extent as the subordinated Indebtedness being redeemed or retired, (iv)
the retirement of any shares of Disqualified Capital Stock by conversion into,
or by exchange for, shares of Disqualified Capital Stock, or out of the Net
Proceeds of the substantially concurrent sale (other than to a Subsidiary of the
Company) of other shares of Disqualified Capital Stock or (v) the payment of
Corporate Services Fees not to exceed $880,000 in fiscal 1997 and 8.5% of the
Company's EBITDA on a consolidated basis for any fiscal year thereafter.
Not later than the date of making any Restricted Payment, the Company shall
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 the covenant "Limitation on Restricted Payments" were computed,
which calculations may be based upon the Company's latest available financial
statements, and that no Default or Event of Default exists and is continuing and
no Default or Event of Default will occur immediately after giving effect to any
Restricted Payments.
Limitations on Investments
The Company will not, and will not permit any of its Restricted
Subsidiaries to, make any Investment other than (i) a Permitted Investment or
(ii) an Investment that is made as a Restricted Payment in compliance with the
"Limitation on Restricted Payments" covenant, after the Issue Date.
Limitations on Liens
The Company will not, and will not permit any of its Restricted
Subsidiaries to, create, incur or otherwise cause or suffer to exist or become
effective any Liens of any kind (other than Permitted Liens) upon any property
or asset of the Company or any Restricted Subsidiary or any shares of stock or
debt of any Restricted Subsidiary which owns property or assets, now owned or
hereafter acquired, unless (i) if such Lien secures Indebtedness which is pari
passu with the Notes or the Guarantees, then the Notes or the Guarantees, as the
case may be, are secured on an equal and ratable basis with the obligations so
secured until such time as such obligation is no longer secured by a Lien or
(ii) if such Lien secures Indebtedness which is subordinated to the Notes or the
Guarantees, any such Lien shall be subordinated to the Lien granted to the
Holders of the Notes to the same extent as such subordinated Indebtedness is
subordinated to the Notes or the Guarantees, as the case may be.
Limitation on Transactions with Affiliates
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, enter into or suffer to exist any
transaction or series of related transactions (including, without limitation,
the sale, purchase, exchange or lease of assets, property or services) with any
Affiliate (including entities in which the Company or any of its Restricted
Subsidiaries own a minority interest) or holder of 10% or more of the Company's
Common Stock (an "Affiliate Transaction") or extend, renew, waive or otherwise
modify the
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terms of any Affiliate Transaction entered into prior to the Issue Date unless
(i) such Affiliate Transaction is between or among the Company and its
Wholly-Owned Subsidiaries or between or among Wholly-Owned Subsidiaries of the
Company; or (ii) the terms of such Affiliate Transaction are fair and reasonable
to the Company or such Restricted Subsidiary, as the case may be, and the terms
of such Affiliate Transaction are commercially reasonable and at least as
favorable as the terms which could be obtained by the Company or such Restricted
Subsidiary, as the case may be, in a comparable transaction made on an
arm's-length basis between unaffiliated parties. In any Affiliate Transaction
involving an amount or having a value in excess of $1 million which is not
permitted under clause (i) above, the Company must obtain a resolution of the
Board of Directors certifying that such Affiliate Transaction complies with
clause (ii) above. In transactions with a value in excess of $3 million which
are not permitted under clause (i) above, the Company must obtain a written
opinion as to the fairness of such a transaction from an independent investment
banking firm, provided, that, in the case of loans from the Company to an
Affiliate or loans from an Affiliate to the Company, no such fairness opinion
shall be required if the Company has obtained a resolution of the Board of
Directors certifying that such Affiliate Transaction complies with clause (ii)
above.
The foregoing provisions will not apply to (i) any Restricted Payment that
is not prohibited by the provisions described under "Limitations on Restricted
Payments" contained herein, (ii) any transaction, approved by the Board of
Directors of the Company, with an officer or director of the Company or of any
Subsidiary in his or her capacity as officer or director entered into in the
ordinary course of business or (iii) any transaction entered into in the
ordinary course of business, consistent with past practice, with any of UpRight
Ireland, Instant Deutschland or Instant Australia.
Limitation on Creation of Subsidiaries
The Company shall not create or acquire, nor permit any of its Restricted
Subsidiaries to create or acquire, any Subsidiary other than (i) a Restricted
Subsidiary existing as of the date of the Indenture, (ii) a Restricted
Subsidiary that is acquired or created after the date of the Indenture, or (iii)
an Unrestricted Subsidiary; provided, however, that each Restricted Subsidiary
acquired or created pursuant to clause (ii) shall have executed a guarantee,
satisfactory in form and substance to the Trustee (and with such documentation
relating thereto as the Trustee shall require, including, without limitation a
supplement or amendment to the Indenture and opinions of counsel as to the
enforceability of such guarantee), pursuant to which such Restricted Subsidiary
shall become a Guarantor. As of the Issue Date, the Company will have no
Subsidiaries, other than the Guarantors.
Limitation on Certain Asset Sales
The Company will not, and will not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless (i) the Company or its
Restricted Subsidiaries, as the case may be, receives consideration at the time
of such sale or other disposition at least equal to the fair market value
thereof (as determined in good faith by the Company's board of directors, and
evidenced by a board resolution); (ii) not less than 85% of the consideration
received by the Company or its Subsidiaries, as the case may be, is in the form
of cash or Temporary Cash Investments; and (iii) the Asset Sale Proceeds
received by the Company or such Restricted Subsidiary are applied (a) first, to
the extent the Company elects, or is required, to prepay, repay or purchase debt
of the Company or any Restricted Subsidiary under a Credit Facility within 180
days following the receipt of the Asset Sale Proceeds from any Asset Sale,
provided that any such repayment shall result in a permanent reduction of the
commitments thereunder in an amount equal to the principal amount so repaid; (b)
second, to the extent of the balance of Asset Sale Proceeds after application as
described above, to the extent the Company elects, to an investment in assets
(including Capital Stock or other securities purchased in connection with the
acquisition of Capital Stock or property of another person) used or useful in
businesses similar or ancillary to the business of the Company or Restricted
Subsidiary as conducted at the time of such Asset Sale, provided that such
investment occurs or the Company or a Restricted Subsidiary enters into
contractual commitments to make such investment, subject only to customary
conditions (other than the obtaining of financing), on or prior to the 181st day
following receipt of such Asset Sale Proceeds (the "Reinvestment Date") and
Asset Sale Proceeds contractually committed are so applied within 270 days
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following the receipt of such Asset Sale Proceeds; and (c) third, if on the
Reinvestment Date with respect to any Asset Sale, the Available Asset Sale
Proceeds exceed $5 million, the Company shall apply an amount equal to such
Available Asset Sale Proceeds to an offer to repurchase the Notes, at a purchase
price in cash equal to 100% of the principal amount thereof plus accrued and
unpaid interest, if any, to the date of repurchase (an "Excess Proceeds Offer").
If an Excess Proceeds Offer is not fully subscribed, the Company may retain the
portion of the Available Asset Sale Proceeds not required to repurchase Notes.
If the Company is required to make an Excess Proceeds Offer, the Company
shall mail, within 30 days following the Reinvestment Date, a notice to the
Holders stating, among other things: (1) that such Holders have the right to
require the Company to apply the Available Asset Sale Proceeds to repurchase
such Notes at a purchase price in cash equal to 100% of the principal amount
thereof plus accrued and unpaid interest, if any, to the date of purchase; (2)
the purchase date, which shall be no earlier than 30 days and not later than 60
days from the date such notice is mailed; (3) the instructions, determined by
the Company, that each Holder must follow in order to have such Notes
repurchased; and (4) the calculations used in determining the amount of
Available Asset Sale Proceeds to be applied to the repurchase of such Notes.
Limitation on Preferred Stock of Restricted Subsidiaries
The Company will not permit any Restricted Subsidiary to issue any
Preferred Stock (except Preferred Stock to the Company or a Restricted
Subsidiary) or permit any Person (other than the Company or a Restricted
Subsidiary) to hold any such Preferred Stock unless the Company or such
Restricted Subsidiary would be entitled to incur or assume Indebtedness under
the covenant described under "-- Limitation on Additional Indebtedness" in the
aggregate principal amount equal to the aggregate liquidation value of the
Preferred Stock to be issued.
Limitation on Capital Stock of Restricted Subsidiaries
The Company will not (i) sell, pledge, hypothecate or otherwise convey or
dispose of any Capital Stock of a Restricted Subsidiary or (ii) permit any of
its Restricted Subsidiaries to issue any Capital Stock, other than to the
Company or a Wholly-Owned Subsidiary of the Company. The foregoing restrictions
shall not apply to an Asset Sale made in compliance with "Limitation on Certain
Asset Sales" or the issuance of Preferred Stock in compliance with the covenant
described under "-- Limitation on Preferred Stock of Restricted Subsidiaries."
Limitation on Sale and Lease-Back Transactions
The Company will not, and will not permit any Restricted Subsidiary to,
enter into any Sale and Lease-Back Transaction unless (i) the consideration
received in such Sale and Lease-Back Transaction is at least equal to the fair
market value of the property sold, as determined in good faith by the Company's
board of directors and evidenced by a board resolution and (ii) the Company
could incur the Attributable Indebtedness in respect of such Sale and Lease-Back
Transaction in compliance with the covenant described under "-- Limitation on
Additional Indebtedness."
Limitation on Dividend and Other Payment Restrictions Affecting Subsidiaries
The Company will not, and will not permit any of its Restricted
Subsidiaries 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 to (a)(i) pay dividends or make any other distributions to
the Company or any of its Restricted Subsidiaries (A) on its Capital stock or
(B) with respect to any other interest or participation in, or measured by, its
profits, or (ii) pay any Indebtedness owed to the Company or any of its
Restricted Subsidiaries, (b) make loans or advances or capital contributions to
the Company or any of its Restricted Subsidiaries or (c) transfer any of its
properties or assets to the Company or any of its Restricted Subsidiaries,
except for such encumbrances or restrictions existing under or by reason of (i)
encumbrances or restrictions existing on the Issue Date, (ii) the Indenture, the
Notes and the Guarantees, (iii) applicable law, (iv) any instrument governing
Indebtedness or Capital Stock of a Person acquired by the Company or any of its
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Restricted Subsidiaries or of any Person that becomes a Restricted Subsidiary as
in effect at the time of such acquisition or such Person becoming a Restricted
Subsidiary (except to the extent such Indebtedness was incurred in connection
with or in contemplation of such acquisition of such Person becoming a
Restricted Subsidiary), which encumbrance or restriction is not applicable to
any Person, or the properties or assets of any Person, other than the Person, or
the property of assets of the Person (including any Subsidiary of the Person),
so acquired, provided that the EBITDA of such Person is not taken into account
(to the extent of such restriction) in determining whether any financing or
Restricted Payment in connection with such acquisition was permitted by the
terms of the Indenture, (v) customary non-assignment provisions in leases or
other agreements entered into in the ordinary course of business and consistent
with past practices, (vi) encumbrances or restrictions under a Credit Facility,
provided that such encumbrances or restrictions are no more restrictive than
those typically contained in senior credit facilities, (vii) Refinancing
Indebtedness provided that such encumbrances or restrictions are in the
aggregate no more restrictive than those contained in the agreements governing
the Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded, or (viii) customary restrictions in security agreements or mortgages
securing Indebtedness of the Company or a Restricted Subsidiary to the extent
such restrictions restrict the transfer of the property subject to such security
agreements and mortgages.
Payments for Consent
Neither the Company nor any of its Subsidiaries shall, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any holder of any Notes for or as an inducement
to any consent, waiver or amendment of any of the terms or provisions of the
Indenture or the Notes unless such consideration is offered to be paid or agreed
to be paid to all holders of the Notes which so consent, waive or agree to amend
in the time frame set forth in solicitation documents relating to such consent,
waiver or agreement.
Limitation on Other Senior Subordinated Indebtedness
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, incur, contingently or otherwise, any
Indebtedness that is both (i) subordinate in right of payment to any Senior
Indebtedness of the Company or its Restricted Subsidiaries, as the case may be,
and (ii) senior in right of payment to the Notes and the Guarantees, as the case
may be. For purposes of this covenant, Indebtedness is deemed to be senior in
right of payment to the Notes and the Guarantees, as the case may be, if it is
not explicitly subordinate in right of payment to Senior Indebtedness at least
to the same extent as the Notes and the Guarantees, as the case may be, are
subordinate to Senior Indebtedness.
Limitation on Lines of Business
The Company will not, and will not permit any of its Restricted
Subsidiaries to, engage in or conduct any business other than (i) participation
in the equipment rental industry, including the sale and rental of industrial
equipment, (ii) participation in the aerial work platform industry or the
materials handling industry, including the manufacture and distribution of
industrial equipment the purpose of which is the movement of people and
material, (iii) the manufacture and distribution of scaffolds and scaffolding
and (iv) businesses complementary, ancillary or related to, any of the
foregoing, or that can be vertically integrated with, any of the foregoing.
CHANGE OF CONTROL OFFER
Within 30 days of the occurrence of a Change of Control, the Company shall
notify the Trustee in writing of such occurrence and shall make an offer to
purchase (the "Change of Control Offer") the outstanding Notes at a purchase
price equal to 101% of the principal amount thereof plus any accrued and unpaid
interest thereon to the Change of Control Payment Date (as hereinafter defined)
(such applicable purchase price being hereinafter referred to as the "Change of
Control Purchase Price") in accordance with the procedures set forth in this
covenant.
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Within 30 days of the occurrence of a Change of Control, the Company also
shall (i) cause a notice of the Change of Control Offer to be sent at least once
to the Dow Jones News Service or similar business news service in the United
States and (ii) send by first-class mail, postage prepaid, to the Trustee and to
each holder of the Notes, at the address appearing in the register maintained by
the Registrar of the Notes, a notice stating:
that a Change of Control Offer is being made pursuant to this covenant
and that all Notes tendered will be accepted for payment, and otherwise
subject to the terms and conditions set forth herein;
the Change of Control Purchase Price and the purchase date (which
shall be a Business Day no earlier than 20 business days from the date such
notice is mailed (the "Change of Control Payment Date"));
that any Note not tendered will continue to accrue interest;
that, unless the Company defaults in the payment of the Change of
Control Purchase Price, any Notes accepted for payment pursuant to the
Change of Control Offer shall cease to accrue interest after the Change of
Control Payment Date;
that holders accepting the offer to have their Notes purchased
pursuant to a Change of Control Offer will be required to surrender the
Notes to the Paying Agent at the address specified in the notice prior to
the close of business on the Business Day preceding the Change of Control
Payment Date;
that holders will be entitled to withdraw their acceptance if the
Paying Agent receives, not later than the close of business on the third
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 the Notes delivered for purchase, and a
statement that such holder is withdrawing his election to have such Notes
purchased;
that holders 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, provided that each Note purchased and each such new
Note issued shall be in an original principal amount in denominations of
$1,000 and integral multiples thereof;
any other procedures that a holder must follow to accept a Change of
Control Offer or effect withdrawal of such acceptance; and
the name and address of the Paying Agent.
On the Change of Control Payment Date, the Company shall, to the extent
lawful, (i) accept for payment Notes or portions thereof tendered pursuant to
the Change of Control Offer, (ii) deposit with the Paying Agent money sufficient
to pay the purchase price of all Notes or portions thereof so tendered and (iii)
deliver or cause to be delivered to the Trustee Notes so accepted together with
an Officers' Certificate stating the Notes or portions thereof tendered to the
Company. 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 Company shall execute and issue, and the Trustee shall promptly authenticate
and mail to such holder, a new Note equal in principal amount to any unpurchased
portion of the Notes surrendered; provided that each such new Note shall be
issued in an original principal amount in denominations of $1,000 and integral
multiples thereof.
The Indenture requires that if a Credit Facility is in effect, or any
amounts are owing thereunder or in respect thereof, at the time of the
occurrence of a Change of Control, prior to the mailing of the notice to holders
described in the preceding paragraph, but in any event within 30 days following
any Change of Control, the Company covenants to (i) repay in full all
obligations under or in respect of such Credit Facility or offer to repay in
full all obligations under or in respect of such Credit Facility and repay the
obligations under or in respect of such Credit Facility of each lender who has
accepted such offer or (ii) obtain the requisite consent under such Credit
Facility to permit the repurchase of the Notes as described above. The Company
must first comply with the covenant described in the preceding sentence before
it shall be required
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to purchase Notes in the event of a Change of Control; provided that the
Company's failure to comply with the covenant described in the preceding
sentence constitutes an Event of Default described in clause (iii) under
"-- Events of Default" below if not cured within 60 days after the notice
required by such clause. As a result of the foregoing, a holder of the Notes may
not be able to compel the Company to purchase the Notes unless the Company is
able at the time to refinance all of the obligations under or in respect of its
Credit Facility or the Credit Facility of its Restricted Subsidiaries or obtain
requisite consents thereunder. Failure by the Company to make a Change of
Control Offer when required by the Indenture constitutes a default under the
Indenture and, if not cured within 60 days after notice, constitutes an Event of
Default.
The Indenture provides that, (A) if the Company or any Subsidiary thereof
has issued any outstanding (i) Indebtedness that is subordinated in right of
payment to the Notes or the Guarantees or (ii) Preferred Stock, and the Company
or such Subsidiary is required to make a Change of Control Offer or to make a
distribution with respect to such subordinated Indebtedness or Preferred Stock
in the event of a change of control, the Company or such Subsidiary shall not
consummate any such offer or distribution with respect to such subordinated
Indebtedness or Preferred Stock until such time as the Company shall have paid
the Change of Control Purchase Price in full to the holders of Notes that have
accepted the Company's Change of Control Offer and shall otherwise have
consummated the Change of Control Offer made to holders of the Notes and (B) the
Company will not issue Indebtedness that is subordinated in right of payment to
the Notes or the Guarantees or Preferred Stock with change of control provisions
requiring the payment of such Indebtedness or Preferred Stock prior to the
payment of the Notes in the event of a Change in Control under the Indenture.
In the event that a Change of Control occurs and the holders of Notes
exercise their right to require the Company to purchase Notes, if such purchase
constitutes a "tender offer" for purposes of Rule 14e-1 under the Exchange Act
at that time, the Company will comply with the requirements of Rule 14e-1 as
then in effect with respect to such repurchase.
MERGER, CONSOLIDATION OR SALE OF ASSETS
The Company will not and will not permit any Guarantor to consolidate with,
merge with or into, or transfer all or substantially all of its assets (as an
entirety or substantially as an entirety in one transaction or a series of
related transactions), to any Person unless: (i) the Company or the Guarantor,
as the case may be, shall be the continuing Person, or the Person (if other than
the Company or the Guarantor) formed by such consolidation or into which the
Company or the Guarantor, as the case may be, is merged or to which the
properties and assets of the Company or the Guarantor, as the case may be, are
transferred shall be a corporation organized and existing under the laws of the
United States or any State thereof or the District of Columbia and shall
expressly assume, by a supplemental indenture, executed and delivered to the
Trustee, in form satisfactory to the Trustee, all of the obligations of the
Company or the Guarantor, as the case may be, under the Notes and the Indenture,
and the obligations under the Indenture shall remain in full force and effect;
(ii) immediately before and immediately after giving effect to such transaction,
no Default or Event of Default shall have occurred and be continuing; and (iii)
immediately after giving effect to such transaction on a pro forma basis the
Company or such Person could incur at least $1.00 of additional Indebtedness
(other than Permitted Indebtedness) under the covenant set forth under
"-- Certain Covenants -- Limitation on Additional Indebtedness," provided that a
Person that is a Guarantor on the Issue Date may merge into the Company or
another Person that is a Guarantor on the Issue Date without complying with this
clause (iii).
In connection with any consolidation, merger or transfer of assets
contemplated by this provision, the Company shall deliver, or cause to be
delivered, to the Trustee, in form and substance reasonably satisfactory to the
Trustee, an Officers' Certificate and an opinion of counsel, each stating that
such consolidation, merger or transfer and the supplemental indenture in respect
thereto comply with this provision and that all conditions precedent herein
provided for relating to such transaction or transactions have been complied
with.
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GUARANTEES
The Notes are guaranteed on a senior subordinated unsecured basis by the
Guarantors. All payments pursuant to the Guarantees by the Guarantors are
subordinated in right of payment to the prior payment in full of all Senior
Indebtedness of the Guarantor, to the same extent and in the same manner that
all payments pursuant to the Notes are subordinated in right of payment to the
prior payment in full of all Senior Indebtedness of the Company.
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 or pursuant to its contribution obligations under
the Indenture, result in the obligations of such Guarantor under the Guarantee
not constituting a fraudulent conveyance or fraudulent transfer under federal or
state law. Each Guarantor that makes a payment or distribution under a Guarantee
shall be entitled to a contribution from each other Guarantor in a pro rata
amount based on the Adjusted Net Assets of each Guarantor.
A Guarantor shall be released from all of its obligations under its
Guarantee if all or substantially all of its assets are sold or all of its
Capital Stock is sold, in each case in a transaction in compliance with the
covenant described under "-- Certain Covenants -- Limitation on Certain Asset
Sales," or the Guarantor merges with or into or consolidates with, or transfers
all or substantially all of its assets to, the Company or another Guarantor in a
transaction in compliance with "Merger, Consolidation or Sale of Assets," and
such Guarantor has delivered to the Trustee an Officers' Certificate and an
opinion of counsel, each stating that all conditions precedent herein provided
for relating to such transaction have been complied with.
EVENTS OF DEFAULT
The following events are defined in the Indenture as "Events of Default":
(i) default in payment of any principal of, or premium, if any, on the
Notes;
(ii) default for 30 days in payment of any interest on the Notes after
such interest becomes due and payable;
(iii) default by the Company or any Guarantor in the observance or
performance of any other covenant in the Notes or the Indenture for 60 days
after written notice from the Trustee or the holders of not less than 25%
in aggregate principal amount of the Notes then outstanding;
(iv) failure to pay when due (within any applicable grace period)
principal, interest or premium in an aggregate amount of $5 million or more
with respect to any Indebtedness of the Company or any Restricted
Subsidiary thereof, or the acceleration of any such Indebtedness
aggregating $5 million or more which default shall not be cured, waived or
postponed pursuant to an agreement with the holders of such Indebtedness
within 60 days after written notice as provided in the Indenture, or such
acceleration shall not be rescinded or annulled within 20 days after
written notice as provided in the Indenture;
(v) any final judgment or judgments which can no longer be appealed
for the payment of money in excess of $5 million shall be rendered against
the Company or any Restricted Subsidiary thereof, and shall not be
discharged for any period of 60 consecutive days during which a stay of
enforcement shall not be in effect;
(vi) certain events involving bankruptcy, insolvency or reorganization
of the Company or any Restricted Subsidiary thereof.
The Indenture provides that the Trustee may withhold notice to the holders
of the Notes of any default (except in payment of principal or premium, if any,
or interest on the Notes) if the Trustee considers it to be in the best interest
of the holders of the Notes to do so.
The Indenture will provide that if an Event of Default (other than an Event
of Default resulting from certain events of bankruptcy, insolvency or
reorganization) shall have occurred and be continuing, then the
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Trustee or the holders of not less than 25% in aggregate principal amount of the
Notes then outstanding may declare to be immediately due and payable the entire
principal amount of all the Notes then outstanding plus accrued interest to the
date of acceleration and such amounts shall become immediately due and payable;
provided, however, that after such acceleration but before a judgment or decree
based on acceleration is obtained by the Trustee, the holders of a majority in
aggregate principal amount of outstanding Notes may, under certain
circumstances, rescind and annul such acceleration if all Events of Default,
other than nonpayment of accelerated principal, premium or interest, have been
cured or waived as provided in the Indenture. In case an Event of Default
resulting from certain events of bankruptcy, insolvency or reorganization shall
occur, the principal, premium and interest amount with respect to all of the
Notes shall be due and payable immediately without any declaration or other act
on the part of the Trustee or the holders of the Notes.
The holders of a majority in principal amount of the Notes then outstanding
shall have the right to waive any existing default or compliance with any
provision of the Indenture or the Notes and to direct the time, method and place
of conducting any proceeding for any remedy available to the Trustee, subject to
certain limitations specified in the Indenture.
No holder of any Note will have any right to institute any proceeding with
respect to the Indenture or for any remedy thereunder, unless such holder shall
have previously given to the Trustee written notice of a continuing Event of
Default and unless also the holders of at least 25% in aggregate principal
amount of the outstanding Notes shall have made written request and offered
reasonable indemnity to the Trustee to institute such proceeding as a trustee,
and unless the Trustee shall not have received from the holders of a majority in
aggregate principal amount of the outstanding Notes a direction inconsistent
with such request and shall have failed to institute such proceeding within 60
days. However, such limitations do not apply to a suit instituted on such Note
on or after the respective due dates expressed in such Note.
DEFEASANCE AND COVENANT DEFEASANCE
The Indenture provides the Company may elect either (a) to defease and be
discharged from any and all obligations with respect to the Notes (except for
the obligations to register the transfer or exchange of such Notes, to replace
temporary or mutilated, destroyed, lost or stolen Notes, to maintain an office
or agency in respect of the Notes and to hold monies for payment in trust)
("defeasance") or (b) to be released from their obligations with respect to the
Notes under certain covenants contained in the Indenture and described above
under "-- Certain Covenants" ("covenant defeasance"), upon the deposit with the
Trustee (or other qualifying trustee), in trust for such purpose, of money
and/or U.S. Government Obligations which through the payment of principal and
interest in accordance with their terms will provide money, in an amount
sufficient to pay the principal of, premium, if any, and interest on the Notes,
on the scheduled due dates therefor or on a selected date of redemption in
accordance with the terms of the Indenture. Such a trust may only be established
if, among other things, the Company has delivered to the Trustee an Opinion of
Counsel (as specified in the Indenture) (i) to the effect that neither the trust
nor the Trustee will be required to register as an investment company under the
Investment Company Act of 1940, as amended, and (ii) describing either a private
ruling concerning the Notes or a published ruling of the Internal Revenue
Service, to the effect that holders of the Notes or persons in their positions
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 and in the same manner and at the same times, as
would have been the case if such deposit, defeasance and discharge had not
occurred.
MODIFICATION OF INDENTURE
From time to time, the Company, the Guarantors and the Trustee may, without
the consent of holders of the Notes, amend the Indenture or the Notes or
supplement the Indenture for certain specified purposes, including providing for
uncertificated Notes in addition to certificated Notes, and curing any
ambiguity, defect or inconsistency, or making any other change that does not
materially and adversely affect the rights of any holder. The Indenture contains
provisions permitting the Company, the Guarantors and the Trustee, with the
consent of holders of at least a majority in principal amount of the outstanding
Notes, to modify or supplement
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the Indenture or the Notes, except that no such modification shall, without the
consent of each holder affected thereby, (i) reduce the amount of Notes whose
holders must consent to an amendment, supplement, or waiver to the Indenture or
the Notes, (ii) reduce the rate of or change the time for payment of interest on
any Note, (iii) reduce the principal of or premium on or change the stated
maturity of any Note, (iv) make any Note payable in money other than that stated
in the Note or change the place of payment from New York, New York, (v) change
the amount or time of any payment required by the Notes or reduce the premium
payable upon any redemption of Notes, or change the time before which no such
redemption may be made, (vi) waive a default on the payment of the principal of,
interest on, or redemption payment with respect to any Note, (vii) take any
other action otherwise prohibited by the Indenture to be taken without the
consent of each holder affected thereby, or (viii) affect the ranking of the
Notes or the Guarantees in a manner adverse to the holders.
REPORTS TO HOLDERS
So long as the Company is subject to the periodic reporting requirements of
the Exchange Act, it will continue to furnish the information required thereby
to the Commission and to the holders of the Notes. The Indenture provides that
even if the Company is entitled under the Exchange Act not to furnish such
information to the Commission or to the holders of the Notes, they will
nonetheless continue to furnish such information to the Commission and to the
holders of the Notes.
COMPLIANCE CERTIFICATE
The Company will deliver to the Trustee on or before 100 days after the end
of the Company's fiscal year and on or before 50 days after the end of each the
first, second and third fiscal quarters in each year an Officers' Certificate
stating whether or not the signers know of any Default or Event of Default that
has occurred. If they do, the certificate will describe the Default or Event of
Default and its status.
THE TRUSTEE
The Trustee under the Indenture is the Registrar and Paying Agent with
regard to the Notes. The Indenture provides that, except during the continuance
of an Event of Default, the Trustee will perform only such duties as are
specifically set forth in the Indenture. During the existence of an Event of
Default, the Trustee will exercise such rights and powers vested in it under the
Indenture and use the same degree of care and skill in its exercise as a prudent
person would exercise under the circumstances in the conduct of such person's
own affairs.
TRANSFER AND EXCHANGE
Holders of the Notes may transfer or exchange Notes in accordance with the
Indenture. The Registrar under such Indenture may require a holder, among other
things, to furnish appropriate endorsements and transfer documents, and to pay
any taxes and fees required by law or permitted by the Indenture. The Registrar
is not required to transfer or exchange any Note selected for redemption. Also,
the Registrar is not required to transfer or exchange any Note for a period of
15 days before selection of the Notes to be redeemed.
The Original Notes were issued in a transaction exempt from registration
under the Securities Act and are subject to restrictions on transfer.
The registered holder of a Note may be treated as the owner of it for all
purposes.
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
covenants contained in the Indenture. Reference is made to the Indenture, a copy
of which has been filed as an exhibit to the Registration Statement of which
this Prospectus is a part, for the full definition of all such terms as well as
any other capitalized terms used herein for which no definition is provided.
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"Acquired Indebtedness" means Indebtedness of a Person (including an
Unrestricted Subsidiary) existing at the time such Person becomes a Restricted
Subsidiary or assumed in connection with the acquisition of assets from such
Person.
"Adjusted Net Assets" of a Guarantor at any date shall mean the lesser of
the amount by which (x) the fair value of the property of such Guarantor exceeds
the total amount of liabilities, including, without limitation, contingent
liabilities (after giving effect to all other fixed and contingent liabilities),
but excluding liabilities under the Guarantee, of such Guarantor at such date
and (y) the present fair salable value of the assets of such Guarantor at such
date exceeds the amount that will be required to pay the probable liability of
such Guarantor on its debts (after giving effect to all other fixed and
contingent liabilities and after giving effect to any collection from any
subsidiary of such Guarantor in respect of the obligations of such Subsidiary
under the Guarantee), excluding Indebtedness in respect of the Guarantee, as
they become absolute and matured.
"Affiliate" of any specified Person means any other Person which directly
or indirectly through one or more intermediaries controls, or is controlled by,
or is under common control with, such specified Person. For the 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, means 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.
"Asset Sale" means the sale, transfer or other disposition (other than to
the Company or any of its Restricted Subsidiaries) in any single transaction or
series of related transactions of (a) any Capital Stock of or other equity
interest in any Restricted Subsidiary of the Company, (b) all or substantially
all of the assets of the Company or of any Restricted Subsidiary thereof, (c)
real property or (d) all or substantially all of the assets of any property, or
part thereof, owned by the Company or any Restricted Subsidiary thereof, or a
division, line of business or comparable business segment of the Company or any
Restricted Subsidiary thereof; provided that Asset Sales shall not include
sales, leases, conveyances, transfers or other dispositions to the Company or to
a Restricted Subsidiary or to any other Person if after giving effect to such
sale, lease, conveyance, transfer or other disposition such other Person becomes
a Restricted Subsidiary.
"Asset Sale Proceeds" means, with respect to any Asset Sale, (i) cash
received by the Company or any Restricted Subsidiary from such Asset Sale
(including cash received as consideration for the assumption of liabilities
incurred in connection with or in anticipation of such Asset Sale), after (a)
provision for all income or other taxes measured by or resulting from such Asset
Sale, (b) payment of all brokerage commissions, underwriting and other fees and
expenses related to such Asset Sale, (c) provision for minority interest holders
in any Restricted Subsidiary as a result of such Asset Sale and (d) deduction of
appropriate amounts to be provided by the Company or a Restricted Subsidiary as
a reserve, in accordance with GAAP, against any liabilities associated with the
assets sold or disposed of in such Asset Sale and retained by the Company or a
Restricted Subsidiary after such Asset Sale, including, without limitation,
pension and other post employment benefit liabilities and liabilities related to
environmental matters or against any indemnification obligations associated with
the assets sold or disposed of in such Asset Sale, and (ii) promissory notes and
other noncash consideration received by the Company or any Restricted Subsidiary
from such Asset Sale or other disposition upon the liquidation or conversion of
such notes or noncash consideration into cash.
"Attributable Indebtedness" under the Indenture in respect of a Sale and
Lease-Back Transaction means, as at the time of determination, the greater of
(i) the fair market value of the property subject to such arrangement (as
determined in good faith by the board of directors of the Company) and (ii) the
present value (discounted at a rate of 10%, compounded annually) of the total
obligations of the lessee for rental payments during the remaining term of the
lease included in such Sale and Lease-Back Transaction (including any period for
which such lease has been extended).
"Available Asset Sale Proceeds" means, with respect to any Asset Sale, the
aggregate Asset Sale Proceeds from such Asset Sales that have not been applied
in accordance with clauses (iii)(a) or (iii)(b), and which has not yet been the
basis for an Excess Proceeds Offer in accordance with clause (iii)(c) of the
first paragraph of "-- Certain Covenants -- Limitation on Certain Asset Sales."
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"Capital Stock" means, with respect to any Person, any and all shares or
other equivalents (however designated) of capital stock, partnership interests
or any other participation, right or other interest in the nature of an equity
interest in such Person or any option, warrant or other security convertible
into any of the foregoing.
"Capitalized Lease Obligations" means Indebtedness represented by
obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP, and the amount of such Indebtedness
shall be the capitalized amount of such obligations determined in accordance
with GAAP.
A "Change of Control" of the Company will be deemed to have occurred at
such time as (i) any Person (including a Person's Affiliates and associates),
other than a Permitted Holder, becomes the beneficial owner (as defined under
Rule 13d-3 or any successor rule or regulation promulgated under the Exchange
Act) of 50% or more of the total voting or economic power of the Company's
Common Stock, (ii) any Person (including a Person's Affiliates and associates),
other than a Permitted Holder, becomes the beneficial owner of more than 35% of
the total voting power of the Company's Common Stock, and the Permitted Holders
beneficially own, in the aggregate, a lesser percentage of the total voting
power of the Common Stock of the Company than such other Person and do not have
the right or ability by voting power, contract or otherwise to elect or
designate for election a majority of the Board of Directors of the Company,
(iii) there shall be consummated any consolidation or merger of the Company in
which the Company is not the continuing or surviving corporation or pursuant to
which the Common Stock of the Company would be converted into cash, securities
or other property, other than a merger or consolidation of the Company in which
the holders of the Common Stock of the Company outstanding immediately prior to
the consolidation or merger hold, directly or indirectly, at least a majority of
the Common Stock of the surviving corporation immediately after such
consolidation or merger, or (iv) during any period of two consecutive years,
individuals who at the beginning of such period constituted the Board of
Directors of the Company (together with any new directors whose election by such
Board of Directors or whose nomination for election by the shareholders of the
Company has been approved by 66 2/3% of the directors then still in office who
either were directors at the beginning of such period or whose election or
recommendation for election was previously so approved) cease to constitute a
majority of the board of directors of the Company.
"Common Stock" of any Person means all Capital Stock of such Person that is
generally entitled to (i) vote in the election of directors of such Person or
(ii) if such Person is not a corporation, vote or otherwise participate in the
selection of the governing body, partners, managers or others that will control
the management and policies of such Person.
"Company Corporate Services Agreement" means the corporate services
agreement dated May 12, 1997 between the Company and Griffin Group International
Management Limited ("Griffin"), as in effect on the Issue Date.
"Consolidated Fixed Charges" means, with respect to any Person and with
respect to any determination date, the sum of a Person's (i) Consolidated
Interest Expense, plus (ii) the product of (x) the aggregate amount of all
dividends paid on Disqualified Capital Stock of the Company or on each series of
preferred stock of each Subsidiary of such Person (other than dividends paid or
payable in additional shares of preferred stock or to the Company or any of its
Wholly-Owned Subsidiaries) times (y) a fraction, the numerator of which is one
and the denominator of which is one minus the then current effective combined
federal, state and local tax rate of such Person (expressed as a decimal), in
each case, for the prior four full fiscal quarter period for which financial
results are available.
"Consolidated Interest Expense" means, with respect to any Person, for any
period, the aggregate amount of interest which, in conformity with GAAP, would
be set forth opposite the caption "interest expense" or any like caption on an
income statement for such Person and its Subsidiaries on a consolidated basis
(including, but not limited to, Redeemable Dividends, whether paid or accrued,
on Subsidiary Preferred Stock (as defined below in these "-- Certain
Definitions"), imputed interest included in Capitalized Lease Obligations, all
commissions, discounts and other fees and charges owed with respect to letters
of credit and bankers' acceptance financing, the net costs associated with
hedging obligations, amortization of other financing fees and expenses, the
interest portion of any deferred payment obligation, amortization of discount or
premium, if
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any, and all other non-cash interest expense (other than interest amortized to
cost of sales)) plus, without duplication, all net capitalized interest for such
period and all interest incurred or paid under any guarantee of Indebtedness
(including a guarantee of principal, interest or any combination thereof) of any
Person, plus the amount of all dividends or distributions paid on Disqualified
Stock (other than dividends paid or payable in shares of Capital Stock of the
Company). If any Indebtedness outstanding or to be incurred (x) bears a floating
rate of interest, the interest expense on such Indebtedness shall be calculated
as if the rate in effect on the date of determination had been the applicable
rate for the entire four quarter period (taking into account on a pro forma
basis any Interest Rate Agreement that has a remaining term as to the date of
determination in excess of 12 months), (y) bears, at the option of the Company
or a Restricted Subsidiary, a fixed or floating rate of interest, the interest
expense on such Indebtedness shall be computed by applying, at the option of the
Company or such Restricted Subsidiary, either a fixed or floating rate and (z)
was incurred under a revolving credit facility, the interest expense on such
Indebtedness shall be computed based upon the average daily balance of such
Indebtedness during the applicable period.
"Consolidated Net Income" means, with respect to any Person, for any
period, the aggregate of the Net Income of such Person and its Subsidiaries for
such period, on a consolidated basis, determined in accordance with GAAP;
provided, however, that (a) the Net Income of any Person (the "other Person") in
which the Person in question or any of its Subsidiaries has less than a 100%
interest (which interest does not cause the net income of such other Person to
be consolidated into the net income of the Person in question in accordance with
GAAP) shall be included only to the extent of the amount of dividends or
distributions paid to the Person in question or the Subsidiary, (b) the Net
Income of any Subsidiary of the Person in question that is subject to any
restriction or limitation on the payment of dividends or the making of other
distributions (other than pursuant to the Notes or the Indenture) shall be
excluded to the extent of such restriction or limitation, (c)(i) the Net Income
of any Person acquired in a pooling of interests transaction for any period
prior to the date of such acquisition and (ii) any net gain (but not loss)
resulting from an Asset Sale by the Person in question or any of its
Subsidiaries other than in the ordinary course of business shall be excluded,
(d) extraordinary gains and losses shall be excluded.
"Corporate Services Fees" means fees paid pursuant to the Subsidiary
Corporate Services Agreements and the Company Corporate Services Agreement for
actual services rendered in an amount not to exceed the amount that would be
payable to unaffiliated third parties for such services.
"Credit Facility" means any credit facility entered into by the Company or
a Restricted Subsidiary of the Company to provide financing for general
corporate purposes, including acquisitions, capital expenditures and working
capital financing for the Company or such Restricted Subsidiary. All such Credit
Facilities are collectively referred to as the "Credit Facilities."
"Designated Senior Indebtedness," as to the Company or any Guarantor, as
the case may be, means any Senior Indebtedness (a) under the Credit Facilities
and (b) which at the time of determination exceeds $10 million in aggregate
principal amount (or accreted value in the case of Indebtedness issued at a
discount) outstanding or available under a committed facility.
"Disqualified Capital Stock" means any Capital Stock of the Company or a
Restricted Subsidiary thereof which, by its terms (or by the terms of any
security into which it is convertible or for which it is exchangeable at the
option of the holder), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the option of the holder thereof, in whole or in part, on or
prior to the maturity date of the Notes, for cash or securities constituting
Debt. Without limitation of the foregoing, Disqualified Capital Stock shall be
deemed to include (i) any Preferred Stock of a Restricted Subsidiary of the
Company and (ii) any Preferred Stock of the Company, with respect to either of
which, under the terms of such Preferred Stock, by agreement or otherwise, such
Restricted Subsidiary or the Company is obligated to pay current dividends or
distributions in cash during the period prior to the maturity date of the Notes;
provided, however, that Preferred Stock of the Company or any Restricted
Subsidiary thereof that is issued with the benefit of provisions requiring a
change of control offer to be made for such Preferred Stock in the event of a
change of control of the Company or Restricted Subsidiary, which provisions
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have substantially the same effect as the provisions of the Indenture described
under "Change of Control Offer," shall not be deemed to be Disqualified Capital
Stock solely by virtue of such provisions.
"EBITDA" means, for any Person, for any period, an amount equal to (a) the
sum of (i) Consolidated Net Income for such period, plus (ii) the provision for
taxes for such period based on income or profits to the extent such income or
profits were included in computing Consolidated Net Income and any provision for
taxes utilized in computing net loss under clause (i) hereof, plus (iii)
Consolidated Interest Expense for such period (but only including Redeemable
Dividends in the calculation of such Consolidated Interest Expense to the extent
that such Redeemable Dividends have not been excluded in the calculation of
Consolidated Net Income), plus (iv) depreciation for such period on a
consolidated basis, plus (v) amortization of intangibles for such period on a
consolidated basis, plus (vi) any other non-cash items reducing Consolidated Net
Income for such period, minus (b) all non-cash items increasing Consolidated Net
Income for such period, all for such Person and its Subsidiaries determined in
accordance with GAAP, except that with respect to the Company each of the
foregoing items shall be determined on a consolidated basis with respect to the
Company and its Restricted Subsidiaries only; and provided, however, that, for
purposes of calculating EBITDA during any fiscal quarter, (A) cash income from a
particular Investment of such Person shall be included only (x) if cash income
has been received by such Person with respect to such Investment during each of
the previous four fiscal quarters, or (y) if the cash income derived from such
Investment is attributable to Temporary Cash Investments and (B) EBITDA shall be
reduced by any amounts paid by the Company pursuant to the Corporate Services
Agreements but only to the extent not already reducing Consolidated Net Income.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fixed Charge Coverage Ratio" of any Person means, with respect to any
determination date, the ratio of (i) EBITDA for such Person's prior four
full-fiscal quarters for which financial results have been reported prior to the
determination date to (ii) Consolidated Fixed Charges of such Person for such
period.
"GAAP" means generally accepted accounting principles consistently applied
as in effect in the United States from time to time.
"incur" means, with respect to any Indebtedness or other obligation of any
Person, to create, issue, incur (by conversion, exchange or otherwise), assume,
guarantee or otherwise become liable in respect of such Indebtedness or other
obligation or the recording, as required pursuant to GAAP or otherwise, of any
such Indebtedness or other obligation on the balance sheet of such person (and
"incurrence," "incurred," "incurable," and "incurring" shall have meanings
correlative to the foregoing); provided, that a change in GAAP that results in
an obligation of such Person that exists at such time becoming Indebtedness
shall not be deemed an incurrence of such Indebtedness.
"Indebtedness" means (without duplication), with respect to any Person, any
indebtedness at any time outstanding, secured or unsecured, contingent or
otherwise, which is for 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), or evidenced by bonds, notes, debentures or similar instruments or
representing the balance deferred and unpaid of the purchase price of any
property (excluding, without limitation, any balances that constitute accounts
payable or trade payables, and other accrued liabilities arising in the ordinary
course of business) if and to the extent any of the foregoing indebtedness would
appear as a liability upon a balance sheet of such Person prepared in accordance
with GAAP, and shall also include, to the extent not otherwise included (i) any
Capitalized Lease Obligations, (ii) obligations secured by a lien to which the
property or assets owned or held by such Person is subject, whether or not the
obligation or obligations secured thereby shall have been assumed (provided,
however, that if such obligation or obligations shall not have been assumed, the
amount of such indebtedness shall be deemed to be the lesser of the principal
amount of the obligation or the fair market value of the pledged property or
assets), (iii) guarantees of items of other Persons which would be included
within this definition for such other Persons (whether or not such items would
appear upon the balance sheet of the guarantor), (iv) all obligations for the
reimbursement of any obligor on any letter of credit, banker's acceptance or
similar credit transaction (provideds that in the case of any such letters of
credit, the items for which such letters of credit provide credit support are
those of other Persons which would be included within
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this definition for such other Persons), (v) in the case of the Company,
Disqualified Capital Stock of the Company or any Restricted Subsidiary thereof,
and (vi) obligations of any such Person under any Interest Rate Agreement
applicable to any of the foregoing (if and to the extent such Interest Rate
Agreement obligations would appear as a liability upon a balance sheet of such
Person prepared in accordance with GAAP). 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, with respect to contingent
obligations, the maximum liability upon the occurrence of the contingency giving
rise to the obligation, provided (i) that the amount outstanding at any time of
any Indebtedness issued with original issue discount is the principal amount of
such Indebtedness less the remaining unamortized portion of the original issue
discount of such Indebtedness at such time as determined in conformity with GAAP
and (ii) that Indebtedness shall not include any liability for federal, state,
local or other taxes. Notwithstanding any other provision of the foregoing
definition, any trade payable arising from the purchase of goods or materials or
for services obtained in the ordinary course of business shall not be deemed to
be "Indebtedness" of the Company or any Restricted Subsidiaries for purposes of
this definition. Furthermore, guarantees of (or obligations with respect to
letters of credit supporting) Indebtedness otherwise included in the
determination of such amount shall not also be included.
"Interest Rate Agreement" means, for any Person, any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement or other
similar agreement designed to protect the party indicated therein against
fluctuations in interest rates.
"Investments" means, directly or indirectly, any advance, account
receivable (other than an account receivable arising in the ordinary course of
business or acquired as part of the assets acquired by the Company in connection
with an acquisition of assets which is otherwise permitted by the terms of the
Indenture), loan or capital contribution to (by means of transfers of property
to others, payments for property or services for the account or use of others or
otherwise), the purchase of any stock, bonds, notes, debentures, partnership or
joint venture interests or other securities of, the acquisition, by purchase or
otherwise, of all or substantially all of the business or assets or stock or
other evidence of beneficial ownership of, any Person or the making of any
investment in, any Person or transfers of property or assets to any Affiliate
other than sales of assets or payment for services rendered in the ordinary
course of business consistent with past practice. Investments shall exclude
extensions of trade credit on commercially reasonable terms in accordance with
normal trade practices.
"Issue Date" means the date the Notes are first issued by the Company and
authenticated by the Trustee under the Indenture.
"Lien" means with respect to any property or assets of any Person, any
mortgage or deed of trust, pledge, hypothecation, assignment, deposit
arrangement, security interest, lien, charge, easement, encumbrance, preference,
priority, or other security agreement or preferential arrangement of any kind or
nature whatsoever on or with respect to such property or assets (including
without limitation, any Capitalized Lease Obligation, conditional sales, or
other title retention agreement having substantially the same economic effect as
any of the foregoing).
"Net Income" means, with respect to any Person for any period, the net
income (loss) of such Person determined in accordance with GAAP.
"Net Proceeds" means (a) in the case of any sale of Capital Stock by the
Company, the aggregate net proceeds received by the Company, after payment of
expenses, commissions and the like incurred in connection therewith, whether
such proceeds are in cash or in property (valued at the fair market value
thereof, as determined in good faith by the board of directors, at the time of
receipt) and (b) in the case of any exchange, exercise, conversion or surrender
of outstanding securities of any kind for or into shares of Capital Stock of the
Company which is not Disqualified Stock, the net book value of such outstanding
securities on the date of such exchange, exercise, conversion or surrender (plus
any additional amount required to be paid by the holder to the Company upon such
exchange, exercise, conversion or surrender, less any and all payments made to
the holders, e.g., on account of fractional shares and less all expenses
incurred by the Company in connection therewith).
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"Non-Payment Event of Default" means any event (other than a Payment
Default) the occurrence of which entitles one or more Persons to accelerate the
maturity of any Designated Senior Indebtedness.
"Officers' Certificate" means, with respect to any Person, a certificate
signed by the Chief Executive Officer, the President or any Vice President and
the Chief Financial Officer or any Treasurer of such Person that shall comply
with applicable provisions of the Indenture.
"Payment Default" means any default, whether or not any requirement for the
giving of notice, the lapse of time or both, or any other condition to such
default becoming an event of default has occurred, in the payment of principal
of (or premium, if any) or interest on or any other amount payable in connection
with Designated Senior Indebtedness.
"Permitted Holders" means (i) any Affiliate of the Company, and (ii) Robert
F. Stowe, his children or other lineal descendants (whether adoptive or
biological), probate estate of any such individual, and any trust, so long as
one or more of the foregoing individuals is the beneficiary thereunder, and any
other corporation, partnership or other entity all of the shareholders,
partners, members or owners of which are any of the foregoing.
"Permitted Indebtedness" means:
(i) Indebtedness of the Company or any Restricted Subsidiary arising
under or in connection with a Credit Facility in an amount not to exceed in
the aggregate with Indebtedness under any other Credit Facility of the
Company or any Restricted Subsidiary the greater of (a) $25 million less
any mandatory prepayments actually made thereunder (to the extent, in the
case of payments of revolving credit indebtedness, that the corresponding
commitments have been permanently reduced) or scheduled payments actually
made thereunder or (b) the sum of (x) 85% of consolidated accounts
receivable of the Company and its Subsidiaries and (y) 50% of consolidated
inventory of the Company and its Subsidiaries;
(ii) Indebtedness under the Notes and the Guarantees offered pursuant
to this Prospectus;
(iii) Indebtedness not covered by any other clause of this definition
which is outstanding on the date of the Indenture;
(iv) Indebtedness of the Company to any Restricted Subsidiary and
Indebtedness of any Restricted Subsidiary to the Company or another
Restricted Subsidiary;
(v) Purchase Money Indebtedness and Capitalized Lease Obligations
incurred to acquire property in the ordinary course of business which
Indebtedness and Capitalized Lease Obligations do not in the aggregate
exceed $5 million;
(vi) Interest Rate Agreements;
(vii) additional Indebtedness of the Company not to exceed $20 million
in principal amount outstanding at any time; and
(viii) Refinancing Indebtedness.
"Permitted Investments" means, for any Person, Investments made on or after
the date of the Indenture consisting of
(i) Investments by the Company, or by a Restricted Subsidiary thereof,
in the Company or a Restricted Subsidiary;
(ii) Temporary Cash Investments;
(iii) Investments by the Company, or by a Restricted Subsidiary
thereof, in a Person, if as a result of such Investment (a) such Person
becomes a Restricted Subsidiary of the Company or (b) 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
Restricted Subsidiary thereof; and
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(iv) reasonable and customary loans made to employees not to exceed $1
million in the aggregate at any one time outstanding; and
(v) an Investment that is made by the Company or a Restricted
Subsidiary thereof in the form of any stock, bonds, notes, debentures,
partnership or joint venture interests or other securities that are issued
by a third party to the Company or Restricted Subsidiary solely as partial
consideration for the consummation of an Asset Sale that is otherwise
permitted under the covenant described under "-- Certain
Covenants -- Limitation on Certain Asset Sales"; and any Investment
existing on the Issue Date.
"Permitted Junior Securities" means debt or equity securities of the
Company or any Guarantor or any successor corporation provided for by a plan of
reorganization or readjustment that are subordinated to the Notes and the
Guarantees at least to the same extent that the Notes and the Guarantees are
subordinated to the payment of all Senior Indebtedness then outstanding.
"Permitted Liens" means (i) Liens on Property or assets of, or any shares
of stock of or secured debt of, any corporation existing at the time such
corporation becomes a Restricted Subsidiary of the Company or at the time such
corporation is merged into the Company or any of its Restricted Subsidiaries,
provided that such Liens are not incurred in connection with, or in
contemplation of, such corporation becoming a Restricted Subsidiary of the
Company or merging into the Company or any of its Restricted Subsidiaries, (ii)
Liens securing Refinancing Indebtedness, provided that any such Lien does not
extend to or cover any Property, shares or debt other than the Property, shares
or debt securing the Indebtedness so refunded, refinanced or extended, (iii)
Liens in favor of the Company or any of its Restricted Subsidiaries, (iv) Liens
securing industrial revenue bonds, (v) Liens to secure Purchase Money
Indebtedness that is otherwise permitted under the Indenture, provided that (a)
any such Lien is created solely for the purpose of securing Indebtedness
representing, or incurred to finance, refinance or refund, the cost (including
sales and excise taxes, installation and delivery charges and other direct costs
of, and other direct expenses paid or charged in connection with, such purchase
or construction) of such Property, (b) the principal amount of the Indebtedness
secured by such Lien does not exceed 100% of such costs, and (c) such Lien does
not extend to or cover any Property other than such item of Property and any
improvements on such item, (vi) statutory liens or landlords', carriers',
warehouseman's, mechanics', suppliers', materialmen's, repairmen's or other like
Liens arising in the ordinary course of business which do not secure any
Indebtedness and with respect to amounts not yet delinquent or being contested
in good faith by appropriate proceedings, if a reserve or other appropriate
provision, if any, as shall be required in conformity with GAAP shall have been
made therefor, (vii) other Liens securing obligations incurred in the ordinary
course of business which obligations do not exceed $1,000,000 in the aggregate
at any one time outstanding, (viii) any extensions, substitutions, replacements
or renewals of the foregoing, (ix) Liens for taxes, assessments or governmental
charges that are being contested in good faith by appropriate proceedings, (x)
easements or minor defects or irregularities in title and other similar charges
or encumbrances on Property not interfering in any material respect with the use
of such property by the Company or any Restricted Subsidiary (xi) customary
deposit arrangements entered into in connection with acquisitions (xii) Liens
securing Capital Lease Obligations permitted to be incurred under clause (v) of
the definition of "Permitted Indebtedness," provided that such Lien does not
extend to any property other than that subject to the underlying lease and
(xiii) Liens securing Indebtedness of the Company or any Restricted Subsidiary
under a Credit Facility.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government (including any agency or political subdivision thereof).
"Preferred Stock" means any Capital Stock of a Person, however designated,
which entitles the holder thereof to a preference with respect to dividends,
distributions or liquidation proceeds of such Person over the holders of other
Capital Stock issued by such Person.
"Property" of any Person means all types of real, personal, tangible,
intangible or mixed property owned by such Person whether or not included in the
most recent consolidated balance sheet of such Person and its Subsidiaries under
GAAP.
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"Public Equity Offering" means a public offering by the Company of shares
of its common stock (however designated and whether voting or non-voting) and
any and all rights, warrants or options to acquire such common stock.
"Purchase Money Indebtedness" means any Indebtedness incurred in the
ordinary course of business by a Person to finance the cost (including the cost
of construction) of an item of property, the principal amount of which
Indebtedness does not exceed the sum of (i) 100% of such cost and (ii)
reasonable fees and expenses of such Person incurred in connection therewith.
"Redeemable Dividend" means, for any dividend or distribution with regard
to Disqualified Capital Stock, the quotient of the dividend or distribution
divided by the difference between one and the maximum statutory federal income
tax rate (expressed as a decimal number between 1 and 0) then applicable to the
issuer of such Disqualified Capital Stock.
"Refinancing Indebtedness" means Indebtedness that refunds, refinances or
extends any Indebtedness of the Company or its Restricted Subsidiaries
outstanding on the Issue Date or other Indebtedness permitted to be incurred by
the Company or its Restricted Subsidiaries pursuant to the terms of the
Indenture, but only to the extent that (i) the Refinancing Indebtedness is
subordinated to the Notes or the Guarantees, as the case may be, to at least the
same extent as the Indebtedness being refunded, refinanced or extended, if at
all, (ii) the Refinancing Indebtedness is scheduled to mature either (a) no
earlier than the Indebtedness being refunded, refinanced or extended, or (b)
after the maturity date of the Notes, (iii) the portion, if any, of the
Refinancing Indebtedness that is scheduled to mature on or prior to the maturity
date of the Notes has a weighted average life to maturity at the time such
Refinancing Indebtedness is incurred that is equal to or greater than the
weighted average life to maturity of the portion of the Indebtedness being
refunded, refinanced or extended that is scheduled to mature on or prior to the
maturity date of the Notes, (iv) such Refinancing Indebtedness is in an
aggregate principal amount that is equal to or less than the sum of (a) the
aggregate principal amount then outstanding under the Indebtedness being
refunded, refinanced or extended, (b) the amount of accrued and unpaid interest,
if any, and premiums owed, if any, not in excess of preexisting prepayment
provisions on such Indebtedness being refunded, refinanced or extended and (c)
the amount of customary fees, expenses and costs related to the incurrence of
such Refinancing Indebtedness, and (v) such Refinancing Indebtedness is incurred
by the same Person that initially incurred the Indebtedness being refunded,
refinanced or extended, except that the Company may incur Refinancing
Indebtedness to refund, refinance or extend Indebtedness of any Wholly-Owned
Subsidiary of the Company; provided, however, that subclauses (ii) and (iii) of
this definition will not apply to any refunding or refinancing of any
Indebtedness under a Credit Facility.
"Restricted Payment" means any of the following: (i) the declaration or
payment of any dividend or any other distribution or payment on Capital Stock of
the Company or any Restricted Subsidiary of the Company or any payment made to
the direct or indirect holders (in their capacities as such) of Capital Stock of
the Company or any Restricted Subsidiary of the Company (other than (x)
dividends or distributions payable solely in Capital Stock (other than
Disqualified Capital Stock) or in options, warrants or other rights to purchase
Capital Stock (other than Disqualified Capital Stock), and (y) in the case of
Restricted Subsidiaries of the Company, dividends or distributions payable to
the Company or to a Wholly-Owned Subsidiary of the Company), (ii) the purchase,
redemption or other acquisition or retirement for value of any Capital Stock of
the Company or any of its Restricted Subsidiaries (other than Capital Stock
owned by the Company or a Wholly-Owned Subsidiary of the Company, excluding
Disqualified Capital Stock), (iii) the making of any principal payment on, or
the purchase, defeasance, repurchase, redemption or other acquisition or
retirement for value, prior to any scheduled maturity, scheduled repayment or
scheduled sinking fund payment, of any Indebtedness which is subordinated in
right of payment to the Notes other than subordinated Indebtedness acquired in
anticipation of satisfying a scheduled sinking fund obligation, principal
installment or final maturity, in each case due within one year of the date of
acquisition), (iv) the making of any Investment or guarantee of any Investment
in any Person other than a Permitted Investment, (v) any designation of a
Restricted Subsidiary as an Unrestricted Subsidiary on the basis of the
Investment by the Company therein, (vi) forgiveness of any Indebtedness of an
Affiliate of the Company to the Company or a Restricted Subsidiary and (vii) the
payment of Corporate Services Fees. For purposes of determining the amount
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expended for Restricted Payments, cash distributed or invested shall be valued
at the face amount thereof and property other than cash shall be valued at its
fair market value (as determined in good faith by the board of directors of the
Company, as evidenced by a board resolution).
"Restricted Subsidiary" means a Subsidiary of the Company other than an
Unrestricted Subsidiary and includes all of the Subsidiaries of the Company
existing as of the Issue Date. The Board of Directors of the Company may
designate any Unrestricted Subsidiary or any Person that is to become a
Subsidiary as a Restricted Subsidiary if immediately after giving effect to such
action (and treating any Acquired Indebtedness as having been incurred at the
time of such action), the Company could have incurred at least $1.00 of
additional Indebtedness (other than Permitted Indebtedness) pursuant to the
"Limitation on Additional Indebtedness" covenant.
"Sale and Lease-Back Transaction" means any arrangement with any Person
providing for the leasing by the Company or any Restricted Subsidiary of the
Company of any real or tangible personal property, which property has been or is
to be sold or transferred by the Company or such Restricted Subsidiary to such
Person in contemplation of such leasing.
"Senior Indebtedness" means the principal of and premium, if any, and
interest on, and any and all other fees, expense reimbursement obligations and
other amounts due pursuant to the terms of all agreements, documents and
instruments providing for, creating, securing or evidencing or otherwise entered
into in connection with (a) all Indebtedness of the Company or any Restricted
Subsidiary owed to lenders under the Credit Facilities, (b) all obligations of
the Company or any Restricted Subsidiary with respect to any Interest Rate
Agreement, (c) all obligations of the Company or any Restricted Subsidiary to
reimburse any bank or other person in respect of amounts paid under letters of
credit, acceptances or other similar instruments, (d) all other Indebtedness of
the Company or any Restricted Subsidiary which does not provide that it is to
rank pari passu with or subordinate to the Notes and the Guarantees, and (e) all
deferrals, renewals, extensions and refundings of, and amendments, modifications
and supplements to, any of the Senior Indebtedness described above.
Notwithstanding anything to the contrary in the foregoing, Senior Indebtedness
will not include (i) Indebtedness of the Company to any of its Subsidiaries,
(ii) Indebtedness represented by the Notes and the Guarantees, (iii) any
Indebtedness which by the express terms of the agreement or instrument creating,
evidencing or governing the same is junior or subordinate in right of payment to
any item of Senior Indebtedness, (iv) any trade payable arising from the
purchase of goods or materials or for services obtained in the ordinary course
of business, or (v) Indebtedness incurred in violation of the Indenture.
"Subsidiary" of any specified Person means any corporation, partnership,
joint venture, association or other business entity, whether now existing or
hereafter organized or acquired, (i) in the case of a corporation, of which more
than 50% of the total voting power of the Capital Stock entitled (without regard
to the occurrence of any contingency) to vote in the election of directors,
officers or trustees thereof is held by such first-named Person or any of its
Subsidiaries, or (ii) in the case of a partnership, joint venture, association
or other business entity, with respect to which such first-named Person or any
of its Subsidiaries has the power to direct or cause the direction of the
management and policies of such entity by contract or otherwise or if in
accordance with generally accepted accounting principles such entity is
consolidated with the first-named Person for financial statement purposes.
"Subsidiary Corporate Services Agreements" means (i) the corporate services
agreement effective as of July 1, 1996 between UpRight and Griffin and (ii) the
corporate services agreement effective as of July 1, 1996 between Horizon and
Griffin, each as in effect on the Issue Date and each of which expired on June
29, 1997.
"Temporary Cash Investments" means (i) Investments in marketable, direct
obligations issued or guaranteed by the United States of America, or of any
governmental agency or political subdivision thereof, maturing within 365 days
of the date of purchase, (ii) Investments in certificates of deposit issued by a
bank organized under the laws of the United States of America or any state
thereof or the District of Columbia, in each case having capital, surplus and
undivided profits totaling more than $500,000,000 and rated at least A by
Standard & Poor's Corporation and A-2 by Moody's Investors Service, Inc.,
maturing within 365 days of
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purchase, or (iii) Investments not exceeding 365 days in duration in money
market funds that invest substantially all of such funds' assets in the
Investments described in the preceding clauses (i) and (ii).
"Unrestricted Subsidiary" means (a) any Subsidiary of an Unrestricted
Subsidiary and (b) any Subsidiary of the Company which is classified after the
Issue Date as an Unrestricted Subsidiary by a resolution adopted by the Board of
Directors of the Company; provided that a Subsidiary organized or acquired after
the Issue Date may be so classified as an Unrestricted Subsidiary only if such
classification is in compliance with the covenant set forth under "-- Certain
Covenants -- Limitation on Restricted Payments." The Trustee shall be given
prompt notice by the Company of each resolution adopted by the Board of
Directors of the Company under this provision, together with a copy of each such
resolution adopted.
"Wholly-Owned Subsidiary" means any Restricted Subsidiary, all of the
outstanding voting securities (other than directors' qualifying shares) of which
are owned, directly or indirectly, by the Company.
BOOK-ENTRY; DELIVERY AND FORM
The Original Notes were issued in the form of one Note certificate (the
"Original Global Note"). Except for Exchange Notes issued to Non-Global
Purchasers (as defined below), the Exchange Notes will be issued in the form of
one or more Global Notes (collectively, the "Exchange Global Note" and,
collectively with the Original Global Note, the "Global Notes"). The Original
Global Note was deposited on the date of the closing of the sale of the Original
Notes, and the Exchange Global Note will be deposited on the date of the closing
of the Exchange Offer, with the Trustee as custodian for The Depository Trust
Company ("DTC"), in New York, New York, and registered in the name of DTC or its
nominee.
Depository Procedures
DTC has advised the Company that DTC is a limited-purpose trust company
created to hold securities for its participating organizations (collectively,
the "Participants") and to facilitate the clearance and settlement of
transactions in those securities between the Participants through electronic
book-entry changes in accounts of the Participants. The Participants include
securities brokers and dealers (including the Initial Purchasers), banks, trust
companies, clearing corporations and certain other organizations. Access to
DTC's system is also available to other entities such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship with
a Participant, either directly or indirectly (collectively, the "Indirect
Participants"). Persons who are not Participants may beneficially own securities
held by or on behalf of DTC only through the Participants or the Indirect
Participants. The ownership interest and transfer of ownership interest of each
actual purchaser of each security held by or on behalf of DTC are recorded on
the records of the Participants and the Indirect Participants.
DTC has also advised the Company that pursuant to procedures established by
it, (i) upon deposit of the Global Notes, DTC will credit the accounts of
Participants designated by the Initial Purchasers with portions of the principal
amount of the Global Notes and (ii) ownership of such interests in the Global
Notes will be shown on, and the transfer of ownership thereof will be effected
only through, records maintained by DTC (with respect to the Participants) or by
the Participants and the Indirect Participants (with respect to other owners of
beneficial interest in the Global Notes).
The laws of some states require that certain persons take physical delivery
in definitive form of securities that they own. Consequently, the ability to
transfer beneficial interests in a Global Note to such persons may be limited to
that extent. Because DTC can act only on behalf of the Participants, which in
turn act on behalf of the Indirect Participants and certain banks, the ability
of a person having beneficial interests in a Global Note to pledge such
interests to persons or entities that do not participate in the DTC system, or
otherwise take actions in respect of such interests, may be affected by the lack
of a physical certificate evidencing such interests. For certain other
restrictions on the transferability of the Notes, see "-- Exchange of Book-Entry
Notes for Certificated Notes."
89
<PAGE> 91
Except as described below, owners of interests in the Global Notes will not
have Notes registered in their names, will not receive physical delivery of
Notes in certificated form and will not be considered the registered owners or
holders thereof under the Indenture for any purpose.
Payments in respect of the principal of (and premium, if any) and interest
on a Global Note registered in the name of DTC or its nominee will be payable to
DTC or its nominee in its capacity as the registered holder under the Indenture.
Under the terms of the Indenture, the Company and the Trustee will treat the
persons in whose names the Notes, including the Global Notes, are registered as
the owners thereof for the purpose of receiving such payments and for any and
all other purposes whatsoever. Consequently, neither the Company, the Initial
Purchasers, the Trustee or any agent of the Company, the Initial Purchasers or
the Trustee has or will have any responsibility or liability for (i) any aspect
or accuracy of DTC's records or any Participant's or Indirect Participant's
records relating to or payments made on account of beneficial ownership
interests in the Global Notes, or for maintaining, supervising or reviewing any
of DTC's records or any Participant's or Indirect Participant's records relating
to the beneficial ownership interests in the Global Notes, or (ii) any other
matter relating to the actions and practices of DTC or any of the Participants
or the Indirect Participants.
DTC has advised the Company that its current practice, upon receipt of any
payment in respect of securities such as the Notes (including principal and
interest), is to credit the accounts of the relevant Participants with the
payment on the payment date, in amounts proportionate to their respective
holdings in principal amount of beneficial interests in the relevant security as
shown on the records of DTC. Payments by the Participants and the Indirect
Participants to the beneficial owners of Notes will be governed by standing
instructions and customary practices and will not be the responsibility of DTC,
the Trustee or the Company. Neither the Company nor the Trustee will be liable
for any delay by DTC or any of the Participants in identifying the beneficial
owners of the Notes, and the Company and the Trustee may conclusively rely on
and will be protected in relying on instructions from DTC or its nominee as the
registered owner of the Global Notes for all purposes.
Interests in the Global Notes will trade in DTC's Same-Day Funds Settlement
System and secondary market trading activity in such interests will therefore
settle in immediately available funds, subject in all cases to the rules and
procedures of DTC and the Participants.
Transfers between Participants in DTC will be effected in accordance with
DTC's procedures and will be settled in same-day funds. Transfers between
accountholders in Euroclear and CEDEL will be effected in the ordinary way in
accordance with their respective rules and operating procedures.
DTC has advised the Company that it will take any action permitted to be
taken by a holder of Notes only at the direction of one or more Participants to
whose account with DTC interests in the Global Notes are credited and only in
respect of such portion of the aggregate principal amount of the Notes as to
which such Participant or Participants has or have given such direction.
However, if any of the events described under "-- Exchange of Book Entry Notes
for Certificated Notes" occurs, DTC reserves the right to exchange the Global
Notes (in the case of the Exchange Global Note) for legended Notes in
certificate form and to distribute such Notes to its Participants.
The information in this section concerning DTC and its book-entry systems
has been obtained from sources that the Company believes to be reliable, but the
Company takes no responsibility for the accuracy thereof.
Although DTC has agreed to the foregoing procedures to facilitate transfers
of interests in the Global Notes among accountholders in DTC, they are under no
obligation to perform or to continue to perform such procedures, and such
procedures may be discontinued at any time. Neither the Company nor the Trustee
nor any agent of the Company or the Trustee will have any responsibility for the
performance by DTC or its respective participants, indirect participants or
accountholders, of their respective obligations under the rules and procedures
governing their operations.
90
<PAGE> 92
Exchange of Book-Entry Notes for Certificated Notes
A Global Note is exchangeable for definitive Notes in registered
certificated form if (i) DTC (x) notifies the Company that it is unwilling or
unable to continue as depository for the Global Note and the Company thereupon
fails to appoint a successor depository or (y) has ceased to be a clearing
agency registered under the Exchange Act, (ii) the Company, at its option,
notifies the Trustee in writing that it elects to cause the issuance of the
Notes in certificated form or (iii) there shall have occurred and be continuing
a Default or an Event of Default with respect to the Notes. In all cases,
certificated Notes delivered in exchange for any Global Note or beneficial
interests therein will be registered in the names, and issued in any approved
denominations, requested by or on behalf of the depository (in accordance with
its customary procedures).
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following discussion summarizes certain federal income tax
considerations for holders who elect to exchange their Original Notes for
Exchange Notes in the Exchange Offer. This summary is for general information
purposes only and does not address any state, local or foreign tax consequences
of the Exchange Offer nor specific federal income tax aspects of the Exchange
Offer which may be relevant to certain holders such as foreign persons,
financial institutions, broker-dealers, tax-exempt organizations or insurance
companies. THEREFORE, EACH HOLDER OF A NOTE SHOULD CONSULT HIS OR HER OWN TAX
ADVISOR CONCERNING THE PARTICULAR FEDERAL, STATE, LOCAL AND FOREIGN TAX
CONSEQUENCES OF EXCHANGING HIS OR HER ORIGINAL NOTES FOR EXCHANGE NOTES IN THE
EXCHANGE OFFER.
Under current provisions of the Internal Revenue Code of 1986, as amended,
the Treasury Regulations promulgated thereunder and current judicial authority
and administrative rulings and practice, an exchange of the debt instrument of
an issuer for a new debt instrument of the issuer will be treated as an
"exchange" for federal income tax purposes if the new debt instrument differs
materially either in kind or in extent from the old debt instrument. Because the
Exchange Notes are substantially identical to the Original Notes and because the
Exchange Offer was contemplated by the Indenture pursuant to which the Original
Notes were sold, the Exchange Notes and Original Notes should not be considered
to differ materially either in kind or in extent and, accordingly, the
consummation of the Exchange Offer should not constitute an "exchange" for
federal income tax purposes. Therefore, for federal income tax purposes, no gain
or loss should be recognized by the holder on the exchange of an Original Note
for an Exchange Note, the holder's adjusted tax basis in the Exchange Note
should be the same as his or her basis in the Original Note and the holding
period for the Exchange Note should be the same as the holding period for the
Original Note.
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange 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 Exchange Notes. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with the resale of Exchange Notes received in
exchange for Original Notes where such Original 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 Expiration Date, it will use reasonable
efforts to make this Prospectus, as amended or supplemented, available to any
broker-dealer for use in connection with any such resale; provided that such
broker-dealer indicates in the Letter of Transmittal that it is a broker-dealer.
In addition, until , 1997, all broker-dealers effecting transactions
in the Exchange Notes may be required to deliver a Prospectus. See "The Exchange
Offer -- Purpose and Effects of the Exchange Offer."
The Company will not receive any proceeds from any sale of Exchange Notes
by broker-dealers or any other persons. Exchange 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 Exchange 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 prices or at negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who
91
<PAGE> 93
may receive compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such Exchange Notes. Any
broker-dealer that resells Exchange 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 Exchange Notes may be deemed to be an
"underwriter" within the meaning of the Securities Act, and any profit on any
such resale of Exchange 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.
By acceptance of this Exchange Offer, each broker-dealer that receives
Exchange Notes pursuant to the Exchange Offer agrees that, upon receipt of
notice from the Company of the happening of any event which makes any statement
in the Prospectus untrue in any material respect or which requires the making of
any changes in the Prospectus in order to make the statements therein not
misleading (which notice the Company agrees to deliver promptly to such
broker-dealer), such broker-dealer will suspend use of the Prospectus until the
Company has amended or supplemented the Prospectus to correct such misstatement
or omission and has furnished copies of the amended or supplemented Prospectus
to such broker-dealer. If the Company gives any such notice to suspend the use
of the Prospectus, it shall extend the 180-day period referred to above by the
number of days during the period from and including the date of the giving of
such notice up to and including when broker-dealers have received copies of the
supplemented or amended Prospectus necessary to permit resales of Exchange
Notes.
The Company has agreed to pay all expenses incident to the Company's
performance of, or compliance with, the Registration Rights Agreement and will
indemnify the holders (including any broker-dealers) and certain parties related
to the holders against certain liabilities, including liabilities under the
Securities Act.
LEGAL MATTERS
Certain legal matters with respect to the Notes offered hereby will be
passed upon for the Company by Pillsbury Madison & Sutro LLP, San Francisco,
California.
EXPERTS
The consolidated financial statements of the Company for each of the three
fiscal years in the period ended June 30, 1996 included in this Prospectus have
been audited by Pannell Kerr Forster, Certified Public Accountants, A
Professional Corporation, Los Angeles, California, independent auditors, as
stated in their report included herein, and have been so included in reliance
upon the report of such firm given upon its authority as experts in accounting
and auditing.
92
<PAGE> 94
W.R. CARPENTER NORTH AMERICA, INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
NUMBER
------
<S> <C>
Condensed Consolidated Balance Sheet -- March 30, 1997 (Unaudited).................. F-2
Condensed Consolidated Statements of Operations -- Nine Months Ended March 31, 1996
and March 30, 1997 (Unaudited).................................................... F-3
Condensed Consolidated Statements of Stockholder's Equity -- Nine Months Ended March
30, 1997 (Unaudited).............................................................. F-4
Condensed Consolidated Statements of Cash Flows -- Nine Months Ended March 31, 1996
and March 30, 1997 (Unaudited).................................................... F-5
Notes to Condensed Consolidated Financial Statements (Unaudited).................... F-6
Independent Auditors' Report........................................................ F-8
Consolidated Balance Sheets -- July 2, 1995 and June 30, 1996....................... F-9
Consolidated Statements of Operations -- Years Ended July 3, 1994, July 2, 1995 and
June 30, 1996..................................................................... F-10
Consolidated Statements of Stockholder's Equity -- Years Ended July 3, 1994, July 2,
1995 and June 30, 1996............................................................ F-11
Consolidated Statements of Cash Flows -- Years Ended July 3, 1994, July 2, 1995 and
June 30, 1996..................................................................... F-12
Notes to Consolidated Financial Statements.......................................... F-13
</TABLE>
F-1
<PAGE> 95
W.R. CARPENTER NORTH AMERICA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 30,
1997
---------
<S> <C>
ASSETS
Current assets
Cash and cash equivalents........................................................ $ 5,984
Accounts receivable (net of allowance for doubtful accounts of $317)............. 23,223
Inventories...................................................................... 16,397
Prepaid expenses and other....................................................... 3,839
-------
Total current assets.......................................................... 49,443
-------
Property, plant and equipment, net................................................. 38,462
-------
Other assets
Deferred income taxes, noncurrent................................................ 847
Other............................................................................ 183
-------
Total other assets............................................................ 1,030
-------
Total assets............................................................. $88,935
=======
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities
Accounts payable................................................................. $11,247
Accrued expenses................................................................. 10,141
Current portion of long-term debt................................................ 6,131
Note payable -- related party.................................................... 7,462
-------
Total current liabilities..................................................... 34,981
Long-term debt, net of current portion............................................. 25,704
Other long-term liabilities........................................................ 3,520
Deferred income taxes.............................................................. 1,671
-------
Total liabilities............................................................. 65,876
-------
Commitments and contingencies
Stockholder's equity
Common stock, $1.00 par value, authorized, 70,000 Class A shares and 35,000 Class
B shares; issued and outstanding 55,000 shares (Class A) and 5,000 shares
(Class B)..................................................................... 60
Preferred stock, $1.00 par value, 25,000 shares authorized, issued and
outstanding................................................................... 25
Additional paid-in capital....................................................... 8,767
Cumulative currency translation adjustment (CTA)................................. 2,084
Retained earnings (on July 3, 1994 a deficit of $31,395 was eliminated due to a
subsidiary's quasi-reorganization)............................................ 12,123
-------
23,059
-------
Total liabilities and stockholder's equity............................... $88,935
=======
</TABLE>
See notes to the condensed consolidated financial statements.
F-2
<PAGE> 96
W.R. CARPENTER NORTH AMERICA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER-SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
-----------------------
MARCH 31, MARCH 30,
1996 1997
--------- ---------
<S> <C> <C>
Revenues
Equipment sales...................................................... $67,744 $78,753
Rental and services.................................................. 15,631 17,331
------- -------
83,375 96,084
Cost of revenues....................................................... 55,216 64,813
------- -------
Gross profit........................................................... 28,159 31,271
------- -------
Operating expenses
Selling, general and administrative.................................. 11,039 13,220
Product liability.................................................... 2,050 2,396
Research and development............................................. 1,908 3,110
------- -------
Total operating expenses..................................... 14,997 18,726
------- -------
Income from operations................................................. 13,162 12,545
Other income (expense)
Interest expense, net................................................ (2,126) (2,460)
Other, net........................................................... (5) (26)
------- -------
Income before income taxes............................................. 11,031 10,059
Provision for income taxes............................................. 4,497 4,069
------- -------
Net income............................................................. $ 6,534 $ 5,990
======= =======
Net income per common share............................................ $ 109 $ 100
======= =======
Weighted average number of common shares............................... 60,000 60,000
======= =======
</TABLE>
See notes to the condensed consolidated financial statements.
F-3
<PAGE> 97
W.R. CARPENTER NORTH AMERICA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
(UNAUDITED)
NINE MONTHS ENDED MARCH 30, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCK PREFERRED STOCK ADDITIONAL TOTAL
---------------- ---------------- PAID-IN RETAINED STOCKHOLDER'S
SHARES AMOUNTS SHARES AMOUNTS CAPITAL CTA EARNINGS EQUITY
------ ------- ------ ------- ---------- ------ -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, June 30, 1996.................... 60 $60 25 $25 $8,767 $2,084 $ 6,133 $17,069
Net income................................ -- -- -- -- -- -- 5,990 5,990
--- --- ------ ------ ------- -------
-- --
Balance, March 30, 1997................... $60 $25 $8,767 $2,084 $12,123 $23,059
60 25
=== === ====== ====== ======= =======
== ==
</TABLE>
See notes to the condensed consolidated financial statements.
F-4
<PAGE> 98
W.R. CARPENTER NORTH AMERICA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
-----------------------
MARCH 31, MARCH 30,
1996 1997
--------- ---------
<S> <C> <C>
Net cash provided by operating activities.............................. $ 7,213 $ 3,390
Cash flows from investing activities
Additions to property, plant and equipment........................... (9,416) (10,078)
Proceeds from disposition of assets.................................. 1,732 1,849
------- --------
Net cash used by investing activities........................ (7,684) (8,229)
------- --------
Cash flows from financing activities
Proceeds from long-term debt, net.................................... 4,525 5,660
Repayment of note payable -- related party........................... (1,997) (6,001)
------- --------
Net cash provided (used) by financing activities............. 2,528 (341)
------- --------
Net increase (decrease) in cash and cash equivalents................... 2,057 (5,180)
Cash and cash equivalents at beginning of period....................... 4,314 11,164
------- --------
Cash and cash equivalents at end of period............................. $ 6,371 $ 5,984
======= ========
Supplemental disclosure of cash flow information:
Cash used for interest payments...................................... $ 1,523 $ 2,031
======= ========
Cash used for income tax payments.................................... $ 3,310 $ 2,917
======= ========
</TABLE>
Supplemental information to statement of cash flows
Non-cash investing and financing activities:
During the periods ended March 31, 1996 and March 30, 1997, the Company
entered into capital lease financing arrangements whereby it acquired
equipment for notes payable in the amounts of $2,566 and $2,639,
respectively.
Depreciation and amortization was $3,117 for the nine month period ended
March 31, 1996 and $4,217 for the nine month period ended March 30, 1997.
See notes to the condensed consolidated financial statements.
F-5
<PAGE> 99
W.R. CARPENTER NORTH AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
MARCH 30, 1997
(IN THOUSANDS)
NOTE 1 -- BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements for
the nine months ended March 31, 1996 and March 30, 1997 have been prepared
pursuant to the rules and regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally included in annual
consolidated financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes these disclosures are adequate to
make the information presented not misleading. In the opinion of management, all
adjustments necessary for a fair presentation for the period presented have been
reflected and are of a normal recurring nature. These interim condensed
consolidated financial statements should be read in conjunction with the
consolidated financial statements and notes thereto for each of the three years
in the period ended June 30, 1996. The results of operations for the nine months
ended March 30, 1997 are not necessarily indicative of the results that may be
achieved for the entire year ending June 29, 1997.
The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries, UpRight, Inc. (UpRight) and Horizon High
Reach, Inc. (Horizon). In consolidation, all significant intercompany balances
and transactions are eliminated.
NOTE 2 -- ISSUANCE OF LONG-TERM DEBT
On July 1, 1996, Horizon entered into a $7,750 term commitment note with a
bank, accruing interest at the bank's prime lending rate, payable in monthly
interest-only payments. On July 15, 1997, the outstanding principal balance of
this note will be amortized over five years in 59 monthly installments through
June 2002, with the remaining unpaid principal due on July 15, 2002. The
proceeds are being used primarily for acquisition of rental fleet equipment.
On July 15, 1996, Horizon entered into a term note with a financial
institution in the amount of approximately $6,000, plus interest thereon
computed either at a fluctuating rate per annum equal to the prime rate or at a
fixed rate per annum determined by the lender to be 2.10% above its money market
funds rate. Interest on the note is payable monthly, and the outstanding
principal balance on the note is due and payable in full on July 15, 2001.
On October 16, 1996, UpRight entered into a revolving loan agreement with a
financial institution which allows it to borrow in amounts in the aggregate not
to exceed $4,000. Interest accrues on amounts borrowed at a fixed or variable
rate, at UpRight's option, of 2.25% per annum in excess of the lender's adjusted
LIBOR rate for the interest period or at the lender's reference rate,
respectively. The loan is payable in monthly installments and matures on
December 31, 1998.
NOTE 3 -- CUSTOMER SEGMENTS
Revenue from customer geographical segments were as follows:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
---------------------------------------
MARCH 31, 1996 MARCH 30, 1997
----------------- -----------------
<S> <C> <C> <C> <C>
U.S., Canada and Latin America.......... $63,873 76.6% $64,353 67.0%
Europe.................................. 15,259 18.3 26,129 27.2
Pacific Rim............................. 4,243 5.1 5,602 5.8
------- ----- ------- -----
$83,375 100.0% $96,084 100.0%
======= ===== ======= =====
</TABLE>
F-6
<PAGE> 100
W.R. CARPENTER NORTH AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 4 -- CONTINGENCIES
The Company and its subsidiaries have various product liability claims and
suits pending. The Company's policy is to defend each suit vigorously,
regardless of the amount sought in damages. Although the outcome of such
litigation cannot be predicted with certainty, it is the opinion of management,
based on the advice of legal counsel and other considerations, that all claims,
legal actions, complaints and proceedings which have been filed or are pending
against the Company and its subsidiaries, as well as possible future claims are
adequately covered by reserves or insurance, and are not expected to have a
material adverse effect on the Company's consolidated financial position.
In February 1997, Horizon entered into a recourse agreement with a leasing
company in connection with a lease financing transaction between the leasing
company and a customer of Horizon. Horizon is contingently liable for the
outstanding balance, up to $1,300, plus accrued interest thereon in the event
the customer defaults on the lease for any reason. Accrued interest on the
unpaid balance is calculated at 10.25% per annum.
NOTE 5 -- RELATED PARTY TRANSACTIONS
Included in the consolidated condensed financial statements are the
following related party balances and transactions.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
---------------------
MARCH MARCH
31, 30,
1996 1997
-------- --------
<S> <C> <C>
Revenue from related parties............................ $4,047 $5,482
Cost of revenue from related parties.................... 2,792 3,783
Purchases from related parties.......................... 638 1,243
Marketing expense paid to related parties............... 740 940
Interest expense paid to related party.................. 806 589
Corporate services fees paid to related party........... -- 615
</TABLE>
During fiscal 1997, each of UpRight and Horizon entered into a separate
corporate services agreement (the "Corporate Services Agreements") with Griffin
Group International Management Ltd. ("Griffin"), an affiliate of the Company.
Pursuant to the Corporate Services Agreements, Griffin provides consulting
services to UpRight and Horizon in various areas including operations, finance
and accounting, asset management, strategic planning and policy, management
organization, marketing, technology and communications and public relations.
During fiscal 1997, UpRight and Horizon will pay Griffin $604 and $276,
respectively, for services rendered by Griffin, including the services of
Messrs. Croot, Murphy and Corcoran and others, pursuant to the Corporate
Services Agreements, of which $435 and $180, respectively, have been paid
through March 30, 1997. The Corporate Services Agreements will terminate on June
29, 1997. On May 12, 1997, the Company entered into a corporate services
agreement with Griffin (the "Company Corporate Services Agreement") pursuant to
which Griffin will, for a term of one fiscal year commencing June 30, 1997,
provide consulting services to the Company, UpRight and Horizon in various areas
including operations, finance and accounting, asset management, strategic
planning and policy, management organization, marketing, technology,
communications, public relations and SEC compliance and reporting, including the
services of Messrs. Croot, Murphy and Corcoran and others. The term of the
Company Corporate Services Agreement is automatically extended for additional
one year periods, unless either party gives notice of termination 180 days prior
to the end of such fiscal year.
F-7
<PAGE> 101
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholder of
W.R. Carpenter North America, Inc.
Selma, California
We have audited the consolidated balance sheets of W.R. Carpenter North
America, Inc. and subsidiaries as of June 30, 1996 and July 2, 1995 and the
related consolidated statements of operations, stockholder's equity and cash
flows for each of the three years in the period ended June 30, 1996. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards 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. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of W.R.
Carpenter North America, Inc. and subsidiaries as of June 30, 1996 and July 2,
1995 and the results of their operations and their cash flows for each of the
three years in the period ended June 30, 1996 in conformity with generally
accepted accounting principles.
PANNELL KERR FORSTER
Certified Public Accountants
A Professional Corporation
Los Angeles, California
April 18, 1997, except Note 18
for which the date is May 12, 1997
F-8
<PAGE> 102
W.R. CARPENTER NORTH AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
JULY 2, JUNE 30,
1995 1996
------- --------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents.............................................. $ 4,314 $ 11,164
Accounts receivable (net of allowance for doubtful accounts of $211 and
$287, respectively)................................................. 12,426 15,593
Inventories............................................................ 9,969 15,301
Prepaid expenses and other............................................. 1,766 1,871
Deferred income taxes.................................................. 1,002 1,003
------- -------
Total current assets................................................ 29,477 44,932
------- -------
Property, plant and equipment, net....................................... 21,673 30,816
------- -------
Other assets
Deferred income taxes, noncurrent...................................... 3,543 --
Other.................................................................. 389 237
------- -------
Total other assets.................................................. 3,932 237
------- -------
Total assets................................................... $55,082 $ 75,985
======= =======
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities
Accounts payable....................................................... $10,054 $ 10,786
Accrued wages and employee benefits.................................... 1,680 2,145
Accrued interest....................................................... 593 1,684
Other accrued expenses................................................. 2,614 3,664
Current portion of long-term debt...................................... 3,344 4,351
Revolving line of credit............................................... -- 844
Note payable -- related party.......................................... 15,463 13,463
------- -------
Total current liabilities...................................... 33,748 36,937
Long-term debt, net of current portion................................... 11,649 18,341
Other long-term liabilities.............................................. 1,387 2,534
Deferred income taxes.................................................... -- 1,104
------- -------
Total liabilities.............................................. 46,784 58,916
------- -------
Commitments and contingencies
Stockholder's equity
Common stock........................................................... 60 60
Preferred stock........................................................ 25 25
Additional paid-in capital............................................. 8,767 8,767
Cumulative currency translation adjustment (CTA)....................... 2,081 2,084
Retained earnings (deficit), (on July 3, 1994 a deficit of $31,395 was
eliminated due to a subsidiary's quasi-reorganization).............. (2,635) 6,133
------- -------
8,298 17,069
------- -------
Total liabilities and stockholder's equity..................... $55,082 $ 75,985
======= =======
</TABLE>
See notes to the consolidated financial statements.
F-9
<PAGE> 103
W.R. CARPENTER NORTH AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER-SHARE DATA)
<TABLE>
<CAPTION>
YEARS ENDED
--------------------------------
JULY 3, JULY 2, JUNE 30,
1994 1995 1996
------- ------- --------
<S> <C> <C> <C>
Revenues
Equipment sales
New..................................................... $46,535 $64,891 $ 94,592
Used.................................................... 4,041 2,445 2,450
Rental and services........................................ 19,811 17,821 20,861
------- ------- --------
Total revenues.......................................... 70,387 85,157 117,903
------- ------- --------
Cost of Revenues
Equipment sales
New..................................................... 31,510 44,514 62,750
Used.................................................... 2,433 1,119 1,170
Rental and services........................................ 13,422 12,584 14,718
------- ------- --------
Total cost of revenues.................................. 47,365 58,217 78,638
------- ------- --------
Gross profit
Equipment sales
New..................................................... 15,025 20,377 31,842
Used.................................................... 1,608 1,326 1,280
Rental and services........................................ 6,389 5,237 6,143
------- ------- --------
Total gross profit...................................... 23,022 26,940 39,265
------- ------- --------
Operating expenses
Selling, general and administrative........................ 15,051 13,982 15,124
Product liability.......................................... 1,827 2,094 3,015
Research and development................................... 1,732 1,817 2,865
------- ------- --------
Total operating expenses................................ 18,610 17,893 21,004
------- ------- --------
Income from operations....................................... 4,412 9,047 18,261
Other income (expense)
Interest expense, net...................................... (3,214) (2,566) (2,907)
Loss on sale of subsidiary................................. (3,991) -- --
Other expense.............................................. (261) (186) (539)
------- ------- --------
Income (loss) before income taxes and cumulative effect on
prior years of accounting change........................... (3,054) 6,295 14,815
Provision (benefit) for income taxes......................... (1,221) 2,608 6,047
------- ------- --------
Income (loss) before cumulative effect on prior years of
accounting change.......................................... (1,833) 3,687 8,768
Cumulative effect on prior years of accounting change........ 6,663 -- --
------- ------- --------
Net income................................................... $ 4,830 $ 3,687 $ 8,768
======= ======= ========
Net income per common share.................................. $ 80 $ 61 $ 146
======= ======= ========
Weighted average number of common shares..................... 60,000 60,000 60,000
======= ======= ========
</TABLE>
See notes to the consolidated financial statements.
F-10
<PAGE> 104
W.R. CARPENTER NORTH AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
YEARS ENDED JULY 3, 1994 JULY 2, 1995 AND JUNE 30, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
RETAINED
COMMON STOCK PREFERRED STOCK ADDITIONAL EARNINGS TOTAL
---------------- ---------------- PAID-IN (ACCUMULATED STOCKHOLDER'S
SHARES AMOUNTS SHARES AMOUNTS CAPITAL CTA DEFICIT) EQUITY
------ ------- ------ ------- ---------- ------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, June 27, 1993.......... 60 $60 25 $25 $ 15,032 $2,081 $(42,547) $ (25,349)
Additional capital
contribution............... -- -- -- -- 25,130 -- -- 25,130
Effect of subsidiary's quasi-
reorganization............. -- -- -- -- (31,395) -- 31,395 --
Net income.................... -- -- -- -- -- -- 4,830 4,830
-- --- -- --- -------- ------ -------- --------
Balance, July 3, 1994........... 60 60 25 25 8,767 2,081 (6,322) 4,611
Net income.................... -- -- -- -- -- -- 3,687 3,687
-- --- -- --- -------- ------ -------- --------
Balance, July 2, 1995........... 60 60 25 25 8,767 2,081 (2,635) 8,298
CTA........................... -- -- -- -- -- 3 -- 3
Net income.................... -- -- -- -- -- -- 8,768 8,768
-- --- -- --- -------- ------ -------- --------
Balance, June 30, 1996.......... 60 $60 25 $25 $ 8,767 $2,084 $ 6,133 $ 17,069
== === == === ======== ====== ======== ========
</TABLE>
See notes to the consolidated financial statements.
F-11
<PAGE> 105
W.R. CARPENTER NORTH AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED
---------------------------------
JULY 3, JULY 2, JUNE 30,
1994 1995 1996
-------- ------- --------
<S> <C> <C> <C>
Cash flows from operating activities
Net income................................................ $ 4,830 $ 3,687 $ 8,768
-------- ------- --------
Adjustments to reconcile net income to net cash provided
(used) by operating activities
Depreciation and amortization............................. 3,828 3,579 4,434
Gain on disposition of property, plant and equipment...... (1,110) (1,341) (1,426)
Changes in operating assets and liabilities
Accounts receivable.................................... (1,253) (1,654) (3,167)
Current portion of net investment in lease............. 333 30 --
Inventories............................................ (2,174) 2,930 (5,331)
Prepaid expenses and other assets...................... (582) (381) (105)
Deferred income taxes, net............................. (8,203) 2,337 4,646
Accounts payable....................................... 2,330 492 733
Accrued expenses....................................... 1,690 (4,091) 2,605
Other, net............................................. (244) (56) 1,237
-------- ------- --------
Total adjustments................................. (5,385) 1,845 3,626
-------- ------- --------
Net cash provided (used) by operating
activities...................................... (555) 5,532 12,394
-------- ------- --------
Cash flows from investing activities
Additions to property, plant and equipment................ (7,626) (7,155) (11,549)
Proceeds from disposition of assets....................... 2,974 2,486 2,678
Principal payments received on notes and contracts
receivable............................................. 675 -- --
Increase in notes and contracts receivable................ (182) (177) --
-------- ------- --------
Net cash (used) by investing activities........... (4,159) (4,846) (8,871)
-------- ------- --------
Cash flows from financing activities
Contributed capital....................................... 19,208 -- --
Proceeds from long-term debt.............................. 3,287 14,514 9,248
Repayment of long-term debt............................... (38,970) (5,006) (3,876)
Proceeds of note payable -- related party................. 19,208 -- --
Repayment of note payable -- related party................ (65) (7,177) (2,045)
-------- ------- --------
Net cash provided by financing activities......... 2,668 2,331 3,327
-------- ------- --------
Net increase (decrease) in cash and cash equivalents........ (2,046) 3,017 6,850
Cash and cash equivalents at beginning of year.............. 3,343 1,297 4,314
-------- ------- --------
Cash and cash equivalents at end of year.................... $ 1,297 $ 4,314 $ 11,164
======== ======= ========
Supplemental disclosure of cash flow information:
Cash used for interest payments........................... $ 2,224 $ 3,541 $ 2,089
======== ======= ========
Cash used for income tax payments......................... $ 29 $ 2,273 $ 4,537
======== ======= ========
</TABLE>
See note 17 for additional supplemental information to consolidated statements
of cash flows.
See notes to the consolidated financial statements.
F-12
<PAGE> 106
W.R. CARPENTER NORTH AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JULY 3, 1994, JULY 2, 1995 AND JUNE 30, 1996
(IN THOUSANDS, EXCEPT PER-SHARE DATA)
NOTE 1 -- THE COMPANY
W.R. Carpenter North America, Inc. (the Company), incorporated in 1975
under the laws of Delaware, serves as the holding company for its operating
subsidiaries UpRight, Inc. (UpRight), Horizon High Reach, Inc. (Horizon) and,
through fiscal 1994, Bacon-Universal Company, Inc. (Bacon).
UpRight was incorporated in California in 1947, and its stock was publicly
traded from 1980 until 1988 when it was acquired by an affiliate of the Company.
In 1988, through a corporate reorganization, UpRight became a wholly-owned
subsidiary of the Company. Prior to 1989, Horizon was an independent company in
the business of renting and selling aerial work equipment in Southern
California. In 1989, UpRight acquired the assets of Horizon which were merged
into the retail division of UpRight's North American Operations. In 1994,
Horizon became a separate, wholly-owned subsidiary of the Company. Although
Horizon is a distributor for UpRight products, the two companies have separate
management and operate on an independent basis. UpRight has investments in two
foreign subsidiaries that are in the process of being liquidated. Management is
of the opinion that UpRight will not receive cash or any other consideration
upon liquidation of these entities, and, accordingly the investments are carried
at no value in the accompanying consolidated financial statements.
UpRight is a leading manufacturer of aerial work platforms. Sales are made
principally to independent distributors who rent and sell UpRight's products to
a broad customer base, which includes end users in the industrial, commercial,
institutional and construction markets.
The aerial work platform industry is highly competitive. In selling its
aerial work platform products, UpRight experiences two principal types of
competition: from other manufacturers and from alternative equipment. UpRight
competes in the aerial work platform industry primarily with several other
manufacturers. Certain of UpRight's competitors are part of, or are affiliated
with, companies that are larger and have greater financial resources than
UpRight.
The principal customers for UpRight's new equipment are independent
equipment distributors that primarily rent UpRight's products and provide
service support to equipment users. In recent years, there has been substantial
consolidation in ownership among rental companies, including certain UpRight
customers, resulting in a more limited number of major customers comprising a
substantial portion of total revenue.
Horizon is a leading industrial equipment rental, sales and service
equipment company serving a diverse range of customers from 14 domestic
locations. Horizon's rental fleet consists primarily of aerial work platforms,
portable lift products, self-propelled scissor lift and boom products, and
forklifts. Horizon rents equipment on a daily, weekly and monthly basis and,
occasionally, for longer periods. Horizon is also a distributor of new equipment
for several leading manufacturers and sells used equipment from its rental
fleet, in addition to complementary parts, supplies and accessories.
Horizon is a distributor for UpRight products in most of Horizon's
designated market areas. The equipment in Horizon's existing rental fleet
consists of scaffold, UpRight lifts, scissors, boom lifts, and other lift
products. Horizon also represents various product lines for other manufacturers.
Horizon's corporate headquarters are located in Fresno, California.
Horizon's competitors include national and multiregional companies,
regional competitors that operate in a small number of states, small,
independent businesses with one or a few rental locations, and equipment vendors
and dealers which both sell and rent equipment directly to end users.
Substantially all of Bacon's revenues were derived from the sale and rental
of construction and agricultural equipment, the sale of parts, and service
income. Bacon operated four branches in the State of
F-13
<PAGE> 107
W.R. CARPENTER NORTH AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JULY 3, 1994, JULY 2, 1995 AND JUNE 30, 1996
(IN THOUSANDS, EXCEPT PER-SHARE DATA)
Hawaii as of July 3, 1994. In early July 1994, subsequent to fiscal 1994, the
Company finalized the sale of Bacon, and no longer owns any interest therein
(see note 15).
NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries, UpRight, Horizon and through fiscal 1994,
Bacon. In consolidation, all significant intercompany balances and transactions
are eliminated.
Cash and cash equivalents
The Company considers all highly liquid assets, having an original maturity
of three months or less to be cash equivalents.
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,
disclosure of contingent assets and liabilities at the dates of the financial
statements, and the reported amounts of revenue and expenses during the
reporting periods. Actual future results could differ from those estimates.
Revenue recognition
The Company's subsidiaries recognize revenue from equipment sales upon
shipment. Revenue from rentals is recognized ratably over the term of the rental
contract.
Inventories
Inventories are valued at the lower of cost, using the first-in, first-out
(FIFO) method, or market.
Property, plant and equipment
Property, plant and equipment are stated at cost. When units of property
are disposed of, the cost and accumulated depreciation are removed from the
accounts, and any resulting gain or loss is recognized in operations for the
period. Sales of rental equipment are reflected as used equipment sales in the
accompanying consolidated financial statements. Cost of used sales consists of
the net book value of the equipment sold plus costs directly associated with the
sale.
Depreciation is computed using the straight-line method over the following
estimated useful lives of the assets, as follows:
<TABLE>
<S> <C>
Building and improvements....................... 5 - 30 years
Machinery and equipment......................... 3 - 10 years
Rental equipment................................ 3 - 10 years
</TABLE>
Expenditures for ordinary repairs and maintenance are charged to
operations; betterments are capitalized.
F-14
<PAGE> 108
W.R. CARPENTER NORTH AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JULY 3, 1994, JULY 2, 1995 AND JUNE 30, 1996
(IN THOUSANDS, EXCEPT PER-SHARE DATA)
Foreign currency transactions
Foreign currency gains and losses are converted into local currency at the
rate of exchange ruling at the date of transaction. Gains or losses arising from
transactions are reflected in the consolidated statement of operations. All
realized and unrealized gains and losses arising on amounts receivable and
payable in foreign currencies are included in the consolidated statement of
operations.
Income taxes
The Company files a consolidated tax return with its subsidiaries. Current
and deferred taxes are recorded for differences in the timing of the recognition
of revenues and expenses for financial reporting and income tax purposes.
Deferred taxes result primarily from the use of accelerated depreciation methods
for income tax purposes, timing in the deduction of state income taxes,
capitalization of certain costs in inventories for tax purposes, and differences
in the recognition of certain accruals for tax and financial statement purposes.
Net income per share
Net income per share is computed using the weighted average number of
shares outstanding of common stock.
Fiscal year
The fiscal year of the Company ends on the Sunday nearest to June 30.
NOTE 3 -- INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
1995 1996
------ -------
<S> <C> <C>
Finished goods.......................................... $3,200 $ 6,374
Work-in-progress........................................ 635 862
Raw materials........................................... 6,134 8,065
------ -------
$9,969 $15,301
====== =======
</TABLE>
NOTE 4 -- PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following:
<TABLE>
<CAPTION>
1995 1996
-------- --------
<S> <C> <C>
Land................................................... $ 105 $ 105
Building and improvements.............................. 2,804 4,784
Machinery and equipment................................ 15,100 19,010
Rental equipment....................................... 22,902 28,247
-------- --------
40,911 52,146
Less accumulated depreciation.......................... (19,238) (21,330)
-------- --------
$ 21,673 $ 30,816
======== ========
</TABLE>
F-15
<PAGE> 109
W.R. CARPENTER NORTH AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JULY 3, 1994, JULY 2, 1995 AND JUNE 30, 1996
(IN THOUSANDS, EXCEPT PER-SHARE DATA)
NOTE 5 -- LEASE OBLIGATIONS
The Company's subsidiaries lease certain office and operating facilities
and certain machinery and equipment under operating leases. The Company's
subsidiaries also have capital lease obligations for rental equipment, computers
and other equipment. The following table sets forth future minimum principal
payments under capital lease arrangements and minimum payments under operating
lease arrangements:
<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES
------- ---------
<S> <C> <C>
1997.................................................... $ 1,195 $ 1,232
1998.................................................... 1,145 1,100
1999.................................................... 1,015 719
2000.................................................... 821 456
2001.................................................... 459 218
Thereafter.............................................. 403 183
------- ------
Total future minimum lease payments..................... 5,038 $ 3,908
======
Less amount representing interest....................... (1,020)
-------
Present value of future minimum lease payments.......... $ 4,018
=======
</TABLE>
Rent expense under operating leases was $1,511, $744 and $1,021 in fiscal
years 1994, 1995 and 1996, respectively.
Assets held under capital leases are included in property, plant and
equipment in the amounts of $2,997 and $5,364, and related accumulated
depreciation of $523 and $771 for 1995 and 1996, respectively.
F-16
<PAGE> 110
W.R. CARPENTER NORTH AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JULY 3, 1994, JULY 2, 1995 AND JUNE 30, 1996
(IN THOUSANDS, EXCEPT PER-SHARE DATA)
NOTE 6 -- LONG-TERM DEBT AND CREDIT FACILITIES
Long-term debt consists of the following:
<TABLE>
<CAPTION>
1995 1996
------- -------
<S> <C> <C>
Capital lease obligations due in monthly installments of
various amounts, with imputed interest at various rates
per annum due at various dates through July 2001....... $ 1,876 $ 4,018
Variable interest bonds (ranging from 7% to 11%), secured
by deed of trust and equipment due in monthly
installments of varying amounts through September
2014................................................... 1,912 4,128
$6,000 equipment term note, interest at the bank's prime
lending rate plus .5 percent (8.75 percent at June 30,
1996), payable in monthly principal installments of $83
plus interest through August 2000...................... 5,167 4,167
A $5,600 term commitment, interest at the bank's prime
lending rate plus .5 percent, payable in monthly
principal installments of $93 plus interest through
July 2000.............................................. 5,600 4,317
A $750 term note, interest at the bank's prime lending
rate plus .5 percent, payable in monthly principal
installments of $31 plus interest through August
1996................................................... 438 62
A $6,000 equipment line of credit, interest at the bank's
prime lending rate, payable in monthly interest-only
payments, with the entire principal due on July 15,
1996, see note 18...................................... -- 6,000
------- -------
14,993 22,692
Less current portion..................................... 3,344 4,351
------- -------
$11,649 $18,341
======= =======
</TABLE>
On October 27, 1994, the Company's UpRight subsidiary finalized a bonds
payable agreement with the Community Redevelopment Agency (Agency) of the City
of Selma, California, for purchases of buildings, equipment and tooling. As of
July 2, 1995 and June 30, 1996, respectively, the Company received $2,040 and
$2,389 in bond proceeds, and made principal payments of $128 and $173 on the
bonds. Undisbursed funds are not reflected in the bonds payable balance at the
year end.
F-17
<PAGE> 111
W.R. CARPENTER NORTH AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JULY 3, 1994, JULY 2, 1995 AND JUNE 30, 1996
(IN THOUSANDS, EXCEPT PER-SHARE DATA)
The following is a five year maturity schedule for long-term debt
(excluding capital leases -- see note 5), including the bonds, as if they had
been fully disbursed at the year end:
<TABLE>
<S> <C>
1997............................................................... $ 4,233
1998............................................................... 4,275
1999............................................................... 4,298
2000............................................................... 4,162
2001............................................................... 2,363
Thereafter (2002 to 2014).......................................... 11,190
-------
30,521
Less amount representing bond interest............................. 8,726
-------
Gross present value................................................ 21,795
Undisbursed bond funds............................................. 2,371
Bond reserve remaining with Agency................................. 750
-------
Net present value.................................................. $18,674
=======
</TABLE>
On October 27, 1994, UpRight also entered into an agreement with the City
of Selma (City) to develop and improve at the Company's expense, certain of the
Company's real property infrastructure. The improvements project was financed by
the issuance of Limited Obligation Improvement Bonds for Assessment District No.
1994-1 (District). The total project cost, including aggregate bond fees of
$504, was not to exceed $1,400. As of June 30, 1996, the Company has received in
the form of bond financing a total of $1,400. The Company is scheduled to repay
the bond financing in bi-annual payments of varying amounts at an interest rate
of 7.5% through December 2014. Due to the structure of the agreement with the
City, the Company is issued bi-annual property tax bills as the bond payments
are due. The Company records the bond payments as property tax expense as each
one accrues. As a consequence of this treatment, the Company's financial
statements do not reflect the bond payable balance of $1,400 at the year end.
On November 9, 1994, UpRight entered into a line of credit agreement with a
certain bank. The revolving line of credit is not to exceed the principal amount
of $2,000, with a variable interest rate that is tied to the bank's prime rate.
A nonrevolving line of credit totaling $750, with interest at prime plus one
quarter due in sixty monthly payments through December 31, 2001. Both lines of
credit expire December 31, 1996, and have outstanding balances at June 30, 1996
of zero.
On August 28, 1995, UpRight entered into loan agreements with finance
companies for the purchase of new equipment and tooling. Total funds of $5,000
are available through June 30, 1997 with five year payment terms, due in sixty
(60) monthly installments, each payable in arrears and with a range of 2.0977%
to 2.1046% of the loan amounts. As of June 30, 1996, total borrowings were
$1,191 and available funds were $3,809.
Horizon has a revolving line of credit with a bank allowing it to borrow up
to $3,000, not to exceed 80% of eligible receivables plus 25% of its inventory.
Interest accrues at the bank's prime lending rate (8.25% at June 30, 1996).
The notes and revolving line of credit are secured by the assets of Horizon
and are subject to financial covenants pursuant to the terms of the debt
agreements. These covenants include tangible net worth, debt service ratio and
current ratio as defined, among others. During 1996, Horizon was out of
compliance with the debt to tangible net worth covenant. The bank has waived
this instance of noncompliance.
F-18
<PAGE> 112
W.R. CARPENTER NORTH AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JULY 3, 1994, JULY 2, 1995 AND JUNE 30, 1996
(IN THOUSANDS, EXCEPT PER-SHARE DATA)
NOTE 7 -- EMPLOYEE BENEFIT PLANS
Employees of UpRight participate in a Taxsaver's Investment Plan (UpRight
401(k) Plan). The UpRight 401(k) Plan was originally adopted effective as of
January 1, 1984 as an addition to the Company's Employee Stock Ownership Plan,
originally adopted in January 1, 1975. The Company's Employee Stock Ownership
Plan was terminated in 1987. UpRight makes fixed contributions to the UpRight
401(k) Plan for each year in an amount equal to 4% of the compensation of all
eligible participants, plus up to an additional 2% matching of participants'
contributions. The UpRight 401(k) Plan also contains features that allow
employees to save money before paying Federal income tax on the amount saved.
The UpRight 401(k) Plan covers all employees who have at least one year of
service, and is administrated by a Plan Committee, whose members are appointed
by UpRight's Board of Directors. The UpRight 401(k) Plan is intended to conform
to the provisions of the Employee Retirement Income Security Act of 1974.
Contributions to the UpRight 401(k) Plan are fully vested as of December 31 in
the year in which such contributions were made. Contributions of approximately
$508, $474 and $426 were made by UpRight during 1994, 1995 and 1996,
respectively.
Employees of Horizon participate in the Horizon High Reach 401(k) Plan
(Horizon 401(k) Plan). Participation in this defined contribution plan is
available to all full-time employees who have completed at least one year of
service and attained the age of 21. Horizon makes fixed contributions to the
Horizon 401(k) Plan for each year in an amount up to 4% of the compensation of
all eligible participants. In addition to the fixed annual contribution, Horizon
is required to make a matching contribution equal to the participant's elective
contribution up to 2% of the participant's compensation for the calendar year.
Employee contributions to the Horizon 401(k) Plan are fully vested. Employer
contributions are vested in 20% annual increments beginning after the second
year of participation in the Horizon 401(k) Plan, with full vesting occurring
after the sixth year of participation. Employees are fully vested upon their
65th birthday. Employees of Horizon who had been employed by UpRight or Horizon
for one year as of December 31, 1993 are fully vested in the Horizon 401(k)
Plan. During 1994, 1995 and 1996, Horizon expensed and accrued $254, $293 and
$314, respectively, under the Horizon 401(k) Plan.
NOTE 8 -- CAPITAL STOCK
The Company is authorized to issue 70 shares of its $1 par value Class A
common stock and 35 shares of its $1 par value Class B common stock. At July 3,
1994, July 2, 1995 and June 30, 1996, 55 shares of Class A common stock and 5
shares of Class B common stock were issued and outstanding. The Class A and
Class B shares have equal voting rights and, subject to the rights of the
Company's preferred shares, equal rights as to dividends and other
distributions.
The Company is also authorized to issue 25 shares of its $1 par value
preferred stock, all of which was issued and outstanding at July 3, 1994, July
2, 1995 and June 30, 1996. The preferred shares have no voting rights and have
preference over both classes of common stock as to dividends and other
distributions. The preferred shares are entitled to a $10 per share preferential
distribution before any distribution to common share holders in the event the
Company is dissolved or liquidated.
NOTE 9 -- CAPITAL CONTRIBUTION IN FISCAL 1994
In fiscal 1994, UpRight International Limited (URI), the parent company of
the Company, provided funds to the Company and its UpRight subsidiary to repay
certain bank debt and assumed obligations for certain advances from affiliates.
URI effected these transactions, totaling $44,338, in the form of a note payable
for $19,208 and additional paid in capital of $25,130.
F-19
<PAGE> 113
W.R. CARPENTER NORTH AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JULY 3, 1994, JULY 2, 1995 AND JUNE 30, 1996
(IN THOUSANDS, EXCEPT PER-SHARE DATA)
NOTE 10 -- PROVISION FOR INCOME TAXES
The provision (benefit) for income taxes consists of the following
<TABLE>
<CAPTION>
1994 1995 1996
------- ------ ------
<S> <C> <C> <C>
Current
Federal....................................... $ 37 $ 41 $ 753
State......................................... 2 30 176
------- ------ ------
39 71 929
Deferred........................................ (1,260) 2,537 5,118
------- ------ ------
$(1,221) $2,608 $6,047
------- ------ ------
</TABLE>
The following is a summary of deferred tax assets and liabilities:
<TABLE>
<CAPTION>
1994 1995 1996
---------------------- ---------------------- ----------------------
CURRENT NONCURRENT CURRENT NONCURRENT CURRENT NONCURRENT
------- ---------- ------- ---------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Deferred tax liabilities
resulting from taxable
temporary differences....... $ -- $ (1,620) $ -- $ (1,833) $ -- $ (2,390)
Deferred tax assets resulting
from deductible temporary
differences, loss
carryforwards, and tax
credit forwards............. 2,176 6,326 1,002 5,376 1,003 1,286
------ ------- ------ ------- ------ -------
$ 2,176 $ 4,706 $ 1,002 $ 3,543 $ 1,003 $ (1,104)
====== ======= ====== ======= ====== =======
</TABLE>
The provision for income taxes differs from the expense that would result
form applying Federal statutory rates to income before taxes because of the
inclusion of a provision for state income taxes. In addition, the provision
includes deferred income taxes resulting from adjustments in the amount of
temporary differences.
The Company concluded that a deferred tax asset valuation allowance as of
July 3, 1994, July 2, 1995 and June 30, 1996, was not necessary.
The Company has approximately $2,900 of net operating loss carryforwards
for Federal income tax purposes, and general business and other tax credit
carryforwards of approximately $2,100 for Federal income tax purposes, which
expire through 2011.
NOTE 11 -- REORGANIZATION OF UPRIGHT, INC.
Effective July 3, 1994, UpRight's Board of Directors approved the
elimination of UpRight's accumulated deficit through an accounting
reorganization of its equity accounts (a quasi-reorganization). The quasi-
reorganization, as reflected in the accompanying consolidated financial
statements, did not result in the revaluation of any assets or liabilities of
UpRight, because the fair values were estimated to approximate book values.
The purpose of the quasi-reorganization was to provide users of UpRight's
financial statements with a "fresh start" presentation of UpRight's operations
subsequent to the spin off of its former retail operating division into Horizon,
a separate wholly-owned subsidiary of the Company (see note 1).
The reorganization of Horizon into a separate subsidiary, the sale of Bacon
(see note 15) and UpRight's quasi-reorganization were all significant aspects of
the Company's efforts to strategically refocus its capital resources and
operational structure.
F-20
<PAGE> 114
W.R. CARPENTER NORTH AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JULY 3, 1994, JULY 2, 1995 AND JUNE 30, 1996
(IN THOUSANDS, EXCEPT PER-SHARE DATA)
NOTE 12 -- CUSTOMER SEGMENTS
Revenue from customer geographical segments were as follows:
<TABLE>
<CAPTION>
1994 1995 1996
------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
U.S., Canada and Latin
America..................... $57,670 82% $67,486 79% $ 92,813 78%
Europe........................ 6,105 9 12,920 15 19,550 17
Pacific Rim................... 6,612 9 4,751 6 5,540 5
------- --- ------- --- ------- ---
$70,387 100% $85,157 100% $117,903 100%
======= === ======= === ======= ===
</TABLE>
NOTE 13 -- CONTINGENCIES
The Company and its subsidiaries have various product liability claims and
suits pending. The Company's policy is to defend each suit vigorously,
regardless of the amount sought in damages. Although the outcome of such
litigation cannot be predicted with certainty, it is the opinion of management,
based on the advice of legal counsel and other considerations, that all claims,
legal actions, complaints and proceedings which have been filed or are pending
against the Company and its subsidiaries, as well as possible future claims are
adequately covered by reserves or insurance, and are not expected to have a
material adverse effect on the Company's consolidated financial position.
NOTE 14 -- RELATED PARTY TRANSACTIONS
Included in the financial statements are the following related party
balances and transactions.
<TABLE>
<CAPTION>
1995 1996
------- -------
<S> <C> <C>
Balances due from related parties........................ $ 441 $ 477
Note payable due to related party(1)..................... 15,463 13,463
Interest payable due to related party.................... 479 1,544
Revenues from related parties............................ 6,006 6,160
Cost of revenues from related parties.................... 3,892 3,574
Purchases from related parties........................... 870 1,727
Marketing expense paid to related parties................ 600 740
Interest expense to related party........................ 1,576 1,065
</TABLE>
- ---------------
(1) In October 1996, the Company repaid $6,001 of the amount due to the related
party and issued an unsecured note payable for the balance due at that date
of $7,462. The note is due on demand and bears interest at either 0.5% above
prime rate or 2% above the LIBOR rate (adjusted annually) at the election of
the Company. Accrued interest is payable quarterly.
NOTE 15 -- SALE OF SUBSIDIARY
In July 1994, subsequent to the Company's fiscal year ended July 3, 1994,
the Company finalized the sale of Bacon, one of its wholly-owned subsidiaries.
The sales price was $100, and resulted in a loss on sale of
F-21
<PAGE> 115
W.R. CARPENTER NORTH AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JULY 3, 1994, JULY 2, 1995 AND JUNE 30, 1996
(IN THOUSANDS, EXCEPT PER-SHARE DATA)
$3,991. The loss of $3,991 was provided for in the Company's fiscal 1994
consolidated financial statements. A summary of Bacon's financial position and
results of operations for the year ended July 3, 1994 is as follows:
<TABLE>
<S> <C>
Financial position
Current assets........................................... $ 6,590
Total assets............................................. 9,655
Current liabilities...................................... 4,672
Total liabilities........................................ 5,748
Stockholder's equity..................................... 3,907
Results of operations
Revenue.................................................. $12,958
Gross profit............................................. 3,729
(Loss) from operations................................... (107)
Net (loss)............................................... (881)
</TABLE>
NOTE 16 -- CONCENTRATIONS OF CREDIT RISK
Financial instruments that subject the Company to concentration of credit
risk are cash equivalents and trade receivables. Cash equivalents consist
principally of short-term money market funds. These instruments are short-term
in nature and bear minimal risk. To date, the Company has not experienced
significant losses on these instruments.
The Company maintains cash balances at financial institutions located in
various domestic banks. Accounts are insured by the Federal Deposit Insurance
Corporation up to $100. At June 30, 1996, the Company's uninsured cash balance
totaled $12,130.
The Company performs on-going credit evaluations of its customers financial
conditions. Security is required on all accounts with credit limits in excess of
$50. UCC financing statements are filed, when necessary, for U.S. customers and
sixty days (from invoice date) letter of credit are required for export
shipments.
NOTE 17 -- SUPPLEMENTAL INFORMATION TO STATEMENT OF CASH FLOWS
Noncash investing and financing activities:
During fiscal years 1994, 1995 and 1996, the Company entered into capital
lease financing arrangements whereby it acquired equipment for notes payable in
the amount of $533, $794 and $3,171, respectively.
During fiscal 1994, the Company's parent assumed obligations of the
Company, totaling $5,922, in the form of a capital contribution to the Company.
NOTE 18 -- SUBSEQUENT EVENTS
On July 1, 1996, Horizon entered into a $7,750 term commitment note with a
bank, accruing interest at the bank's prime lending rate, payable in monthly
interest-only payments. On July 15, 1997, the outstanding principal balance of
this note will be amortized over five years in 59 monthly installments through
June 2002, with the remaining unpaid principal due on July 15, 2002. The
proceeds will be used primarily for acquisition of rental fleet equipment.
On July 15, 1996, Horizon entered into a term note with a financial
institution in the amount of approximately $6,000, plus interest thereon
computed either at a fluctuating rate per annum equal to the
F-22
<PAGE> 116
W.R. CARPENTER NORTH AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JULY 3, 1994, JULY 2, 1995 AND JUNE 30, 1996
(IN THOUSANDS, EXCEPT PER-SHARE DATA)
prime rate or at a fixed rate per annum determined by the lender to be 2.10%
above its money market funds rate. Interest on the note is payable monthly, and
the outstanding principal balance on the note is due and payable in full on July
15, 2001.
On October 16, 1996, UpRight entered into a revolving loan agreement with a
financial institution which allows it to borrow in amounts in the aggregate not
to exceed $4,000. Interest accrues on amounts borrowed at a fixed or variable
rate, at UpRight's option, of 2.25% per annum in excess of the lender's adjusted
LIBOR rate for the interest period or at the lender's reference rate,
respectively. The loan is payable in monthly installments and matures on
December 31, 1998.
During fiscal 1997, each of UpRight and Horizon entered into a separate
corporate services agreement (the "Corporate Services Agreements") with Griffin
Group International Management Ltd. ("Griffin"), an affiliate of the Company.
Pursuant to the Corporate Services Agreements, Griffin provides consulting
services to UpRight and Horizon in various areas including operations, finance
and accounting, asset management, strategic planning and policy, management
organization, marketing, technology and communications and public relations.
During fiscal 1997, UpRight and Horizon will pay Griffin $604 and $276,
respectively, for services rendered by Griffin, including the services of
Messrs. Croot, Murphy and Corcoran and others, pursuant to the Corporate
Services Agreements, of which $435 and $180, respectively, have been paid
through March 30, 1997. The Corporate Services Agreements terminated on June 29,
1997. On May 12, 1997, the Company entered into a corporate services agreement
with Griffin (the "Company Corporate Services Agreement") pursuant to which
Griffin, for a term of one fiscal year commencing June 30, 1997, provides
consulting services to the Company, UpRight and Horizon in various areas
including operations, finance and accounting, asset management, strategic
planning and policy, management organization, marketing, technology,
communications, public relations and SEC compliance and reporting, including the
services of Messrs. Croot, Murphy and Corcoran and others. The term of the
Company Corporate Services Agreement is automatically extended for additional
one year periods, unless either party gives notice of termination 180 days prior
to the end of such fiscal year.
NOTE 19 -- RECENT ACCOUNTING PRONOUNCEMENT
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standard (SFAS) No. 128, "Earnings per Share." The
statement is effective for financial statements for periods ending after
December 15, 1997, and changes the method in which earnings per share will be
determined. Adoption of this statement by the Company will not have a material
impact on earnings per share.
In March 1995, the FASB issued SFAS No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets To be Disposed Of" ("Statement
121"). Statement 121 addresses the accounting for the impairment of long-lived
assets, certain identifiable intangible and goodwill related to those assets to
be held and used. It also addresses the accounting for long-lived assets and
certain identifiable intangibles to be disposed of. Statement 121 establishes
guidance for recognizing and measuring impairment losses and requires that the
carrying amount of impaired assets be reduced to fair value. Statement 121 was
effective for fiscal years beginning after December 15, 1995. The impact of the
adoption of Statement 121 did not have a material adverse effect on the
Company's consolidated financial condition or results of operations.
F-23
<PAGE> 117
============================================================
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER
CONTAINED HEREIN 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 BY THE COMPANY OR ANY OTHER PERSON. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY TO ANY PERSON
IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN
WHICH THE PERSON MAKING SUCH AN OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO
OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
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
Certain Definitions........................ 3
Prospectus Summary......................... 4
Risk Factors............................... 19
The Exchange Offer......................... 26
Use of Proceeds............................ 35
Capital Expansion Program.................. 36
Capitalization............................. 38
Selected Historical and Pro Forma
Consolidated Financial Data.............. 39
Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................... 42
Business................................... 48
Management................................. 61
Security Ownership of Certain Beneficial
Owners................................... 63
Certain Relationships and Related
Transactions............................. 63
Description of Certain Indebtedness........ 64
Description of the Notes................... 66
Certain Federal Income Tax
Considerations........................... 91
Plan of Distribution....................... 91
Legal Matters.............................. 92
Experts.................................... 92
Index to Consolidated Financial
Statements............................... F-1
</TABLE>
UNTIL , 1997 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS
EFFECTING TRANSACTIONS IN THE EXCHANGE NOTES, WHETHER OR NOT PARTICIPATING IN
THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION
TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN SELLING EXCHANGE NOTES
RECEIVED IN EXCHANGE FOR ORIGINAL NOTES HELD FOR THEIR OWN ACCOUNT. SEE "PLAN OF
DISTRIBUTION."
============================================================
============================================================
W.R. CARPENTER
NORTH AMERICA, INC.
OFFER TO EXCHANGE ITS
10 5/8% SENIOR SUBORDINATED
NOTES DUE 2007,
WHICH HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT, FOR ANY AND ALL OF ITS
OUTSTANDING 10 5/8% SENIOR SUBORDINATED
NOTES DUE 2007
------------------------------
PROSPECTUS
------------------------------
, 1997
============================================================
<PAGE> 118
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law provides that a
Delaware corporation may indemnify any person against expenses, judgments, fines
and settlements actually and reasonably incurred by any such person in
connection with a threatened, pending or completed action, suit or proceeding to
which such person is a party or is threatened to be made a party by reason of
the fact that he is or was a director, officer, employee or agent of such
corporation, provided, that (i) he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and (ii) with respect to any criminal action or proceeding, he had
no reasonable cause to believe his conduct was unlawful. If the action or suit
is by or in the right of the corporation, the corporation may indemnify any such
person against expenses actually and reasonably incurred by him in connection
with the defense or settlement of such action or suit if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, except that no indemnification may 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 for negligence or misconduct in the
performance of his duty to the corporation, unless and only to the extent that
the Delaware Court of Chancery or the court in which the action or suit is
brought determines upon application that, despite the adjudication of liability
but in view of all of the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses as the court deems proper.
In accordance with the Delaware General Corporation Law, the Registrant's
Certificate of Incorporation limits the personal liability of its directors for
violations of their fiduciary duty.
The Ninth Article of the Registrant's Certificate of Incorporation, as
amended, authorizes the Registrant to indemnify any and all persons whom it
shall have power to indemnify under Section 145 of the Delaware General
Corporation Law to the fullest extent permitted thereunder, and the
indemnification in the Ninth Article shall not be deemed exclusive of any other
rights to which those indemnified may be entitled under any ByLaw, agreement,
vote of stockholders or disinterested directors or otherwise. The Ninth Article
also provides that the corporation shall 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 by reason of the fact that he 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, join venture, trust or other enterprise,
against all expenses (including attorneys' fees), judgments, fines, and amount
paid in settlement actually and reasonably incurred by him in connection with
the defense or settlement of such action, suit or proceeding to the fullest
extent and in the manner set forth in and permitted by the General Corporation
Law of the State of Delaware as from time to time in effect and any other
applicable law as from time to time in effect. Further, the Ninth Article states
that such right of indemnification shall not be deemed exclusive of any other
rights to which such director, officer, employee or agent may be entitled apart
from the foregoing provisions and shall continue as to any such person who has
ceased to be a director, officer, employee or agent and shall insure to the
benefit of the heirs, executors and administrators of each such person. The
Ninth Article provides that its provisions shall be deemed to be a contract
between the corporation and each director, officer, employee or agent who serves
in such capacity at any time while the Ninth Article, and the relevant
provisions of the Delaware General Corporation Law and other applicable law, if
any, are in effect, and any repeal or modification thereof shall not affect any
rights or obligations then existing with respect to any state of facts then or
theretofore existing or any action, suit or proceeding theretofore or thereafter
brought or threatened based in whole or in part upon any such state of facts.
The Registrant maintains a directors' and officers' liability insurance
policy that indemnifies the Registrant's directors and officers against certain
losses in connection with claims made against them for certain wrongful acts.
II-1
<PAGE> 119
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits. The following Exhibits are filed herewith and made a part
hereof:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- --------- -----------------------------------------------------------------------------------
<S> <C>
3.1(i) Certificate of Incorporation of the Registrant, as amended.
3.1(ii) Bylaws of the Registrant, as amended.
4.1 Indenture, dated as of June 10, 1997, by and among the Registrant, the Guarantors
named therein and U.S. Trust Company of California, N.A.
4.2 Registration Rights Agreement, dated as of June 10, 1997, by and among the
Registrant, the Guarantors named therein and the Initial Purchasers named therein.
4.3 Form of Original Global Note.
4.4 Form of Exchange Global Note.
5.1 Opinion of Pillsbury Madison & Sutro LLP.
10.1 Securities Purchase Agreement, dated as of June 4, 1997, by and among the
Registrant, the Guarantors named therein and the Initial Purchasers named therein.
10.2 Revolving Loan Agreement, dated October 16, 1996, between UpRight, Inc., and Union
Bank of California.
10.3 Industrial Lease, dated February 7, 1997, between A.L.L., a general partnership,
and UpRight, Inc.
10.4 Lease, entered into as of November 1995, by and between Townview Partners, an Ohio
partnership, and UpRight, Inc.
10.5 Recourse Agreement, dated February 11, 1997, by and between Horizon High Reach,
Inc., and American Equipment Leasing.
10.6 Management Services Agreement, dated May 12, 1997, by and between the Registrant
and Griffin Group International Management Ltd.
10.7 Lease, dated November 15, 1996, by and between Akzo Nobel Coatings, Inc., and
Horizon High Reach, Inc.
10.8 Lease, dated January 1997, by and between Morris Ragona and Joan Ragona, and
Horizon High Reach, Inc.
10.9 Agreement of Lease, dated January 26, 1995, by and between Richard V. Gunner and
George Andros, and Horizon High Reach, Inc.
10.10 Lease Agreement, executed November 10, 1989, by and between Trussel Electric, Inc.,
and Up-Right, Inc., including Lease Extension Agreement dated February 28, 1994,
Lease Modification Agreement dated January 26, 1994, and Notice of Option to Renew
dated May 7, 1992.
10.11 Lease Agreement (undated) by and between T.T. Templin and Horizon High Reach &
Equipment Company.
10.12 Agreement of Lease, dated October 15, 1992, by and between Robert I. Selsky and
Up-Right Aerial Platforms Assignment of Lease, dated June 1994, by and between
Up-Right, Inc., and Horizon High Reach, Inc., and Consent to Assignment dated July
15, 1994.
10.13 Lease Agreement, dated April 27, 1990, by and between D.L. Phillips Investment
Builders, Inc., and Up-Right, Inc. together with Supplemental Agreement to Lease,
dated September 30, 1994, Assignment of Lease, dated June 18, 1990, by and between
D.L. Phillips Investment Builders, Inc., and JMA, Ltd., Assignment of Lease dated
June 1994, by and between Up-Right, Inc., and Horizon High Reach, Inc., and Consent
to Assignment dated July 15, 1994.
10.14 Lease Renewal Agreement, dated October 19, 1992, between Ronald W. Werner and
UpRight, Inc.
</TABLE>
II-2
<PAGE> 120
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- --------- -----------------------------------------------------------------------------------
<S> <C>
10.15 Lease, dated March 7, 1995, by and between BMB Investment Group and Horizon High
Reach, Inc.
21.1 Subsidiaries of the Registrant.
23.1 Consent of Pillsbury Madison & Sutro LLP (included in Exhibit 5.1).
23.2 Consent of Pannell Kerr Forster, Certified Public Accountants, A Professional
Corporation, independent auditors.
24.1 Power of Attorney (see Page II-5).
25.1 Statement of Eligibility of Trustee, U.S. Trust Company of California, N.A., on
Form T-1.
27.1 Financial Data Schedule.
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
</TABLE>
(b) Financial Statement Schedules.
All schedules have been omitted because they are not applicable, not
required or the required information is included in the financial statements and
notes thereto.
(c) Not applicable.
ITEM 22. UNDERTAKINGS
(a) Indemnification. 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 that 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.
(b)(1) The undersigned Registrant hereby undertakes as follows: that prior
to any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other Items of the applicable form.
(2) The Registrant undertakes that every prospectus (i) that is filed
pursuant to paragraph (1) immediately preceding, or (ii) that purports to meet
the requirements of section 10(a)(3) of the Securities Act of 1933 and is used
in connection with an offering of securities subject to Rule 415, will be filed
as a part of an amendment to the registration statement and will not be used
until such amendment is effective, and that, for purposes 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.
(c) The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11, or 13 of Form S-4, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other
II-3
<PAGE> 121
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.
(e) The undersigned Registrant hereby undertakes: (A) 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; (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; (B) 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; (C) 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.
II-4
<PAGE> 122
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of San Francisco,
California, on July 11, 1997.
W.R. CARPENTER NORTH AMERICA, INC.
By: /s/ DAVID K. SARGENT
------------------------------------
David K. Sargent
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Directors and Officers
of W.R. Carpenter North America, Inc., a Delaware corporation, hereby constitute
and appoint Graham D. Croot, James T. Dillon, James C. Olson and James M.
McLaughlin, each with full power of substitution and resubstitution, their true
and lawful attorneys and agents to sign the names of the undersigned Directors
and Officers in the capacities indicated below to the registration statement to
which this Power of Attorney is filed as an exhibit, and all amendments
(including post-effective amendments) and supplements thereto, and all
instruments or documents filed as a part thereof or in connection therewith and
any related Rule 462(b) registration statement or amendment thereto, and to file
the same, with all exhibits thereto, and all other instruments and documents in
connection therewith, with the Securities and Exchange Commission; and each of
the undersigned hereby ratifies and confirms all that said attorneys, agents, or
any of them, shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ -------------------------------- --------------
<C> <S> <C>
/s/ DAVID K. SARGENT President, Chief Executive July 11, 1997
- ------------------------------------------ Officer and Director (Principal
David K. Sargent Executive Officer)
/s/ GRAHAM D. CROOT Chief Financial Officer July 11, 1997
- ------------------------------------------ (Principal Financial Officer and
Graham D. Croot Principal Accounting Officer)
/s/ PETER B. SAWDY Director July 11, 1997
- ------------------------------------------
Peter B. Sawdy
/s/ ROBERT F. STOWE Chairman of the Board of July 11, 1997
- ------------------------------------------ Directors
Robert F. Stowe
</TABLE>
II-5
<PAGE> 123
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
EXHIBITS DESCRIPTION PAGE
- -------- ------------------------------------------------------------------------- ------------
<C> <S> <C>
3.1(i) Certificate of Incorporation of the Registrant, as amended.
3.1(ii) Bylaws of the Registrant, as amended.
4.1 Indenture, dated as of June 10, 1997, by and among the Registrant, the
Guarantors named therein and U.S. Trust Company of California, N.A.
4.2 Registration Rights Agreement, dated as of June 10, 1997, by and among
the Registrant, the Guarantors named therein and the Initial Purchasers
named therein.
4.3 Form of Original Global Note.
4.4 Form of Exchange Global Note.
5.1 Opinion of Pillsbury Madison & Sutro LLP.
10.1 Securities Purchase Agreement, dated as of June 4, 1997, by and among the
Registrant, the Guarantors named therein and the Initial Purchasers named
therein.
10.2 Revolving Loan Agreement, dated October 16, 1996, between UpRight, Inc.,
and Union Bank of California.
10.3 Industrial Lease, dated February 7, 1997, between A.L.L., a general
partnership, and UpRight, Inc.
10.4 Lease, entered into as of November 1995, by and between Townview
Partners, an Ohio partnership, and UpRight, Inc.
10.5 Recourse Agreement, dated February 11, 1997, by and between Horizon High
Reach, Inc., and American Equipment Leasing.
10.6 Management Services Agreement, dated May 12, 1997, by and between the
Registrant and Griffin Group International Management Ltd.
10.7 Lease, dated November 15, 1996, by and between Akzo Nobel Coatings, Inc.,
and Horizon High Reach, Inc.
10.8 Lease, dated January 1997, by and between Morris Ragona and Joan Ragona,
and Horizon High Reach, Inc.
10.9 Agreement of Lease, dated January 26, 1995, by and between Richard V.
Gunner and George Andros, and Horizon High Reach, Inc.
10.10 Lease Agreement, executed November 10, 1989, by and between Trussel
Electric, Inc., and Up-Right, Inc., including Lease Extension Agreement
dated February 28, 1994, Lease Modification Agreement dated January 26,
1994, and Notice of Option to Renew dated May 7, 1992.
10.11 Lease Agreement (undated) by and between T.T. Templin and Horizon High
Reach & Equipment Company.
10.12 Agreement of Lease, dated October 15, 1992, by and between Robert I.
Selsky and Up-Right Aerial Platforms Assignment of Lease, dated June
1994, by and between Up-Right, Inc., and Horizon High Reach, Inc., and
Consent to Assignment dated July 15, 1994.
10.13 Lease Agreement, dated April 27, 1990, by and between D.L. Phillips
Investment Builders, Inc., and Up-Right, Inc. together with Supplemental
Agreement to Lease, dated September 30, 1994, Assignment of Lease, dated
June 18, 1990, by and between D.L. Phillips Investment Builders, Inc.,
and JMA, Ltd., Assignment of Lease dated June 1994, by and between
Up-Right, Inc., and Horizon High Reach, Inc., and Consent to Assignment
dated July 15, 1994.
</TABLE>
<PAGE> 124
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
EXHIBITS DESCRIPTION PAGE
- -------- ------------------------------------------------------------------------- ------------
<C> <S> <C>
10.14 Lease Renewal Agreement, dated October 19, 1992, between Ronald W. Werner
and UpRight, Inc.
10.15 Lease, dated March 7, 1995, by and between BMB Investment Group and
Horizon High Reach, Inc.
21.1 Subsidiaries of the Registrant.
23.1 Consent of Pillsbury Madison & Sutro LLP (included in Exhibit 5.1).
23.2 Consent of Pannell Kerr Forster, Certified Public Accountants, A
Professional Corporation, independent auditors.
24.1 Power of Attorney (see Page II-5).
25.1 Statement of Eligibility of Trustee, U.S. Trust Company of California,
N.A., on Form T-1.
27.1 Financial Data Schedule.
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
</TABLE>
<PAGE> 1
EXHIBIT 3.1(i)
CERTIFICATE OF INCORPORATION
OF
W. R. CARPENTER NORTH AMERICA, INC.
The undersigned, a natural person, for the purpose of organizing a
corporation for conducting the business and promoting the purposes hereinafter
stated, under the provisions and subject to the requirements of the laws of the
State of Delaware (particularly Chapter 1, Title 8 of the Delaware Code and the
acts amendatory thereof and supplemental thereto, and known, identified and
referred to as the "General Corporation Law of the State of Delaware"), hereby
certifies that:
FIRST: The name of the corporation (hereinafter called the
"corporation") is W. R. Carpenter North America, Inc.
SECOND: The address, including street, number, city, and county, of the
registered office of the corporation in the State of Delaware is 229 South State
Street, City of Dover, County of Kent; and the name of the registered agent of
the corporation in the State of Delaware at such address is The Prentice-Hall
Corporation System, Inc.
THIRD: The nature of the business and the purposes to be conducted and
promoted by the corporation, which shall be in addition to the authority of the
corporation to conduct any lawful business, to promote any lawful purpose, and
to engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of the State of Delaware, is as follows:
To purchase, receive, take by grant, gift, devise, bequest or
otherwise, lease, or otherwise acquire, own, hold, improve, employ, use
and otherwise deal in and with real or personal property, or any
interest therein, wherever situated, and to sell, convey, lease,
exchange, transfer or otherwise dispose of, or mortgage or pledge, all
or any of its property and assets, or any interest therein, wherever
situated.
To engage generally in the real estate business as
principal, agent, broker, and in any lawful capacity, and
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<PAGE> 2
generally to take, lease and purchase, or otherwise acquire, and to
own, use, hold, sell, convey, exchange, lease, mortgage, work, clear,
improve, develop, divide, and otherwise handle, manage, operate, deal
in and dispose of real estate, real property, lands, multiple-dwelling
structures, houses, buildings and triple-dwelling structures, houses,
buildings and other works and any interest or right therein; to take,
lease, purchase or otherwise acquire, and to own, use, hold, sell,
convey, exchange, hire, lease, pledge, mortgage, and otherwise handle,
and deal in and dispose of, as principal, agent, broker, and in any
lawful capacity, such personal property, chattels, chattels real,
rights, easements, privileges, choses in action, notes, bonds,
mortgages, and securities as may lawfully be acquired, held, or
disposed of; and to acquire, purchase, sell, assign, transfer, dispose
of, and generally deal in and with as principal, agent, broker, and in
any lawful capacity, mortgages and other interests in real, personal,
and mixed properties; to carry on a general construction, contracting,
building, and realty management business as principal, agent,
representative, contractor, subcontractor, and in any other lawful
capacity.
To carry on a general mercantile, industrial, investing, and
trading business in all its branches; to devise, invent, manufacture,
fabricate, assemble, install, service, maintain, alter, buy, sell,
import, export, license as licensor or licensee, lease as lessor or
lessee, distribute, job, enter into, negotiate, execute, acquire, and
assign contracts in respect of, acquire, receive, grant, and assign
licensing arrangements, options, franchises, and other rights in
respect of, and generally deal in and with, at wholesale and retail, as
principal, and as sales, business, special, or general agent,
representative, broker, factor, merchant, distributor, jobber, advisor,
and in any other lawful capacity, goods, wares, merchandise,
commodities, and unimproved, improved, finished, processed, and other
real, personal, and mixed property of any and all kinds, together with
the components, resultants, and by-products thereof.
To apply for, register, obtain, purchase, lease, take licenses
in respect of or otherwise acquire, and to hold, own, use, operate,
develop, enjoy, and turn to account, grant licenses and immunities in
respect of, manufacture under and to introduce, sell, assign, mortgage,
pledge or
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<PAGE> 3
otherwise dispose of, and, in any manner deal with and contract with
reference to:
(a) inventions, devices, formulae, processes and any
improvements and modifications thereof;
(b) letters patent, patent rights, patented
processes, copyrights, designs, and similar rights,
trade-marks, trade names, trade symbols and other indications
or origin and ownership granted by or recognized under the
laws of the United States of America, the District of
Columbia, any state or subdivision thereof, and any
commonwealth, territory, possession, agency or instrumentality
of the United States of America and of any foreign country,
and all rights connected therewith or appertaining thereunto;
(c) franchises, licenses, grants and concessions.
To guarantee, purchase, take, receive, subscribe for, and
otherwise acquire, own, hold, use, and otherwise employ, sell, lease,
exchange, transfer, and otherwise dispose of, mortgage, lead, pledge,
and otherwise deal in and with, securities (which term, for the purpose
of this Article THIRD, includes, without limitation of the generality
thereof, any shares of stock, bonds, debentures, notes, mortgages,
other obligations, and any certificates, receipts or other instruments
representing rights to receive, purchase or subscribe for the same, or
representing any other rights or interests therein or in any property
or assets) of any persons, domestic and foreign firms, associations,
and corporations, and by any government or agency or instrumentality
thereof; to make payment therefor in any lawful manner; and, while
owner of any such securities, to exercise any and all rights, powers
and privileges in respect thereof, including the right to vote.
To make, enter into, perform and carry out contracts of every
kind and description with any person, firm,
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<PAGE> 4
association, corporation or government or agency or instrumentality
thereof.
To acquire by purchase, exchange or otherwise, all, or any
part of, or any interest in, the properties, assets, business and good
will of any one or more persons, firms, associations or corporations
heretofore or hereafter engaged in any business for which a corporation
may now or hereafter be organized under the laws of the State of
Delaware; to pay for the same in cash, property or its own or other
securities; to hold, operate, reorganize, liquidate, sell or in any
manner dispose of the whole or any part thereof; and in connection
therewith, to assume or guarantee performance of any liabilities,
obligations or contracts of such persons, firms, associations or
corporations, and to conduct the whole or any part of any business thus
acquired.
To lend money in furtherance of its corporate purposes and to
invest and reinvest its funds from time to time to such extent, to such
persons, firms, associations, corporations, governments or agencies or
instrumentalities thereof, and on such terms and on such security, if
any, as the Board of Directors of the corporation may determine.
To make contracts of guaranty and suretyship of all kinds and
endorse or guarantee the payment of principal, interest or dividends
upon, and to guarantee the performance of sinking fund or other
obligations of, any securities, and to guarantee in any way permitted
by law the performance of any of the contracts or other undertakings in
which the corporation may otherwise be or become interested, of any
persons, firm, association, corporation, government or agency or
instrumentality thereof, or of any other combination, organization or
entity whatsoever.
To borrow money without limit as to amount and at such rates
of interest as it may determine; from time to time to issue and sell
its own securities, including its shares of stock, notes, bonds,
debentures, and other obligations, in such amounts, on such terms and
conditions, for such purposes and for such prices, now or hereafter
permitted by the laws of the State of Delaware and by this certificate
of incorporation, as the Board of Directors of the corporation may
determine; and to secure any of its
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<PAGE> 5
obligations by mortgage, pledge or other encumbrance of all or any of
its property, franchises and income.
To be a promoter or manager of other corporations of any type
of kind; and to participate with others in any corporation,
partnership, limited partnership, joint venture, or other association
of any kind, or in any transaction, undertaking or arrangement which
the corporation would have power to conduct by itself, whether or not
such participation involves sharing or delegation of control with or to
others.
To draw, make, accept, endorse, discount, execute, and issue
promissory notes, drafts, bills of exchange, warrants, bonds,
debentures, and other negotiable or transferable instruments and
evidences of indebtedness whether secured by mortgage or otherwise, as
well as to secure the same by mortgage or otherwise, so far as may be
permitted by the laws of the State of Delaware.
To purchase, receive, take reacquire or otherwise acquire, own
and hold, sell, lend, exchange, reissue, transfer or otherwise dispose
of, pledge, use, cancel, and otherwise deal in and with its own shares
and its other securities from time to time to such an extent and in
such manner and upon such terms as the Board of Directors of the
corporation shall determine; provided that the corporation shall not
use its funds or property for the purchase of its own shares of capital
stock when its capital is impaired or when such use would cause any
impairment of its capital, except to the extent permitted by law.
To organize, as an incorporator, or cause to be organized
under the laws of the State of Delaware, or of any other State of the
United States of America, or of the district of Columbia, or of any
commonwealth, territory, dependency, colony, possession, agency, or
instrumentality of the United States of America, or of any foreign
country, a corporation or corporations for the purpose of conducting
and promoting any business or purpose for which corporations may be
organized, and to dissolve, wind up, liquidate, merge or consolidate
any such corporation or corporations or to cause the same to be
dissolved, wound up, liquidated, merged or consolidated, or to take any
such similar action with respect to corporations heretofore existing to
the extent otherwise permitted by the laws of
-5-
<PAGE> 6
the State of Delaware, any other State of the United States of America,
the District of Columbia, or any commonwealth, territory, dependency,
colony, possession or instrumentality of the United States of America
or any foreign country.
To conduct its business, promote its purposes, and carry on
its operations in any and all of its branches and maintain offices both
within and without the State of Delaware, in any and all States of the
United States of America, in the District of Columbia, and in any or
all commonwealths, territories, dependencies, colonies, possessions,
agencies, or instrumentalities of the United States of America and of
foreign governments.
To promote and exercise all or any part of the foregoing
purposes and powers in any and all parts of the world, and to conduct
its business in all or any of its branches as principal, agent, broker,
factor, contractor, and in any other lawful capacity, either alone or
through or in conjunction with any corporations, associations,
partnerships, firms, trustees, syndicates, individuals, organizations,
and other entities in any part of the world, and, in conducting its
business and promoting any of its purposes, to maintain offices,
branches and agencies in any part of the world, to make and perform any
contracts and to do any acts and things, and to carry on any business,
and to exercise any powers and privileges suitable, convenient, or
proper for the conduct, promotion, and attainment of any of the
business and purposes herein specified or which at any time may be
incidental thereto or may appear conductive to or expedient for the
accomplishment of any such business and purposes and which might be
engaged in or carried on by a corporation incorporated or organized
under the General Corporation Law of the State of Delaware, and to have
and exercise all of the powers conferred by the laws of the State of
Delaware upon corporations incorporated or organized under the General
Corporation Law of the State of Delaware.
To engage in any mercantile trading, commodity trading, or
merchandising business of any kind or character within the State of
Delaware or in any state, district, possession, territory or
instrumentality of the United States of America, to the extent
permitted by the laws applicable therein.
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<PAGE> 7
To buy and sell, as broker or agent or on its own account, at
wholesale and retail, import and export, acquire, own, exchange,
barter, transfer, contract, lease, encumber, prepare for market,
package, distribute, ship, install, service, repair, alter, conduct,
operate and more particularly but without limiting the generality of
the foregoing, to carry on in all its branches and to generally deal in
builders' hardware and builders' supply materials of any nature
whatsoever, or any materials related, connected or incidental thereto
within the State of Delaware or in any State of the United States of
America, district, possession, territory or instrumentality of the
United States of America, to the extent permitted by the laws
applicable therein.
The foregoing provisions of this Article THIRD shall by construed both
as purposes and powers and each as an independent purpose and power. The
foregoing enumeration of specific purposes and power shall not be held to limit
or restrict in any manner the purposes and power of the corporation, and the
purposes and powers herein specified shall, except when otherwise provided in
this Article THIRD, be in no wise limited or restricted by reference to, or
inference from, the terms of any provisions of this or any other Article of this
certificate of incorporation; provided, that the corporation shall not conduct
any business, promote any purpose, or exercise any power or privilege within or
without the State of Delaware which, under the laws thereof, the corporation may
not lawfully conduct, promote, or exercise.
FOURTH: The total number of shares of stock which the corporation shall
have authority to issue is 30,000 shares, of which 10,000 are to be Class A
common shares, and 20,000 shares Class B common shares. The par value of each
share in such class, both Class A and Class B common, is $1.00. Any fractional
share of such stock shall be entitled to its proportionate part of the rights of
a whole share to receive dividends and to participate in the assets of the
corporation in the event of liquidation, but shall not be entitled to vote.
No holder of any share or shares of stock of the corporation of any
class now or hereafter authorized shall have any right, preemptive or otherwise,
to subscribe for, purchase or otherwise acquire any shares of stock of the
corporation of any class now or hereafter authorized, or any bonds, debentures,
or other securities convertible into or exchangeable for any
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<PAGE> 8
shares, or any warrants or other instruments evidencing rights or options to
subscribe for, purchase or otherwise acquire any such shares, whether such
shares, bonds, debentures, securities, warrants or other instruments be
unissued, or issued and thereafter acquired by the corporation, and all such
shares, bonds, debentures, securities, warrants or other instruments may be
issued and disposed of by the Board of Directors, to such person or persons and
on such terms and for such consideration (so far as may be permitted by law) as
the Board of Directors, in their absolute discretion, may deem advisable.
The Board of Directors in its absolute discretion shall have the power
to declare and pay dividends in such proportion between the Class A common
shares and the Class B common shares as they shall deem advisable, necessary or
proper, including the power to declare the same dividend for both classes of
shares, declare dividends on one class to the exclusion of the other, or declare
different dividend rates on each class, with the discretion to vary such terms
of dividend declaration from period to period as the Board of Directors in its
discretion deems appropriate.
FIFTH: The name and the mailing address of the incorporator is as
follows:
<TABLE>
<CAPTION>
Name Mailing Address
---- ---------------
<S> <C>
Jon H. Hammer 555 Madison Avenue
New York, New York 10022
</TABLE>
SIXTH: The corporation is to have perpetual existence.
SEVENTH: Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this corporation or of any creditor of stockholder thereof or on the
application of any receiver or receivers appointed for this corporation under
the provisions of section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this corporation under the provisions of section 279 of Title 8 of the
Delaware Code order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders
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<PAGE> 9
of this corporation, as the case may be, to be summoned in such manner as the
said court directs. If a majority in number representing three-fourths in value
of the creditors of class of creditors, and/or of the stockholders or class of
stockholders of this corporation, as the case may be, agree to any compromise or
arrangement and to any reorganization of this corporation as consequence of such
compromise or arrangement, the said compromise or arrangement and the said
reorganization shall, if sanctioned by the court to which the said application
has been made, be binding on all the creditors or class of creditors, and/or on
all the stockholders or class of stockholders, of this corporation, as the case
may be, and also on this corporation.
EIGHTH: For the management of the business and for the conduct of the
affairs of the corporation, and in further definition, limitation and regulation
of the powers of the corporation and of its directors and of its stockholders or
any class thereof, as the case may be, it is further provided:
1. The management of the business and the conduct of the
affairs of the corporation shall be vested in its Board of Directors,
including the election of the Chairman of the Board of Directors, if
any, the President, the Treasurer, the Secretary, and other principal
officers of the corporation. The number of directors which shall
constitute the whole Board of Directors shall be fixed by, or in the
manner provided in, the By-Laws. The phrase "whole Board" and the
phrase "total number of directors" shall be deemed to have the same
meanindg, to wit, the total number of directors which the corporation
would have if there were no vacancies. No election of directors need be
by written ballot.
2. The original By-Laws of the corporation shall be adopted by
the incorporator, thereafter the Bay-Laws of the corporation may be
amended, or repealed, as the case may be, in accordance with the
provisions of Section 109 of the General Corporation Law of the State
of Delaware, and, after the corporation has received any payment for
any of its stock, the power to adopt, amend, or repeal the ByLaws of
the corporation, by the Board of Directors or the corporation;
provided, however, that any provision for the classification of
directors of the corporation for staggered terms pursuant to the
provisions of
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<PAGE> 10
subsection (d) of Section 141 of the General Corporation Law of the
State of Delaware shall be set forth in an initial By-Law or in a
By-Law adopted by the stockholders entitled to vote of the corporation
unless provisions for such classification shall be set forth in this
certificate of incorporation.
3. Whenever the corporation shall be authorized to issue only
one class of stock, each outstanding share shall entitle the holder
thereof to notice of, and the right to vote at, any meeting of
stockholders. Whenever the corporation shall be authorized to issue
more than one class of stock, no outstanding share of any class of
stock which is denied voting power under the provisions of the
certificate of incorporation shall entitle the holder thereof to the
right to vote at any meeting of stockholders except as the provisions
of paragraph (c) (2) of section 242 of the General Corporation Law of
the State of Delaware shall otherwise require; provided, that no share
of any such class which is otherwise denied voting power shall entitle
the holder thereof to vote upon the increase or decrease in the number
of authorized shares of said class.
4. The Board of Directors is expressly authorized to set apart
out of any funds of the corporation available for dividends a reserve
or reserves for any proper purpose and to abolish any such reserve in
the manner in which it was created; and to authorize and cause to be
executed mortgages and liens upon the real and personal property of the
corporation to the extent heretofore authorized in this Certificate of
Incorporation.
5. By resolution passed by a majority of the whole Board of
Directors, the Board of Directors is expressly authorized to designate
one or more committees, each committee to consist of two or more of the
directors of the corporation, which to the extent provided in the
resolution or the By-Laws of the corporation, shall have and may
exercise the powers of the Board of Directors in the management of the
business and affairs of the corporation, and may authorize the seal of
the corporation to be affixed to all papers which may require it. Such
committee or
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<PAGE> 11
committees shall have such name or names as may be stated in the
By-Laws of the corporation or as may be determined from time to time by
resolution adopted by the Board of Directors.
6. Each holder of record of the common stock, Class A and
Class B alike, shall be entitled to one vote for each share held. The
holders of the common stock shall be entitled to receive pro rata the
net distributable assets of the corporation on liquidation, Class A and
Class B alike.
NINTH: The corporation shall, to the fullest extent permitted by
Section 145 of the General Corporation Law of the State of Delaware, as the same
may be amended and supplemented, indemnify any and all persons whom it shall
have power to indemnify under said section from and against any and all of the
expenses, liabilities or other matters referred to in or covered by said
section, and the indemnification provided for herein shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any By-Law, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has at any time thereafter ceased to be director, officer, employee or agent
and shall inure to the benefit of the heirs, executors and administrators of
such a person. The corporation shall 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 by reason of the fact that he 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 all
expenses (including attorneys' fees), judgments, fines, and amount paid in
settlement actually and reasonably incurred by him in connection with the
defense or settlement of such action, suit or proceeding to the fullest extent
and in the manner set forth in and permitted by the General Corporation Law of
the State of Delaware as from time to time in effect and any other applicable
law as from time to time in effect. Such right of indemnification shall not be
deemed exclusive of any other rights to which such director, officer, employee
or agent may be entitled apart from the foregoing provisions and shall continue
as to any such person who has ceased to be a director, officer, employee or
agent and shall
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<PAGE> 12
inure to the benefit of the heirs, executors and administrators of each such
person. The foregoing provisions of this Article shall be deemed to be a
contract between the corporation and each director, officer, employee or agent
who serves in such capacity at any time while this Article, and the relevant
provisions of the General Corporation Law of the State of Delaware and other
applicable law, if any, are in effect, and any repeal or modification thereof
shall not affect any rights or obligations then existing with respect to any
state of facts then or theretofore existing or any action, suit or proceeding
theretofore or thereafter brought or threatened based in whole or in part upon
any such state of facts.
TENTH: From time to time any of the provisions of this certificate of
incorporation may be amended, altered or repealed, and other provisions
authorized by the laws of the State of Delaware at the time in force may be
added or inserted in the manner and at the time prescribed by said laws, and all
rights at any time conferred upon the stockholders of the corporation by this
certificate of incorporation are granted subject to the provision of this
Article TENTH.
ELEVENTH: Meetings of stockholders may be held outside the State of
Delaware, if the By-Laws so provide. The books of the corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the By-Laws of the corporation. Elections of directors
need not be by ballot unless the By-Laws of the corporation shall so provide.
Signed at New York, New York on October 20, 1975.
/s/ Jon H. Hammer
------------------------------------
Incorporator
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<PAGE> 13
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
Be IT REMEMBERED that personally appeared before me, the
undersigned, a Notary Public duly authorized to take acknowledgment of deeds by
the laws of the place where the foregoing Certificate of Incorporation was
signed, Jon H. Hammer, the Incorporator who signed the foregoing Certificate of
Incorporation, known to me personally to be such, and who acknowledged the same
to be his act and deed, and that the facts therein stated are true.
GIVEN under my hand on October 20, 1975.
/s/ Joan H. Newsome
------------------------------------
Notary Public
[seal of the Notary Public]
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<PAGE> 14
Certificate of Amendment of Certificate of Incorporation
W. R. CARPENTER NORTH AMERICA, INC.
It is hereby certified that:
1. The name of the corporation (hereinafter called the "corporation")
is W. R. Carpenter North America, Inc.
2. The certificate of incorporation of the corporation, filed on
October 22, 1975, is hereby amended by striking out the first paragraph of
Article "Fourth" thereof and substituting in lieu of said paragraph of Article
"Fourth" the following:
"FOURTH: The total number of shares of stock which the
corporation shall have authority to issue is 60,000 shares, of which
25,000 are to be Class A common shares, and 35,000 shares Class B
common shares. The par value of each share in such class, both Class A
and Class B common is $1.00. Any fractional share of such stock shall
be entitled to its proportionate part of the rights of a whole share to
receive dividends and to participate in the assets of the corporation
in the event of liquidation, but shall not be entitled to vote."
3. The amendment of the certificate of incorporation herein certified
has been duly adopted in accordance with the provisions of Section 242 of the
General Corporation Law of the State of Delaware, and pursuant to a resolution
duly and unanimously adopted at a meeting of the Board of Directors of the
corporation and at a meeting of the stockholders of the corporation, both held
on March 16, 1980.
Signed and attested to on March 16, 1980.
/s/ Walter Randolph Carpenter
-----------------------------
Walter Randolph Carpenter,
President
Attest:
/s/ Michael Barnsby
- -----------------------------
Michael Barnsby,
Secretary
<PAGE> 15
CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION
W. R. CARPENTER NORTH AMERICA, INC.
It is hereby certified that:
(1) The name of the Corporation (hereinafter called the "Corporation")
is W. R. Carpenter North America, Inc.
(2) The Certificate of Incorporation of the Corporation, filed on 22
October, 1975, and amended by the filing of an amendment dated 16 March, 1980 on
5 August, 1980, is hereby amended by striking out the first paragraph of Article
"Fourth" thereof and substituting in lieu of said paragraph of Article "Fourth"
the following:
"FOURTH: The total number of shares of stock which the
corporation shall have authority to issue is 105,000 shares of which
70,000 are to be Class A common shares, and 35,000 shares Class B
common shares. The par value of each share in such class, both Class A
and Class B common is $1.00. Any fractional share of such stock shall
be entitled to its proportionate part of the rights of a whole share to
receive dividends and to participate in the assets of the corporation
in the event of liquidation, but shall not be entitled to vote."
(3) The amendment of the Certificate of Incorporation herein certified
has been duly adopted in accordance with the provisions of Section 242 of the
General Corporation Law of the State of Delaware, and pursuant to a resolution
duly and
<PAGE> 16
unanimously adopted by all the shareholders of the Corporation on 13 November,
1987.
Signed and attested on 13 November, 1987
/s/ R. F. Stowe
-----------------------------
R. F. STOWE - PRESIDENT
Attest:
/s/ N. Y. Fong
- -----------------------------
N. Y. FONG - SECRETARY
<PAGE> 17
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
W. R. CARPENTER NORTH AMERICA, INC.
W. R. Carpenter North America, Inc., a Delaware corporation (the
"Corporation"), does hereby certify that:
The amendment set forth below to the Corporation's Certificate of
Incorporation, as heretofore amended, was duly adopted in accordance with the
provisions of Section 242 of the Delaware General Corporation Law:
Article FOURTH is amended to read in its entirety as follows:
"FOURTH: The total number of shares of stock which the corporation
shall have authority to issue is 130,000 shares of which 70,000 are to
be Class A Common shares, 35,000 are to be Class B Common shares, and
25,000 are to be Class A Preferred shares. The par value of each share
in each such class is $1.00 per share. Any fractional share of such
stock shall be entitled to its proportionate part of the rights of a
whole share to receive dividends and to participate in the assets of
the corporation in the event of liquidation, as hereinafter set forth,
but shall not be entitled to vote.
The voting powers, preferences, and relative, participating, optional
and other special rights, and qualifications, limitations and
restrictions thereof of the
<PAGE> 18
Class A Common shares, Class B Common shares and Class A Preferred
shares are as follows:
Class A Common Shares
and Class B Common Shares
Each share of Class A common shares and Class B Common shares shall be
equal to every other share of Class A Common shares and Class B Common
shares in every respect. Each share of Class A Common shares and Class
B Common shares shall entitle the holder thereof to one vote for each
share upon all matters upon which stockholders of the corporation have
the right to vote. Subject to the rights of the holders of the Class A
Preferred shares, the holders of the Class A Common shares and Class B
Common shares shall be entitled to receive dividends, when, as and if
declared by the corporation's board of directors out of funds legally
available therefor. Subject to the rights of the holders of the Class A
Preferred shares, upon the dissolution, liquidation or winding up of
the corporation, the holders of the Class A Common shares and the Class
B Common shares shall be entitled to receive and to be paid the assets
of the corporation available for distribution to its stockholders.
Class A Preferred Shares
Except as may otherwise be required by law, the holders of the Class A
Preferred shares shall have no voting rights. The holders of the Class
A Common shares shall be entitled to receive dividends, when, as, and
if declared by the corporation's board of directors out of funds
legally available therefor, and no more. No dividends shall be paid to
the holders of the Class A Common shares or the Class B Common shares
so long as the full amount of dividends declared by the corporation's
board of directors to be payable to the holders of the Class A
<PAGE> 19
Preferred shares shall not have been paid or set aside for payment.
Upon the dissolution, liquidation or winding up of the corporation, the
holders of the Class A Preferred shares shall be entitled to receive
and to be paid out of the assets of the corporation available for
distribution to its stockholders, before any payment or distribution
shall be made to the holders of the Class A Common shares or the Class
B Common shares, the amount of $10.00 per share, and no more."
IN WITNESS WHEREOF, W. R. Carpenter North America,
Inc. has caused this Certificate of Amendment to be signed and
attested by its duly authorized officers this 14th day of
December, 1988.
W. R. CARPENTER NORTH AMERICA, INC.
By /s/ Graham D. Croot
-----------------------------
Title: Treasurer
Attest:
By /s/ Peter Hunt
-----------------------------
Title: Assistant Secretary
<PAGE> 1
EXHIBIT 3.1(ii)
W.R. CARPENTER NORTH AMERICA, INC.
(A Delaware Corporation)
BY-LAWS
ARTICLE I
NAME OF CORPORATION, SITUATION OF OFFICES
AND CORPORATE SEAL
Section 1.01. Name: The name of the Corporation is W. R. CARPENTER
NORTH AMERICA, INC.
Section 1.02. Principal Office: The principal office of the Corporation
shall be located in the City of Dover, County of Kent, State of Delaware. The
Corporation, in addition to its principal office, may establish and maintain
such other offices and places of business as the Board of Directors may, from
time to time, determine.
Section 1.03. Seal: The corporate seal of the Corporation shall be
circular in form and shall bear the name of the Corporation, the years of its
incorporation, and the words "Corporate Seal, Delaware". The form of the seal
shall be subject to alteration by the Board of Directors and the seal may be
used by causing it or a facsimile to be impressed or affixed or printed or
otherwise reproduced. Any officer or Director of the Corporation shall have
authority to affix the corporate seal of the Corporation to any document
requiring the same.
ARTICLE II
STOCKHOLDERS
Section 2.01. Annual Meetings: The annual stockholders' meeting for the
election of Directors and the transaction of other proper business notice of
which was given in the notice of meeting shall be held at a date to be fixed by
resolution of the Board of Directors, but not later than six (6) months
subsequent to June 30 of each year. Such time of meeting may be changed by
amending these By-Laws.
Section 2.02. Special Meetings: Special meetings of the stockholders
may be called at any time by the Chairman of the Board, the President or by any
Vice President, or by a majority of the Board of Directors.
Section 2.03. Place of Meeting: All stockholders' meetings shall be
held at 229 South State Street, Dover, Delaware, except that the Board of
Directors may in its sole
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discretion fix a different place of meeting, within or without the State of
Delaware, which shall be specified in each notice or waiver of notice of the
meeting.
Section 2.04. Notice of Meetings: The Secretary or an Assistant
Secretary shall cause notice of the place, date and hour, and, in the case of a
special meeting, the purpose or purposes of each stockholders' meeting to be
mailed, not less than 10 nor more than 50 days before the date of the meeting,
to each stockholder entitled to vote at such meeting, at his address as it
appears on the records of the Corporation at the time of such mailing. Notice of
any stockholders' meeting need not be given to any stockholder who shall sign a
written waiver of such notice whether before or after the time of such meeting,
or to any stockholder who shall attend such meeting in person or by proxy
otherwise than for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened, or to any stockholder with whom communication is at the time
unlawful. Unless the adjournment is for more than 30 days or a new record date
is fixed, notice of adjournment of a stockholders' meeting to another time or
place need not be given if such time and place are announced at such meeting.
Section 2.05. Voting - In General: At every stockholder's meeting each
stockholder of all classes shall be entitled to one vote for each share of stock
of the Corporation validly issued and outstanding and held by such stockholder,
except that no shares held by the Corporation shall be entitled to a vote.
Except as otherwise specifically provided by these By-Laws, all matters shall be
decided by a vote of the majority of the votes validly cast. The vote upon any
question shall be by ballot whenever requested by any person entitled to vote,
but, unless such a request is made, voting may be conducted in any way approved
by the meeting.
Section 2.06. Stockholders Entitled to Vote: If, pursuant to Section
2.17 hereof, a record date has been fixed for the determination of stockholders
entitled to notice of or to vote at any stockholders' meeting, each stockholder
of the Corporation shall be entitled to vote, in person or by proxy, each share
of stock standing in his name on the books of the Corporation on such record
date. If no record date has been fixed, then each stockholder shall be entitled
to vote stock standing in his name on the books of the Corporation at the close
of business on the date next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding the day on
which the meeting is held.
Section 2.07. Voting - Proxies: The right to vote by proxy shall exist
only if the instrument authorizing such proxy to act shall have been executed in
writing by the stockholder himself or by his attorney thereunto duly authorized
in writing.
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<PAGE> 3
No proxy shall be voted on after three years from its date unless it provides
for a longer period.
Section 2.08. Quorum: The presence at any stockholders' meeting, in
person or by proxy, of the record holders of shares aggregating a majority of
the total number of shares entitled to vote at the meeting shall be necessary
and sufficient to constitute a quorum for the transaction of business.
Section 2.09. Absence of Quorum: In the absence of a quorum, a majority
in interest of the stockholders entitled to vote at the meeting and present
thereat in person or by proxy, or if no stockholder entitled to vote is present
thereat in person or by proxy, any officer present thereat entitled to preside
or act as Secretary of such meeting, may adjourn the meeting sine die or from
time to time. Any business that might have been transacted at the meeting
originally called may be transacted at any such adjourned meeting at which a
quorum is present.
Section 2.10. List of Stockholders: It shall be the duty of the
Secretary or other officer of the Corporation who shall have charge of the stock
ledger to prepare and make, at least 10 days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
For said 10 days such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, at the place where said meeting is to be
held or, if so specified in the notice of meeting, at any other place within the
city where the meeting is to be held. Such list shall be produced and kept at
the time and place of meeting during the whole time thereof, and may be
inspected by any stockholder who is present. The stock ledger shall be the only
evidence as to who are the stockholders entitled to examine such list or the
books of the Corporation or to vote in person or by proxy at such meeting.
Section 2.11. Certificates Representing Stock: Every holder of stock in
the corporation shall be entitled to have a certificate signed by, or in the
name of, the corporation by the Chairman or Vice-Chairman of the Board of
Directors, if any, or by the President or a Vice-President and by the Treasurer
or an Assistant Treasurer or the Secretary or an Assistant Secretary of the
corporation certifying the number of shares owned by him in the corporation. Any
and all signatures on any such certificate may be facsimiles. In case any
officer, transfer agent, or registrar who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer, transfer agent, or registrar before such certificate is issued, it may
be issued by the corporation with the same effect as if he were such officer,
transfer agent, or registrar at the date of issue.
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<PAGE> 4
Whenever the corporation shall be authorized to issue more than one
class of stock or more than one series of any class of stock, and whenever the
corporation shall issue any shares of its stock as partly paid stock, the
certificates representing shares of any such class or series or of any such
partly paid stock shall set forth thereon the statements prescribed by the
General Corporation Law. Any restrictions on the transfer or registration of
transfer of any shares of the stock of any class or series shall be noted
conspicuously on the certificate representing such shares.
The corporation may issue a new certificate of stock in place of any
certificate theretofore issued by it, alleged to have been lost, stolen, or
destroyed, and the Board of Directors may require the owner of any lost, stolen,
or destroyed certificate, or his legal representative, to give the corporation a
bond sufficient to indemnify the corporation against any claim that may made
against it on account of the alleged loss, theft or destruction of any such
certificate or the issuance of any such new certificate.
Section 2.12 Fractional Share Interests: The corporation may, but shall
not be required to, issue fractions of a share. If the corporation does not
issue fractions of a share, it shall (1) arrange for the disposition of
fractional interests by those entitled thereto, (2) pay in cash the fair value
of fractions of a share as of the time when those entitled to receive such
fractions are determined, or (3) issue scrip or warrants in registered or bearer
form which shall entitle the holder to receive a certificate for a full share
upon the surrender of such scrip or warrants aggregating a full share. A
certificate for a fractional share shall, but scrip or warrants shall not unless
otherwise provided therein, entitle the holder to exercise voting rights, to
receive dividends thereon, and to participate in any of the assets of the
corporation in the event of liquidation. The Board of Directors may cause scrip
or warrants to be issued subject to the conditions that the shares for which
scrip or warrants are exchangeable may be sold by the corporation and the
proceeds thereof distributed to the holders of scrip or warrants, or subject to
any other conditions which the Board of Directors may impose.
Section 2.13. Stock Transfers: Upon compliance with provisions
restricting the transfer or registration of transfer of shares of stock, if any,
transfers or registration of transfers of shares of stock of the corporation
shall be made only on the stock ledger of the corporation by the registered
holder thereof, or by his attorney thereunto authorized by power of attorney
duly executed and filed with the Secretary of the corporation or with a transfer
agent or a registrar, if any, and on surrender of the certificate or
certificates for such shares of stock properly endorsed and the payment of all
taxes due thereon.
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<PAGE> 5
Section 2.14. Transfer of Capital Stock: The corporation shall be
entitled to treat the holder of record of any share of stock as the absolute
owner thereof for all purposes, and accordingly shall not be bound to recognize
any legal, equitable or other claim or interest in such share on the part of any
other person, whether or not it shall have express or other notice thereof,
except as otherwise expressly provided by the statutes of the State of Delaware;
provided, however, that whenever any transfer of shares shall be made for
collateral security, and not absolutely, it shall be so expressed in the entry
of the transfer if, when the certificates are presented to the corporation for
transfer, both the transferor and the transferee request the corporation to do
so.
Section 2.15. Transfer Agents and Registrars: The Board of Directors
may, from time to time, appoint or remove transfer agents and/or registrars of
transfers of shares of stock of the corporation, and it may appoint the same
person as both transfer agent and registrar. Upon any such appointment being
made all certificates representing shares of capital stock thereafter issued
shall be countersigned by one of such transfer agents or by one of such
registrars of transfers or by both and shall not be valid unless so
countersigned. If the same person shall be both transfer agent and registrar,
only one countersignature by such person shall be required.
Section 2.16. Certificate of Stock: (a) The number of each certificate
issued, the name of the person owning the shares represented thereby, the number
and class of such shares and the date of issuance shall be entered upon the
stock books of the corporation at the time of issuance.
(b) Every certificate exchanged or otherwise returned to the
corporation shall be marked "Cancelled" with the date of cancellation.
Section 2.17. Fixing of Record Date or Closing of Transfer Books: The
Board of Directors may fix in advance a date as a record date for the
determination of the stockholders entitled to notice of or to vote at any
meeting of stockholders or any adjournment thereof, or to express consent to
corporate action in writing without a meeting, or to receive payment of any
dividend or other distribution or allotment of any rights, or to exercise any
rights in respect of any change, conversion or exchange of stock, or for the
purpose of any other lawful action, provided that such record date shall not be
a date more than 60 nor less than 10 days before the date of such meeting of
stockholders, nor more than 60 days prior to any other action. In such case only
such stockholders as shall be stockholders of record on the record date so fixed
shall be entitled to such notice of, and to vote at, such meeting or
adjournment, or to give such consent, or to receive payment of such dividend or
other distribution, or to receive such allotment of rights, or to exercise such
rights, or to take such other actions, as the
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<PAGE> 6
case may be, notwithstanding any transfer of any shares on the books of the
corporation after any such record date.
Section 2.18. Conduct of Stockholders' Meeting: Meetings of the
stockholders shall be presided over by one of the following officers in the
order of seniority and if present and acting - the Chairman of the Board, if
any, the Vice-Chairman of the Board, if any, the President, a Vice-President,
or, if none of the foregoing is in office and present and acting, by a chairman
to be chosen by the stockholders. The Secretary of the corporation, or in his
absence, an Assistant Secretary, shall act as secretary of every meeting, but if
neither the Secretary nor an Assistant Secretary is present the Chairman of the
meeting shall appoint a secretary of the meeting.
Section 2.19. Inspectors: The directors, in advance of any meeting,
may, but need not, appoint one or more inspectors of election to act at the
meeting or any adjournment thereof. If an inspector or inspectors are not
appointed, the person presiding at the meeting may, but need not, appoint one or
more inspectors. In case any person who may be appointed as an inspector fails
to appear or act, the vacancy may be filled by appointment made by the Directors
in advance of the meeting or at the meeting by the person presiding thereat.
Each inspector, if any, before entering upon the discharge of his duties, shall
take and sign an oath faithfully to execute the duties of inspector at such
meeting with strict impartiality and according to the best of his ability. The
inspectors, if any, shall determine the number of shares of stock outstanding
and the voting power of each, the shares of stock represented at the meeting,
the existence of a quorum, the validity and effect of proxies, and shall receive
votes, ballots or consents, hear and determine all challenges and questions
arising in connection with the right to vote, count and tabulate all votes,
ballots or consents, determine the result, and do such acts as are proper to
conduct the election or vote with fairness to all stockholders. On request of
the person presiding at the meeting, the inspector or inspectors, if any, shall
make a report in writing of any challenge, question or matter determined by him
or them and execute a certificate of any fact found by him or them.
Section 2.20. Stockholder Action Without Meetings: Any action required
by the General Corporation Law to be taken at annual or special meeting of
stockholders, or any action which may be taken at any annual or special meeting
of stockholders, may be taken without a meeting, without prior notice and
without a vote, if a consent in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted. Prompt notice of the taking of the corporate action without a meeting by
less than unanimous written consent shall be given to those stockholders who
have not consented in writing.
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<PAGE> 7
Section 2.21. Meaning of Certain Terms: As used herein in respect of
the right to notice of a meeting of stockholders or a waiver thereof or to
participate or vote thereat or to consent or dissent in writing in lieu of a
meeting, as the case may be, the term "share" or "shares" or "share of stock" or
"shares of stock" or "stockholder" or "stockholders" refers to an outstanding
share or shares of stock and to a holder or holders of record of outstanding
share of stock when the corporation is authorized to issue only one class of
shares of stock, and said reference is also intended to include any outsourcing
share or shares of stock and any holder or holders of record of outstanding
shares of stock of any class upon which or upon whom the certificate of
incorporation confers such rights where there are two or more classes or series
of shares of stock or upon which or upon whom the General Corporation Law
confers such rights notwithstanding that the certificate of incorporation may
provide for more than one class or series of shares of stock, one or more of
which are limited or denied such rights thereunder; provided, however, that no
such right shall vest in the event of an increase or a decrease in the
authorized number of shares of stock of any class or series which is otherwise
denied voting rights under the provisions of the certificate of incorporation.
ARTICLE III
BOARD OF DIRECTORS
Section 3.01. Number and Term of Office: The Board of Directors shall
consist of not less than two or more than ten Directors, which number may be
increased or decreased by resolution of the Board of Directors or action of the
stockholders, provided that the number of Directors shall not be reduced to less
than two. Each Director (whenever elected) shall hold office until his successor
is elected and qualified or until his earlier resignation or removal.
Section 3.02. Qualifications: A Director need not be a
stockholder, a citizen of the United States, or a resident of
the State of Delaware.
Section 3.03. Election and Term: The first Board of Directors, unless
the members thereof shall have been named in the certificate of incorporation,
shall be elected by the incorporator or incorporators and shall hold office
until the first annual meeting of stockholders and until their successors are
elected and qualified or until their earlier resignation or removal. Any
director may resign at any time upon written notice to the corporation.
Thereafter, directors who are elected at an annual meeting of stockholders, and
directors who are elected in the interim to fill vacancies and newly created
directorships, shall hold office until the next annual meeting of stockholders
and until their successors are elected and
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qualified or until their earlier resignation or removal. In the interim between
annual meetings of stockholders or of special meetings of stockholders called
for the election of directors and/or for the removal of one or more directors
and for the filling of any vacancy in that connection, newly created
directorships and any vacancies in the Board of Directors, including unfilled
vacancies resulting from the removal of directors for cause or without cause,
may be filled by the vote of a majority of the remaining directors then in
office, although less than a quorum, or by the sole remaining director.
Section 3.04. Removal of Directors: At any stockholders' meeting called
for that purpose, provided a quorum is present, any Director may be removed
(either with or without cause) by the vote of the holders of a majority of the
shares represented at the meeting, and at the same meeting a duly qualified
person may be elected in his stead by a plurality of the votes validly cast.
Section 3.05. Vacancies and Newly Created Directorships: If any
vacancies shall occur in the Board of Directors by reason of resignation,
removal or otherwise, or if the authorized number of Directors shall be
increased, the Directors then in office shall continue to act, and such
vacancies (if not previously filled by the stockholders pursuant to Section 3.03
hereof) or newly created Directorships may be filled by a majority of the
Directors then in office, although less than a quorum, provided that immediately
after filling such vacancy at least two-thirds of the Directors then holding
office shall have been elected to such office by the stockholders of the
corporation. In the event that at any time, other than the time preceding the
first annual stockholders' meeting, less than a majority of the Directors of the
corporation holding office at that time were so elected by the stockholders, a
meeting of the stockholders shall be held promptly and in any event within 60
days for the purpose of electing Directors to fill any existing vacancies in the
Board of Directors, unless otherwise filled pursuant to Section 3.03 above.
Section 3.06. General Powers:
(a) The property, affairs and business of the corporation shall be
managed by the Board of Directors, which may exercise all the powers of the
corporation except those powers vested solely in the stockholders of the
corporation by statute, by the Certificate of Incorporation, or by these
By-Laws.
(b) All acts done by any meeting of the Directors or by any person
acting as a Director, so long as his successor shall not have been duly elected
or appointed, shall notwithstanding that it be afterwards discovered that there
was some defect in the election of the Directors or such person acting as
aforesaid or that they or any of them were disqualified, be as valid as if the
Directors or such other person, as the case may be, had been
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duly elected and were or was qualified to be Directors or a Director of the
corporation.
Section 3.07. Power to Issue and Sell Stock: The Board of Directors may
from time to time issue and sell or cause to be issued and sold any of the
corporation's authorized shares to such persons and for such consideration as
the Board of Directors shall deem advisable, subject to the provisions of
Article FOURTH of the Certificate of Incorporation.
Section 3.08. Power to Declare Dividends:
(a) The Board of Directors, from time to time as they may deem
advisable, may declare and pay dividends in cash, stock, or other property of
the corporation, out of any source available for dividends, to the stockholders
according to their respective rights and interests, all to the extent permitted
by the General Corporation Law of the State of Delaware, or the certificate of
incorporation.
(b) The Board of Directors may at any time declare and distribute pro
rata among the stockholders a "stock dividend" out of the corporation's
authorized but unissued shares of stock, including any shares previously
purchased by the corporation.
Section 3.09. Annual and Regular Meetings: The annual meeting of the
Board of Directors for choosing officers and transacting other proper business
shall be held immediately after the annual stockholders' meeting at the place of
such meeting. The Board of Directors from time to time may provide by resolution
for the holding of regular meetings and fix their time and place (within or
outside the State of Delaware). Notice of such annual and regular meetings need
not be given, provided that notice of any change in the time or place of such
meetings shall be sent promptly to each Director not present at the meeting at
which such change was made in the manner provided for notice of special
meetings.
Section 3.10. Special Meetings: Special meetings of the Board of
Directors shall be held whenever called by the Chairman of the Board, the
President (or, in the absence or disability of the President, by any
Vice-President), the Treasurer, or two or more Directors, at the time and place
(within or outside the State of Delaware) specified in the respective notices or
waivers of notice of such meetings.
Section 3.11. Notice: Notice of special meetings, stating the time and
place, shall be mailed to each Director at his residence or regular place of
business at least five days before the day on which a special meeting is to be
held or caused to be delivered to him personally or to be transmitted to him by
telegraph, cable or wireless at least two days before the meeting.
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Section 3.12 Waiver of Notice: No notice of any meeting need to be
given to any Director who attends that meeting in person or to any Director who
waives notice of that meeting in writing, whether before or after the time of
the meeting, or to any Director with whom communication is unlawful. No notice
need be given of any adjourned meeting.
Section 3.13. Quorum: At all meetings of the Board of Directors the
presence of two of the number of Directors then in office shall constitute a
quorum for the transaction of business. In the absence of a quorum, a majority
of the Directors present may adjourn the meeting, from time to time, until a
quorum shall be present.
Section 3.14. Compensation: Each Director may receive
such remuneration for his services as shall be fixed from time
to time by resolution of the Board of Directors.
Section 3.15. Action Without a Meeting: Any action required or
permitted to be taken at any meeting of the Board of Directors may be taken
without a meeting if written consents thereto are signed by all members of the
Board and such written consents are filed with the minutes of proceedings of the
Board.
Section 3.16. Advisory Boards: By resolution adopted by a majority of
the whole Board of Directors, the Board of Directors may designate one or more
advisory boards, each consisting of persons designated by the Board of Directors
who may but need not be directors of the corporation, each member of any such
board to hold office during the pleasure of the Board of Directors, and shall
present such reports and recommendations to the Board of Directors, all as shall
be determined by the Board of Directors.
ARTICLE IV
EXECUTIVE COMMITTEE AND OTHER COMMITTEES
Section 4.01. How Constituted: By resolution adopted by a majority of
the whole Board of Directors, the Board may designate one or more committees,
including an Executive Committee, each consisting of at least one Director. Each
member of a committee shall hold office during the pleasure of the Board. One of
the members of the Executive Committee shall be the President of the
corporation.
Section 4.02. Powers of the Executive Committee: Unless otherwise
provided by resolution of the Board of Directors, when the Board of Directors is
not in session the Executive Committee shall have and may exercise all powers of
the Board of Directors in the management of the business and affairs of the
corporation that may lawfully be exercised by an Executive Committee,
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including the power to declare a dividend or to authorize the issuance of stock.
Section 4.03. Other Committees: To the extent provided by
resolution of the Board, other committees shall have and may
exercise any of the powers that may lawfully be granted to the
Executive Committee.
Section 4.04. Proceedings, Quorum and Manner of Acting: In the absence
of appropriate resolution of the Board of Directors, each committee may adopt
such rules and regulations governing its proceedings, quorum and manner of
acting as it shall deem proper and desirable, provided that the quorum shall not
be less than one Director.
ARTICLE IV
OFFICERS
Section 5.01. General: The officers of the corporation shall be
Chairman of the Board, Board of Directors, a President, one or more Vice
Presidents, a Secretary, and a Treasurer, and may include one or more Assistant
Secretaries, one or more Assistant Treasurers, and such other officers as may be
appointed in accordance with the provisions of Section 5.11 hereof. The Board of
Directors may elect a Chairman of the Board.
Section 5.02. Election, Term of Office, Qualifications and General
Authorization: The officers of the corporation (except those appointed pursuant
to Section 5.11 hereof) shall be chosen by the Board of Directors at its first
meeting or such subsequent meetings as shall be held prior to its first annual
meeting, and thereafter annually at its annual meeting. If any officers are not
chosen at an annual meeting, such officers may be chosen at any subsequent
regular or special meeting of the Board. Except as provided in Sections 5.03,
5.04, and 5.05 hereof, each officer chosen by the Board of Directors shall hold
office until the next annual meeting of the Board of Directors and until his
successor shall have been chosen and qualified. Any person may hold one or more
offices of the corporation except the offices of President and Secretary. The
Chairman of the Board and the President shall be chosen from among the Directors
of the corporation and may hold such offices only so long as they continue to be
Directors. No other officer need be a Director.
All officers of the corporation shall have such authority and perform
such duties in the management and operation of the corporation as shall be
prescribed in the resolutions of the Board of Directors designating and choosing
such officers and prescribing their authority and duties, and shall have such
additional authority and duties as are incident to their office
-11-
<PAGE> 12
except to the extent that such resolutions may be inconsistent therewith. The
Secretary or an Assistant Secretary of the corporation shall record all of the
proceedings of all meetings and actions in writing of stockholders, directors,
and committees of directors, and shall exercise such additional authority and
perform such additional duties as the Board shall assign to him. Any officer may
be removed, with or without cause, by the Board of Directors. Any vacancy in any
office may be filled by the Board of Directors.
Section 5.03. Resignation: Any officer may resign his office at any
time by delivering a written resignation to the Board of Directors, the
President, the Secretary, or any Assistant Secretary. Unless otherwise specified
therein, such resignation shall take effect upon delivery.
Section 5.04. Removal: Any officer may be removed from office, either
with or without cause, by the vote of a majority of the Board of Directors given
at any regular meeting called for such purpose. In addition, any officer or
agent appointed in accordance with the provisions of Section 5.11 hereof may be
removed, either with or without cause, by any officer upon whom such power of
removal shall have been conferred by the Board of Directors.
Section 5.05. Vacancies and Newly Created Offices: If any vacancy shall
occur in any office by reason of death, resignation, removal, disqualification
or other cause, or if any new office shall be created, such vacancies or newly
created offices may be filled by the Board of Directors at any regular or
special meeting or, in the case of any office created pursuant to Section 5.11
hereof, by any officer upon whom such power shall have been conferred by the
Board of Directors.
Section 5.06. Chairman of the Board: The Chairman of the Board, if
there be such an officer, shall, if present, preside at all meetings of the
Board of Directors and perform such other powers and duties as may be assigned
to him from time to time by the Board of Directors.
Section 5.07. President: Subject to such supervisory powers, if any, as
may be given by the Board of Directors to the Chairman of the Board, if there be
such an officer, the President shall be the general manager and chief executive
officer of the Corporation and shall, subject to the control of the Board of
Directors, have general supervision, direction, and control of the business and
other officers, employees and agents of the Corporation. He shall preside at all
meetings of the stockholders. He shall be ex-officio a member of all the
standing committees, including the executive committee, if any, and shall have
the general powers and duties of management usually vested in the office of
president of a corporation, and shall have such other powers and duties as may
be prescribed by the Board of Directors or by these Bylaws. He shall have power
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<PAGE> 13
to sign all stock certificates, contracts and other instruments of the
Corporation which are authorized by the Board of Directors.
Section 5.08. Treasurer and Assistant Treasurer: The Treasurer shall be
the principal financial and accounting officer of the corporation and shall have
general charge of the finances of the corporation. Except as otherwise provided
by the Board of Directors, he shall have general supervision of the funds and
property of the corporation and of the performance by any custodian of its
duties with respect thereto. He shall sign (unless an Assistant Treasurer or
Secretary or Assistant Secretary shall have signed) all certificates of stock of
the corporation authorized for issuance by the Board of Directors. He shall
render to the Board of Directors, whenever directed by the Board, an account of
the financial condition of the corporation and of all his transactions as
Treasurer; and as soon as possible after the close of each financial year he
shall make and submit to the Board of Directors a like report for such financial
year. He shall perform all the acts incidental to the office of the Treasurer,
subject to the control of the Board of Directors.
Any Assistant Treasurer may perform such duties of the Treasurer as the
Treasurer or the Board of Directors may assign, and, in the absence of the
Treasurer, he may perform all the duties of the Treasurer.
Section 5.10. Secretary and Assistant Secretaries: The Secretary shall
attend to the giving and serving of all notices of the corporation and shall
record all proceedings of the meetings of the stockholders and directors in a
book to be kept for that purpose. He shall keep in safe custody the seal of the
corporation, and shall have charge of the records of the corporation, including
the stock books and such other books and papers as the Board of Directors may
direct and such books, reports, certificates and other documents required by law
to be kept, all of which shall at all reasonable times be open to inspection by
any Director. He shall sign (unless the Treasurer, an Assistant Treasurer or an
Assistant Secretary shall have signed) certificates representing stock of the
corporation authorized for issuance by the Board of Directors. He shall perform
such other duties as appertain to his office or as may be required by the Board
of Directors.
Any Assistant Secretary may perform such duties of the Secretary as the
Secretary or the Board of Directors may assign, and, in the absence of the
Secretary, he may perform all the duties of the Secretary.
Section 5.11. Subordinate Officers: The Board of Directors from time to
time may appoint such other officers or agents as it may deem advisable, each of
whom shall have such title, hold office for such period, have such authority and
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<PAGE> 14
perform such duties as the Board of Directors may determine. The Board of
Directors from time to time may delegate to one or more officers or agents the
power to appoint any such subordinate officers or agents and to prescribe their
respective rights, terms of office, authorities and duties.
Section 5.12. Remuneration: The salaries or other compensation of the
officers of the corporation shall be fixed from time to time by resolution of
the Board of Directors, except that the Board of Directors may by resolution
delegate to any person or group of persons the power to fix the salaries or
other compensation of any subordinate officers or agent appointed in accordance
with the provisions of Section 5.11 hereof.
ARTICLE VI
EXECUTION OF INSTRUMENTS, VOTING OF SECURITIES
Section 6.01. General: Subject to the provisions of Section 6.02
hereof, all deeds, documents, transfers, contracts, agreements and other
instruments requiring execution by the corporation shall be signed by the
President or a Vice President and by the Treasurer or Secretary or an Assistant
Treasurer or an Assistant Secretary, or as the Board of Directors may otherwise,
from time to time, authorize. Any such authorization may be general or confined
to specific instances.
Section 6.02. Checks, Notes, Drafts, etc.: Except as otherwise
authorized by the Board of Directors, all requisitions or orders for the payment
of money or for the issue of checks and drafts therefor, all promissory notes,
all assignments of securities standing in the name of the corporation, shall be
signed in the name of the corporation by the President or a Vice President and
by the Treasurer or an Assistant Treasurer.
ARTICLE VII
FISCAL YEAR, ACCOUNTANT
Section 7.01. Fiscal Year: The fiscal year of the corporation shall,
unless otherwise ordered by the Board of Directors, be twelve calendar months
beginning on the 1st day of July in each year and ending on the 30th day of the
following June.
Section 7.02. Accountant:
(a) The corporation shall employ an independent public accountant or
firm of independent public accountants as its Accountant to examine the accounts
of the corporation and to sign and certify financial statements filed by the
corporation
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<PAGE> 15
and to sign and certify financial statements filed by the corporation. The
Accountant's certificates and reports shall be addressed to both the Board of
Directors and to the stockholders.
(b) Any vacancy occurring between annual meetings, due to the death or
resignation of the Accountant, may be filled by the Board of Directors.
ARTICLE VIII
OPERATING RULES
Section 8.01. General: The Board of Directors or the
stockholders may adopt Operating Rules governing the operation
of the corporation. Any such Operating Rules shall have the
same force and effect as these By-Laws.
ARTICLE IX
AMENDMENTS
Section 9.01. General: All By-Laws of the corporation, whether adopted
by the Board of Directors or the stockholders, shall be subject to amendment,
alteration or repeal, and new By-Laws may be made, by the affirmative vote of a
majority of either:
(a) The holders of record of the outstanding shares of stock of
the corporation entitled to vote at any annual or special
meeting, the notice or waiver of notice of which shall have
specified or summarized the proposed amendment, alteration,
repeal or new By-Law; or
(b) The total authorized number of Directors.
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<PAGE> 1
EXHIBIT 4.1
================================================================================
W.R. CARPENTER NORTH AMERICA, INC.
THE GUARANTORS named herein
and
U.S. TRUST COMPANY OF CALIFORNIA, N.A., as Trustee
INDENTURE
Dated as of June 10, 1997
Up to $150,000,000
10 5/8% Senior Subordinated Notes due 2007
================================================================================
<PAGE> 2
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA Indenture
Section Section
- ------- -------
<S> <C>
310(a)(1)..................................................... 8.10
(a)(2)................................................... 8.10
(a)(3)................................................... N.A.
(a)(4)................................................... N.A.
(b)...................................................... 8.08; 8.10; 12.02
(b)(1)................................................... 8.10
(b)(9)................................................... 8.10
(c)...................................................... N.A.
311(a)........................................................ 8.11
(b)...................................................... 8.11
(c)...................................................... N.A.
312(a)........................................................ 2.05
(b)...................................................... 12.03
(c)...................................................... 12.03
313(a)........................................................ 8.06
(b)(1)................................................... 8.06
(b)(2)................................................... 8.06
(c)...................................................... 12.02
(d)...................................................... 8.06
314(a)........................................................ 4.02; 4.04; 12.02
(b)...................................................... N.A.
(c)(1)................................................... 12.04; 12.05
(c)(2)................................................... 12.04; 12.05
(c)(3)................................................... N.A.
(d)...................................................... N.A.
(e)...................................................... 12.05
(f)...................................................... N.A.
315(a)........................................................ 8.01; 8.02
(b)...................................................... 8.05; 12.02
(c)...................................................... 8.01
(d)...................................................... 6.05; 8.01; 8.02
(e)...................................................... 6.11
316(a) (last sentence)........................................ 12.06
(a)(1)(A)................................................ 6.05
(a)(1)(B)................................................ 6.04
(a)(2)................................................... 9.02
(b)...................................................... 6.07
(c)...................................................... 9.04
317(a)(1)..................................................... 6.08
(a)(2)................................................... 6.09
(b)...................................................... 8.12
318(a)........................................................ 12.01
</TABLE>
- -------------------
N.A. means Not Applicable
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
a part of the Indenture
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
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ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
<S> <C>
Section 1.01. Definitions............................................................ 1
Section 1.02. Other Definitions...................................................... 25
Section 1.03. Incorporation by Reference of Trust Indenture Act...................... 26
Section 1.04. Rules of Construction.................................................. 26
ARTICLE TWO
THE NOTES
Section 2.01. Amount of Notes........................................................ 27
Section 2.02. Form and Dating........................................................ 28
Section 2.03. Execution and Authentication........................................... 29
Section 2.04. Registrar and Paying Agent............................................. 30
Section 2.05. Paying Agent To Hold Money in Trust.................................... 30
Section 2.06. Noteholder Lists....................................................... 31
Section 2.07. Transfer and Exchange.................................................. 31
Section 2.08. Replacement Notes...................................................... 32
Section 2.09. Outstanding Notes...................................................... 33
Section 2.10. Treasury Notes......................................................... 33
Section 2.11. Temporary Notes........................................................ 34
Section 2.12. Cancellation. ........................................................ 34
Section 2.13. Defaulted Interest..................................................... 34
Section 2.14. CUSIP Number. ........................................................ 35
Section 2.15. Deposit of Moneys...................................................... 35
Section 2.16. Book-Entry Provisions for Global Notes................................. 35
Section 2.17. Special Transfer Provisions............................................ 38
Section 2.18. Computation of Interest................................................ 40
ARTICLE THREE
REDEMPTION
Section 3.01. Election to Redeem; Notices to Trustee................................. 41
Section 3.02. Selection by Trustee of Notes To Be Redeemed........................... 41
Section 3.03. Notice of Redemption................................................... 42
Section 3.04. Effect of Notice of Redemption......................................... 42
Section 3.05. Deposit of Redemption Price............................................ 43
Section 3.06. Notes Redeemed in Part................................................. 43
</TABLE>
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<TABLE>
<CAPTION>
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ARTICLE FOUR
COVENANTS
<S> <C>
Section 4.01. Payment of Notes....................................................... 44
Section 4.02. SEC Reports. ........................................................ 44
Section 4.03. Waiver of Stay, Extension or Usury Laws................................ 46
Section 4.04. Compliance Certificate................................................. 46
Section 4.05. Taxes.................................................................. 47
Section 4.06. Limitation on Additional Indebtedness.................................. 47
Section 4.07. Limitation on Preferred Stock of Restricted Subsidiaries............... 48
Section 4.08. Limitation on Capital Stock of Restricted Subsidiaries................. 48
Section 4.09. Limitation on Restricted Payments...................................... 49
Section 4.10. Limitation on Certain Asset Sales...................................... 50
Section 4.11. Limitation on Transactions with Affiliates............................. 53
Section 4.12. Limitations on Liens................................................... 54
Section 4.13. Limitations on Investments............................................. 55
Section 4.14. Limitation on Creation of Subsidiaries................................. 55
Section 4.15. Limitation on Sale and Lease-Back Transactions......................... 55
Section 4.16. Limitation on Dividend and Other Payment Restrictions Affecting
Subsidiaries......................................................... 55
Section 4.17. Payments for Consent................................................... 56
Section 4.18. Legal Existence........................................................ 57
Section 4.19. Change of Control...................................................... 57
Section 4.20. Maintenance of Properties; Insurance; Books and Records;
Compliance with Law.................................................. 60
Section 4.21. Further Assurance to the Trustee....................................... 61
Section 4.22. Limitation on Other Senior Subordinated Debt........................... 61
Section 4.23. Limitation on Lines of Business........................................ 61
ARTICLE FIVE
SUCCESSOR CORPORATION
Section 5.01. Limitation on Consolidation, Merger and Sale of Assets................. 62
Section 5.02. Successor Person Substituted........................................... 63
</TABLE>
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<TABLE>
<CAPTION>
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ARTICLE SIX
DEFAULTS AND REMEDIES
<S> <C>
Section 6.01. Events of Default...................................................... 63
Section 6.02. Acceleration. ........................................................ 65
Section 6.03. Other Remedies......................................................... 66
Section 6.04. Waiver of Past Defaults and Events of Default.......................... 66
Section 6.05. Control by Majority.................................................... 66
Section 6.06. Limitation on Suits.................................................... 67
Section 6.07. No Personal Liability of Directors, Officers, Employees and
Stockholders......................................................... 67
Section 6.08. Rights of Holders To Receive Payment................................... 68
Section 6.09. Collection Suit by Trustee............................................. 68
Section 6.10. Trustee May File Proofs of Claim....................................... 68
Section 6.11. Priorities............................................................. 69
Section 6.12. Undertaking for Costs.................................................. 69
Section 6.13. Restoration of Rights and Remedies..................................... 70
ARTICLE SEVEN
SUBORDINATION
Section 7.01. Notes Subordinated to Senior Indebtedness.............................. 70
Section 7.02. No Payment on Notes in Certain Circumstances........................... 70
Section 7.03. Payment Over of Proceeds Upon Dissolution, Etc......................... 73
Section 7.04. Payments May Be Paid Prior to Dissolution.............................. 74
Section 7.05. Subrogation............................................................ 75
Section 7.06. Obligations of the Company Unconditional............................... 75
Section 7.07. Notice to Trustee...................................................... 76
Section 7.08. Reliance on Judicial Order or Certificate of Liquidating Agent......... 77
Section 7.09. Trustee's Relation to Senior Indebtedness.............................. 77
Section 7.10. Subordination Rights Not Impaired by Acts or Omissions of the
Company or Holders of Senior Indebtedness............................ 78
Section 7.11. Noteholders Authorize Trustee To Effectuate Subordination of
Notes................................................................ 78
</TABLE>
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<TABLE>
<CAPTION>
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<S> <C>
Section 7.12. This Article Seven Not To Prevent Events of Default.................... 79
Section 7.13. Trustee's Compensation Not Prejudiced.................................. 79
ARTICLE EIGHT
TRUSTEE
Section 8.01. Duties of Trustee...................................................... 79
Section 8.02. Rights of Trustee...................................................... 81
Section 8.03. Individual Rights of Trustee........................................... 82
Section 8.04. Trustee's Disclaimer................................................... 82
Section 8.05. Notice of Defaults..................................................... 82
Section 8.06. Reports by Trustee to Holders.......................................... 82
Section 8.07. Compensation and Indemnity............................................. 83
Section 8.08. Replacement of Trustee................................................. 84
Section 8.09. Successor Trustee by Consolidation, Merger, etc........................ 85
Section 8.10. Eligibility; Disqualification.......................................... 85
Section 8.11. Preferential Collection of Claims Against Company...................... 86
Section 8.12. Paying Agents. ........................................................ 86
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 9.01. Without Consent of Holders............................................. 86
Section 9.02. With Consent of Holders................................................ 87
Section 9.03. Compliance with Trust Indenture Act.................................... 89
Section 9.04. Revocation and Effect of Consents...................................... 89
Section 9.05. Notation on or Exchange of Notes....................................... 90
Section 9.06. Trustee To Sign Amendments, etc........................................ 90
ARTICLE TEN
DISCHARGE OF INDENTURE; DEFEASANCE
Section 10.01. Discharge of Indenture................................................ 90
Section 10.02. Legal Defeasance...................................................... 91
Section 10.03. Covenant Defeasance................................................... 92
Section 10.04. Conditions to Defeasance or Covenant Defeasance....................... 92
Section 10.05. Deposited Money and U.S. Government Obligations To Be Held in
Trust; Other Miscellaneous Provisions............................... 94
Section 10.06. Reinstatement......................................................... 95
Section 10.07. Moneys Held by Paying Agent........................................... 95
Section 10.08. Moneys Held by Trustee................................................ 96
</TABLE>
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<PAGE> 7
ARTICLE ELEVEN
GUARANTEE OF NOTES
<TABLE>
<CAPTION>
Page
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<S> <C>
Section 11.01. Unconditional Guarantee............................................... 96
Section 11.02. Subordination of Guarantee............................................ 98
Section 11.03. Severability. ........................................................ 98
Section 11.04. Release of a Guarantor................................................ 98
Section 11.05. Limitation of Guarantor's Liability................................... 98
Section 11.06. Guarantors May Consolidate, Etc., on Certain Terms.................... 99
Section 11.07. Contribution. ....................................................... 100
Section 11.08. Waiver of Subrogation................................................. 100
Section 11.09. Execution of Guarantee................................................ 101
Section 11.10. No Payment on Guarantees in Certain Circumstances..................... 101
Section 11.11. Payment Over of Proceeds Upon Dissolution, Etc........................ 104
Section 11.12. Payments May Be Paid Prior to Dissolution............................. 106
Section 11.13. Subrogation. ....................................................... 106
Section 11.14. Obligations of Each Guarantor Unconditional........................... 107
Section 11.15. Notice to Trustee..................................................... 107
Section 11.16. Reliance on Judicial Order or Certificate of Liquidating Agent........ 108
Section 11.17. Trustee's Relation to Senior Indebtedness............................. 108
Section 11.18. Subordination Rights Not Impaired by Acts or Omissions of a
Guarantor or Holders of Senior Indebtedness......................... 109
Section 11.19. Noteholders Authorize Trustee To Effectuate Subordination of
Guarantees.......................................................... 110
Section 11.20. This Article Eleven Not To Prevent Events of Default.................. 110
Section 11.21. Trustee's Compensation Not Prejudiced................................. 110
ARTICLE TWELVE
MISCELLANEOUS
Section 12.01. Trust Indenture Act Controls.......................................... 111
Section 12.02. Notices............................................................... 111
Section 12.03. Communications by Holders with Other Holders.......................... 112
</TABLE>
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<PAGE> 8
<TABLE>
<CAPTION>
Page
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<S> <C>
Section 12.04. Certificate and Opinion as to Conditions Precedent.................... 112
Section 12.05. Statements Required in Certificate and Opinion........................ 113
Section 12.06. Rules by Trustee and Agents........................................... 113
Section 12.07. Business Days; Legal Holidays......................................... 113
Section 12.08. Governing Law......................................................... 114
Section 12.09. No Adverse Interpretation of Other Agreements......................... 114
Section 12.10. No Recourse Against Others............................................ 114
Section 12.11. Successors. ....................................................... 115
Section 12.12. Multiple Counterparts................................................. 115
Section 12.13. Table of Contents, Headings, etc...................................... 115
Section 12.14. Separability. ....................................................... 115
SIGNATURES........................................................................... S-1
</TABLE>
EXHIBITS
<TABLE>
<S> <C> <C>
Exhibit A. Form of Note................................................... A-1
Exhibit B. Form of Legend and Assignment for Rule 144A.................... B-1
Exhibit C. Form of Legend and Assignment for Regulation S Note............ C-1
Exhibit D. Form of Legend for Global Note................................. D-1
Exhibit E. Form of Certificate to Be Delivered in Connection with
Transfers to Non-QIB Accredited Investors.................... E-1
Exhibit F. Form of Certificate to Be Delivered in Connection with
Transfers Pursuant to Regulation S........................... F-1
Exhibit G. Form of Guarantee.............................................. G-1
</TABLE>
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<PAGE> 9
INDENTURE, dated as of June 10, 1997, among W.R. CARPENTER NORTH
AMERICA, INC., a Delaware corporation (the "Company"), the Guarantors (as
hereinafter defined) and U.S. TRUST COMPANY OF CALIFORNIA, N.A., as trustee (the
"Trustee").
Each party agrees as follows for the benefit of the other parties and
for the equal and ratable benefit of the Holders of the Notes.
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions.
"Acquired Indebtedness" means Indebtedness of a Person (including an
Unrestricted Subsidiary) existing at the time such Person becomes a Restricted
Subsidiary or assumed in connection with the acquisition of assets from such
Person.
"Additional Interest" means additional interest on the Notes which the
Company and the Guarantors, jointly and severally, agree to pay to the Holders
pursuant to Section 4 of the Registration Rights Agreement.
"Adjusted Net Assets" of a Guarantor at any date shall mean the lesser
of the amount by which (x) the fair value of the property of such Guarantor
exceeds the total amount of liabilities, including, without limitation,
contingent liabilities (after giving effect to all other fixed and contingent
liabilities), but excluding liabilities under the Guarantee, of such Guarantor
at such date and (y) the present fair salable value of the assets of such
Guarantor at such date exceeds the amount that will be required to pay the
probable liability of such Guarantor on its debts (after giving effect to all
other fixed and contingent liabilities and after giving effect to any collection
from any subsidiary of such Guarantor in respect of the obligations of such
Subsidiary under the Guarantee), excluding Indebtedness in respect of the
Guarantee, as they become absolute and matured.
"Affiliate" of any specified Person means any other Person which
directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such specified Person. For the
purposes of this definition, "control" (including, with correlative meanings,
<PAGE> 10
-2-
the terms "controlling," "controlled by," and "under common control with"), as
used with respect to any Person, means 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.
"Agent" means any Registrar, Paying Agent, or agent for service of
notices and demands.
"Asset Sale" means the sale, transfer or other disposition (other than
to the Company or any of its Restricted Subsidiaries) in any single transaction
or series of related transactions of (a) any Capital Stock of or other equity
interest in any Restricted Subsidiary of the Company, (b) all or substantially
all of the assets of the Company or of any Restricted Subsidiary thereof, (c)
real property or (d) all or substantially all of the assets of any property, or
part thereof, owned by the Company or any Restricted Subsidiary thereof, or a
division, line of business or comparable business segment of the Company or any
Restricted Subsidiary thereof; provided that Asset Sales shall not include
sales, leases, conveyances, transfers or other dispositions to the Company or to
a Restricted Subsidiary or to any other Person if after giving effect to such
sale, lease, conveyance, transfer or other disposition such other Person becomes
a Restricted Subsidiary.
"Asset Sale Proceeds" means, with respect to any Asset Sale, (i) cash
received by the Company or any Restricted Subsidiary from such Asset Sale
(including cash received as consideration for the assumption of liabilities
incurred in connection with or in anticipation of such Asset Sale), after (a)
provision for all income or other taxes measured by or resulting from such Asset
Sale, (b) payment of all brokerage commissions, underwriting and other fees and
expenses related to such Asset Sale, (c) provision for minority interest holders
in any Restricted Subsidiary as a result of such Asset Sale and (d) deduction of
appropriate amounts to be provided by the Company or a Restricted Subsidiary as
a reserve, in accordance with GAAP, against any liabilities associated with the
assets sold or disposed of in such Asset Sale and retained by the Company or a
Restricted Subsidiary after such Asset Sale, including, without limitation,
pension and other post employment benefit liabilities and liabilities related to
environmental matters or against any indemnification obligations associated with
the assets sold or disposed of in such Asset Sale, and (ii) promissory notes and
other noncash consideration received by the Company or any Restricted Subsidiary
from such Asset
<PAGE> 11
-3-
Sale or other disposition upon the liquidation or conversion of such notes or
noncash consideration into cash.
"Attributable Indebtedness" under this Indenture in respect of a Sale
and Lease-Back Transaction means, as at the time of determination, the greater
of (i) the fair market value of the property subject to such arrangement (as
determined in good faith by the board of directors of the Company) and (ii) the
present value (discounted at a rate of 10%, compounded annually) of the total
obligations of the lessee for rental payments during the remaining term of the
lease included in such Sale and Lease-Back Transaction (including any period for
which such lease has been extended).
"Available Asset Sale Proceeds" means, with respect to any Asset Sale,
the aggregate Asset Sale Proceeds from such Asset Sales that have not been
applied in accordance with clauses (iii)(a) or (iii)(b), and which has not yet
been the basis for an Excess Proceeds Offer in accordance with clause (iii)(c)
of the first paragraph of Section 4.10.
"Board of Directors" with respect to any Person means, (i) at any time
such Person is a limited liability company, the board of directors of its
managing member or, if such managing member is a limited liability company, the
board of directors of such managing member's managing member, and (ii) otherwise
the board of directors of such Person or any committee authorized to act
therefor.
"Board Resolution" means a copy of a resolution certified pursuant to an
Officers' Certificate to have been duly adopted by the Board of Directors of the
Company or a Guarantor, as appropriate, and to be in full force and effect, and
delivered to the Trustee.
"Capital Stock" means, with respect to any Person, any and all shares or
other equivalents (however designated) of capital stock, partnership interests
or any other participation, right or other interest in the nature of an equity
interest in such Person or any option, warrant or other security convertible
into any of the foregoing.
"Capitalized Lease Obligations" means Indebtedness represented by
obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP, and the amount of such Indebtedness
shall be the capitalized amount of such obligations determined in accordance
with GAAP.
<PAGE> 12
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"Cash Equivalents" means (i) direct obligations of the United States of
America or any agency thereof, or obligations guaranteed or insured by the
United States of America, provided that in each case such obligations mature
within one year from the date of acquisition thereof, (ii) certificates of
deposit maturing within one year from the date of creation thereof issued by any
U.S. national or state banking institution having capital, surplus and undivided
profits aggregating at least $250,000,000 and at the time of investment rated at
least A-1 by S&P and P-1 by Moody's, (iii) commercial paper with a maturity of
180 days or less issued by a corporation (except an Affiliate of the Company)
organized under the laws of any state of the United States or the District of
Columbia and at the time of investment rated at least A-1 by S&P or at least P-1
by Moody's and (iv) repurchase agreements and reverse repurchase agreements
relating to marketable direct obligations issued or unconditionally guaranteed
by the United States of America or issued by an agency thereof and backed by the
full faith and credit of the United States of America, in each case maturing
within one year from the date of acquisition; provided that the terms of such
agreements comply with the guidelines set forth in the Federal Financial
Agreements of Depository Institutions with Securities Dealers and Others, as
adopted by the Comptroller of the Currency and (v) tax-exempt auction rate
securities and municipal preferred stock, in each case, subject to reset no more
than 35 days after the date of acquisition and having a rating of at least AA by
S&P or Aa by Moody's at the time of investment.
A "Change of Control" of the Company will be deemed to have occurred at
such time as (i) any Person (including a Person's Affiliates and associates),
other than a Permitted Holder, becomes the beneficial owner (as defined under
Rule 13d-3 or any successor rule or regulation promulgated under the Exchange
Act) of 50% or more of the total voting or economic power of the Company's
Common Stock, (ii) any Person (including a Person's Affiliates and associates),
other than a Permitted Holder, becomes the beneficial owner of more than 35% of
the total voting power of the Company's Common Stock, and the Permitted Holders
beneficially own, in the aggregate, a lesser percentage of the total voting
power of the Common Stock of the Company than such other Person and do not have
the right or ability by voting power, contract or otherwise to elect or
designate for election a majority of the Board of Directors of the Company,
(iii) there shall be consummated any consolidation or merger of the Company in
which the Company is not the continuing or surviving corporation or pursuant to
which the Common Stock of the Company would be converted into cash, securities
<PAGE> 13
-5-
or other property, other than a merger or consolidation of the Company in which
the holders of the Common Stock of the Company outstanding immediately prior to
the consolidation or merger hold, directly or indirectly, at least a majority of
the Common Stock of the surviving corporation immediately after such
consolidation or merger, or (iv) during any period of two consecutive years,
individuals who at the beginning of such period constituted the Board of
Directors of the Company (together with any new directors whose election by such
Board of Directors or whose nomination for election by the shareholders of the
Company has been approved by 66 2/3% of the directors then still in office who
either were directors at the beginning of such period or whose election or
recommendation for election was previously so approved) cease to constitute a
majority of the board of directors of the Company.
"Common Stock" of any Person means all Capital Stock of such Person that
is generally entitled to (i) vote in the election of directors of such Person or
(ii) if such Person is not a corporation, vote or otherwise participate in the
selection of the governing body, partners, managers or others that will control
the management and policies of such Person.
"Company" means the party named as such in the first paragraph of this
Indenture until a successor replaces such party pursuant to Article 5 of this
Indenture and thereafter means the successor.
"Company Corporate Services Agreement" means the corporate services
agreement dated May 12, 1997 between the Company and Griffin, as in effect on
the Issue Date.
"Company Request" means any written request signed in the name of the
Company by the Chairman of the Board of Directors, the Chief Executive Officer,
the President, any Vice President, the Chief Financial Officer or the Treasurer
of the Company and attested to by the Secretary or any Assistant Secretary of
the Company.
"Consolidated Fixed Charges" means, with respect to any Person and with
respect to any determination date, the sum of a Person's (i) Consolidated
Interest Expense, plus (ii) the product of (x) the aggregate amount of all
dividends paid on Disqualified Capital Stock of the Company or on each series of
preferred stock of each Subsidiary of such Person (other than dividends paid or
payable in additional shares of preferred stock or to the Company or any of its
Wholly-Owned Subsidiaries) times (y) a fraction, the numerator of which is one
and
<PAGE> 14
-6-
the denominator of which is one minus the then current effective combined
federal, state and local tax rate of such Person (expressed as a decimal), in
each case, for the prior four full fiscal quarter periods for which financial
results are available.
"Consolidated Interest Expense" means, with respect to any Person, for
any period, the aggregate amount of interest which, in conformity with GAAP,
would be set forth opposite the caption "interest expense" or any like caption
on an income statement for such Person and its Subsidiaries on a consolidated
basis (including, but not limited to, Redeemable Dividends, whether paid or
accrued, on Subsidiary Preferred Stock), imputed interest included in
Capitalized Lease Obligations, all commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers' acceptance
financing, the net costs associated with hedging obligations, amortization of
other financing fees and expenses, the interest portion of any deferred payment
obligation, amortization of discount or premium, if any, and all other non-cash
interest expense (other than interest amortized to cost of sales)) plus, without
duplication, all net capitalized interest for such period and all interest
incurred or paid under any guarantee of Indebtedness (including a guarantee of
principal, interest or any combination thereof) of any Person, plus the amount
of all dividends or distributions paid on Disqualified Stock (other than
dividends paid or payable in shares of Capital Stock of the Company). If any
Indebtedness outstanding or to be incurred (x) bears a floating rate of
interest, the interest expense on such Indebtedness shall be calculated as if
the rate in effect on the date of determination had been the applicable rate for
the entire four quarter period (taking into account on a pro forma basis any
Interest Rate Agreement that has a remaining term as to the date of
determination in excess of 12 months), (y) bears, at the option of the Company
or a Restricted Subsidiary, a fixed or floating rate of interest, the interest
expense on such Indebtedness shall be computed by applying, at the option of the
Company or such Restricted Subsidiary, either a fixed or floating rate and (z)
was incurred under a revolving credit facility, the interest expense on such
Indebtedness shall be computed based upon the average daily balance of such
Indebtedness during the applicable period.
"Consolidated Net Income" means, with respect to any Person, for any
period, the aggregate of the Net Income of such Person and its Subsidiaries for
such period, on a consolidated basis, determined in accordance with GAAP;
provided, however, that (a) the Net Income of any Person (the "other Person") in
<PAGE> 15
-7-
which the Person in question or any of its Subsidiaries has less than a 100%
interest (which interest does not cause the net income of such other Person to
be consolidated into the net income of the Person in question in accordance with
GAAP) shall be included only to the extent of the amount of dividends or
distributions paid to the Person in question or the Subsidiary, (b) the Net
Income of any Subsidiary of the Person in question that is subject to any
restriction or limitation on the payment of dividends or the making of other
distributions (other than pursuant to the Notes or this Indenture) shall be
excluded to the extent of such restriction or limitation, (c)(i) the Net Income
of any Person acquired in a pooling of interests transaction for any period
prior to the date of such acquisition and (ii) any net gain (but not loss)
resulting from an Asset Sale by the Person in question or any of its
Subsidiaries other than in the ordinary course of business shall be excluded,
(d) extraordinary gains and losses shall be excluded.
"Corporate Services Fees" means fees paid pursuant to the Subsidiary
Corporate Services Agreements and the Company Corporate Services Agreement for
actual services rendered in an amount not to exceed the amount that would be
payable to unaffiliated third parties for such services.
"Corporate Trust Office" means the office of the Trustee at which at any
particular time its corporate trust business shall be principally administered,
which office at the date of execution of this Indenture is located at c/o United
States Trust Company of New York, 114 West 47th Street, New York, NY 10036,
attention: Corporate Trust Department.
"Credit Facility" means any credit facility entered into by the Company
or a Restricted Subsidiary of the Company to provide financing for general
corporate purposes, including acquisitions, capital expenditures and working
capital financing for the Company or such Restricted Subsidiary. All such Credit
Facilities are collectively referred to as the "Credit Facilities."
"Currency Agreement" means, for any Person, any foreign exchange
contract, currency swap agreement or other similar agreement or arrangement
designed to protect such Person against fluctuations in currency values.
"Default" means any event that is, or with the passing of time or giving
of notice or both would be, an Event of Default.
<PAGE> 16
-8-
"Depository" means, with respect to the Notes issued in the form of one
or more Global Notes, The Depository Trust Company or another Person designated
as Depository by the Company, which Person must be a clearing agency registered
under the Exchange Act.
"Designated Senior Indebtedness," as to the Company or any Guarantor, as
the case may be, means any Senior Indebtedness (a) under the Credit Facilities
and (b) which at the time of determination exceeds $10 million in aggregate
principal amount (or accreted value in the case of Indebtedness issued at a
discount) outstanding or available under a committed facility.
"Disqualified Capital Stock" means any Capital Stock of the Company or a
Restricted Subsidiary thereof which, by its terms (or by the terms of any
security into which it is convertible or for which it is exchangeable at the
option of the holder), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the option of the holder thereof, in whole or in part, on or
prior to the maturity date of the Notes, for cash or securities constituting
Indebtedness. Without limitation of the foregoing, Disqualified Capital Stock
shall be deemed to include (i) any Preferred Stock of a Restricted Subsidiary of
the Company and (ii) any Preferred Stock of the Company, with respect to either
of which, under the terms of such Preferred Stock, by agreement or otherwise,
such Restricted Subsidiary or the Company is obligated to pay current dividends
or distributions in cash during the period prior to the maturity date of the
Notes; provided, however, that Preferred Stock of the Company or any Restricted
Subsidiary thereof that is issued with the benefit of provisions requiring a
change of control offer to be made for such Preferred Stock in the event of a
change of control of the Company or Restricted Subsidiary, which provisions have
substantially the same effect as the provisions of this Indenture described
under "Change of Control," shall not be deemed to be Disqualified Capital Stock
solely by virtue of such provisions.
"EBITDA" means, for any Person, for any period, an amount equal to (a)
the sum of (i) Consolidated Net Income for such period, plus (ii) the provision
for taxes for such period based on income or profits to the extent such income
or profits were included in computing Consolidated Net Income and any provision
for taxes utilized in computing net loss under clause (i) hereof, plus (iii)
Consolidated Interest Expense for such period (but only including Redeemable
Dividends in the calcula-
<PAGE> 17
-9-
tion of such Consolidated Interest Expense to the extent that such Redeemable
Dividends have not been excluded in the calculation of Consolidated Net Income),
plus (iv) depreciation for such period on a consolidated basis, plus (v)
amortization of intangibles for such period on a consolidated basis, plus (vi)
any other non-cash items reducing Consolidated Net Income for such period, minus
(b) all non-cash items increasing Consolidated Net Income for such period, all
for such Person and its Subsidiaries determined in accordance with GAAP, except
that with respect to the Company each of the foregoing items shall be determined
on a consolidated basis with respect to the Company and its Restricted
Subsidiaries only; and provided, however, that, for purposes of calculating
EBITDA during any fiscal quarter, (A) cash income from a particular Investment
of such Person shall be included only (x) if cash income has been received by
such Person with respect to such Investment during each of the previous four
fiscal quarters, or (y) if the cash income derived from such Investment is
attributable to Temporary Cash Investments and (B) EBITDA shall be reduced by
any amounts paid by the Company pursuant to the Corporate Services Agreements
but only to the extent not already reducing Consolidated Net Income.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Notes" has the meaning provided in the Registration Rights
Agreement or, with respect to Notes issued under this Indenture subsequent to
the Issue Date pursuant to Section 2.01, a registration rights agreement
substantially identical to the Registration Rights Agreement.
"Fixed Charge Coverage Ratio" of any Person means, with respect to any
determination date, the ratio of (i) EBITDA for such Person's prior four full
fiscal quarters for which financial results have been reported prior to the
determination date to (ii) Consolidated Fixed Charges of such Person for such
period.
"GAAP" means generally accepted accounting principles consistently
applied as in effect in the United States from time to time.
"Griffin" means Griffin Group International Management Limited, and its
successors and assigns.
"Guarantee" means, as the context may require, individually, a
guarantee, or collectively, any and all guarantees,
<PAGE> 18
-10-
of the Obligations of the Company with respect to the Notes by each Guarantor
pursuant to the terms of Article 10 hereof, substantially in the form set forth
in Exhibit G.
"Guarantor" means each of (i) UpRight, (ii) Horizon, (iii) UpRight
Foreign Sales Corporation, a United States Virgin Islands corporation and (iv)
each Restricted Subsidiary which guarantees payment of the Notes pursuant to
Section 4.14, and "Guarantors" means such entities, collectively.
"Guarantor Senior Indebtedness," as to any Guarantor, means the
principal of and premium, if any, and interest on, and any and all other fees,
expense reimbursement obligations and other amounts due pursuant to the terms of
all agreements, documents and instruments providing for, creating, securing or
evidencing or otherwise entered into in connection with (a) such Guarantor's
direct incurrence of any Indebtedness or its guarantee of all Indebtedness of
the Company or any Restricted Subsidiary owed to lenders under the Credit
Facilities, (b) all obligations of such Guarantor with respect to any Interest
Rate Agreement or any guarantee thereof, (c) all obligations of such Guarantor
to reimburse any bank or other person in respect of amounts paid under letters
of credit, acceptances or other similar instruments and all obligations of such
Guarantor with respect to guarantees of such reimbursement obligations, (d) all
other Indebtedness of such Guarantor which does not provide that it is to rank
pari passu with or subordinate to the Guarantees and (e) all deferrals,
renewals, extensions and refundings of, and amendments, modifications and
supplements to, any of the Guarantor Senior Indebtedness described above.
Notwithstanding anything to the contrary in the foregoing, Guarantor Senior
Indebtedness will not include (i) Indebtedness of such Guarantor to any of its
Subsidiaries, (ii) Indebtedness represented by the Guarantees, (iii) any
Indebtedness which by the express terms of the agreement or instrument creating,
evidencing or governing the same is junior or subordinate in right of payment to
any item of Guarantor Senior Indebtedness, (iv) any trade payable arising from
the purchase of goods or materials or for services obtained in the ordinary
course of business or (v) Indebtedness incurred in violation of this Indenture.
"Holder" or "Noteholder" means the Person in whose name a Note is
registered on the Registrar's books.
"Horizon" means Horizon High Reach, Inc., a Delaware corporation.
<PAGE> 19
-11-
"incur" means, with respect to any Indebtedness or other obligation of
any Person, to create, issue, incur (by conversion, exchange or otherwise),
assume, guarantee or otherwise become liable in respect of such Indebtedness or
other obligation or the recording, as required pursuant to GAAP or otherwise, of
any such Indebtedness or other obligation on the balance sheet of such person
(and "incurrence," "incurred," "incurable," and "incurring" shall have meanings
correlative to the foregoing); provided, that a change in GAAP that results in
an obligation of such Person that exists at such time becoming Indebtedness
shall not be deemed an incurrence of such Indebtedness.
"Indebtedness" means (without duplication), with respect to any Person,
any indebtedness at any time outstanding, secured or unsecured, contingent or
otherwise, which is for 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), or evidenced by bonds, notes, debentures or similar instruments or
representing the balance deferred and unpaid of the purchase price of any
property (excluding, without limitation, any balances that constitute accounts
payable or trade payables, and other accrued liabilities arising in the ordinary
course of business) if and to the extent any of the foregoing indebtedness would
appear as a liability upon a balance sheet of such Person prepared in accordance
with GAAP, and shall also include, to the extent not otherwise included (i) any
Capitalized Lease Obligations, (ii) obligations secured by a lien to which the
property or assets owned or held by such Person is subject, whether or not the
obligation or obligations secured thereby shall have been assumed (provided,
however, that if such obligation or obligations shall not have been assumed, the
amount of such indebtedness shall be deemed to be the lesser of the principal
amount of the obligation or the fair market value of the pledged property or
assets), (iii) guarantees of items of other Persons which would be included
within this definition for such other Persons (whether or not such items would
appear upon the balance sheet of the guarantor), (iv) all obligations for the
reimbursement of any obligor on any letter of credit, banker's acceptance or
similar credit transaction (provided that in the case of any such letters of
credit, the items for which such letters of credit provide credit support are
those of other Persons which would be included within this definition for such
other Persons), (v) in the case of the Company, Disqualified Capital Stock of
the Company or any Restricted Subsidiary thereof, and (vi) obligations of any
such Person under any Interest Rate Agreement applicable to any of the foregoing
(if and to the extent such Interest Rate Agreement obligations
<PAGE> 20
-12-
would appear as a liability upon a balance sheet of such Person prepared in
accordance with GAAP). 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, with respect to contingent obligations, the maximum
liability upon the occurrence of the contingency giving rise to the obligation,
provided (i) that the amount outstanding at any time of any Indebtedness issued
with original issue discount is the principal amount of such Indebtedness less
the remaining unamortized portion of the original issue discount of such
Indebtedness at such time as determined in conformity with GAAP and (ii) that
Indebtedness shall not include any liability for federal, state, local or other
taxes. Notwithstanding any other provision of the foregoing definition, any
trade payable arising from the purchase of goods or materials or for services
obtained in the ordinary course of business shall not be deemed to be
"Indebtedness" of the Company or any Restricted Subsidiaries for purposes of
this definition. Furthermore, guarantees of (or obligations with respect to
letters of credit supporting) Indebtedness otherwise included in the
determination of such amount shall not also be included.
"Indenture" means this Indenture as amended, restated or supplemented
from time to time.
"Initial Purchasers" means CIBC Wood Gundy Securities Corp. and
BancAmerica Securities, Inc.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as that term is defined in Rule 501 (a)(1), (2), (3) or
(7) promulgated under the Securities Act.
"Interest Payment Date" means the stated maturity of an installment of
interest on the Notes.
"Interest Rate Agreement" means, for any Person, any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement or other
similar agreement designed to protect the party indicated therein against
fluctuations in interest rates.
"Investments" means, directly or indirectly, any advance, account
receivable (other than an account receivable arising in the ordinary course of
business or acquired as part of the assets acquired by the Company in connection
with an acquisition of assets which is otherwise permitted by the terms of this
Indenture), loan or capital contribution to (by means
<PAGE> 21
-13-
of transfers of property to others, payments for property or services for the
account or use of others or otherwise), the purchase of any stock, bonds, notes,
debentures, partnership or joint venture interests or other securities of, the
acquisition, by purchase or otherwise, of all or substantially all of the
business or assets or stock or other evidence of beneficial ownership of, any
Person or the making of any investment in, any Person or transfers of property
or assets to any Affiliate other than sales of assets or payment for services
rendered in the ordinary course of business consistent with past practice.
Investments shall exclude extensions of trade credit on commercially reasonable
terms in accordance with normal trade practices.
"Issue Date" means the date the Notes are first issued by the Company
and authenticated by the Trustee under this Indenture.
"Lien" means with respect to any property or assets of any Person, any
mortgage or deed of trust, pledge, hypothecation, assignment, deposit
arrangement, security interest, lien, charge, easement, encumbrance, preference,
priority, or other security agreement or preferential arrangement of any kind or
nature whatsoever on or with respect to such property or assets (including
without limitation, any Capitalized Lease Obligation, conditional sales, or
other title retention agreement having substantially the same economic effect as
any of the foregoing).
"Maturity Date" means June 15, 2007.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Income" means, with respect to any Person for any period, the net
income (loss) of such Person determined in accordance with GAAP.
"Net Proceeds" means (a) in the case of any sale of Capital Stock by the
Company, the aggregate net proceeds received by the Company, after payment of
expenses, commissions and the like incurred in connection therewith, whether
such proceeds are in cash or in property (valued at the fair market value
thereof, as determined in good faith by the board of directors, at the time of
receipt) and (b) in the case of any exchange, exercise, conversion or surrender
of outstanding securities of any kind for or into shares of Capital Stock of the
Company which is not Disqualified Stock, the net book value of
<PAGE> 22
-14-
such outstanding securities on the date of such exchange, exercise, conversion
or surrender (plus any additional amount required to be paid by the holder to
the Company upon such exchange, exercise, conversion or surrender, less any and
all payments made to the holders, e.g., on account of fractional shares and less
all expenses incurred by the Company in connection therewith).
"Non-Payment Event of Default" means any event (other than a Payment
Default) the occurrence of which entitles one or more Persons to accelerate the
maturity of any Designated Senior Indebtedness.
"Non-U.S. Person" means a Person who is not a U.S. person, as defined in
Regulation S.
"Notes" means the securities issued by the Company, including, without
limitation, the Subsequent Series Notes, the Private Exchange Notes, if any, and
the Exchange Notes, treated as a single class of securities, as amended or
supplemented from time to time in accordance with the terms hereof, that are
issued pursuant to this Indenture.
"Obligations" means, with respect to any Indebtedness, any principal,
premium, interest, penalties, fees, indemnifications, reimbursements, damages
and other expenses payable under the documentation governing such Indebtedness.
"Offering" means the offering of the Notes as described in the Offering
Memorandum.
"Offering Memorandum" means the Offering Memorandum dated June 4, 1997
pursuant to which the Notes issued on the Issue Date were offered.
"Officer", with respect to any Person (other than the Trustee), means
the Chairman of the Board of Directors, Chief Executive Officer, the President,
any Vice President and the Chief Financial Officer, the Treasurer or the
Secretary of such Person, or any other officer of such Person designated by the
Board of Directors of such Person and set forth in an Officers' Certificate
delivered to the Trustee.
"Officers' Certificate" means, with respect to any Person, a certificate
signed by the Chief Executive Officer, the President or any Vice President and
the Chief Financial Officer or any Treasurer of such Person that shall comply
with applicable provisions of this Indenture.
<PAGE> 23
-15-
"Opinion of Counsel" means a written opinion reasonably satisfactory in
form and substance to the Trustee from legal counsel, which counsel is
reasonably acceptable to the Trustee, stating the matters required by Section
12.05 and delivered to the Trustee.
"Payment Default" means any default, whether or not any requirement for
the giving of notice, the lapse of time or both, or any other condition to such
default becoming an event of default has occurred, in the payment of principal
of (or premium, if any) or interest on or any other amount payable in connection
with Designated Senior Indebtedness.
"Permitted Holders" means (i) any Affiliate of the Company, and (ii)
Robert F. Stowe, his children or other lineal descendants (whether adoptive or
biological), the probate estate of any such individual, and any trust, so long
as one or more of the foregoing individuals is the beneficiary thereunder, and
any other corporation, partnership or other entity all of the shareholders,
partners, members or owners of which are any of the foregoing.
"Permitted Indebtedness" means:
(i) Indebtedness of the Company or any Restricted Subsidiary arising
under or in connection with a Credit Facility in an amount not to exceed in
the aggregate with Indebtedness under any other Credit Facility of the
Company or any Restricted Subsidiary the greater of (a) $25 million less any
mandatory prepayments actually made thereunder (to the extent, in the case
of payments of revolving credit indebtedness, that the corresponding
commitments have been permanently reduced) or scheduled payments actually
made thereunder or (b) the sum of (x) 85% of consolidated accounts
receivable of the Company and its Subsidiaries and (y) 50% of consolidated
inventory of the Company and its Subsidiaries;
(ii) Indebtedness under the Notes and the Guarantees offered pursuant to
this Offering Memorandum;
(iii) Indebtedness not covered by any other clause of this definition
which is outstanding on the date of this Indenture;
(iv) Indebtedness of the Company to any Restricted Subsidiary and
Indebtedness of any Restricted Subsidiary to the Company or another
Restricted Subsidiary;
<PAGE> 24
-16-
(v) Purchase Money Indebtedness and Capitalized Lease Obligations
incurred to acquire property in the ordinary course of business which
Indebtedness and Capitalized Lease Obligations do not in the aggregate
exceed $5 million;
(vi) Interest Rate Agreements;
(vii) additional Indebtedness of the Company not to exceed $20 million in
principal amount outstanding at any time; and
(viii) Refinancing Indebtedness.
"Permitted Investments" means, for any Person, Investments made
on or after the date of this Indenture consisting of:
(i) Investments by the Company, or by a Restricted Subsidiary thereof,
in the Company or a Restricted Subsidiary;
(ii) Temporary Cash Investments;
(iii) Investments by the Company, or by a Restricted Subsidiary thereof,
in a Person, if as a result of such Investment (a) such Person becomes a
Restricted Subsidiary of the Company or (b) 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
Restricted Subsidiary thereof; and
(iv) reasonable and customary loans made to employees not to exceed $1
million in the aggregate at any one time outstanding; and
(v) an Investment that is made by the Company or a Restricted
Subsidiary thereof in the form of any stock, bonds, notes, debentures,
partnership or joint venture interests or other securities that are issued
by a third party to the Company or Restricted Subsidiary solely as partial
consideration for the consummation of an Asset Sale that is otherwise
permitted under Section 4.10; and
(vi) any Investment existing on the Issue Date.
"Permitted Junior Securities" means debt or equity securities of the
Company or any Guarantor or any successor
<PAGE> 25
-17-
corporation provided for by a plan of reorganization or readjustment that are
subordinated to the Notes and the Guarantees at least to the same extent that
the Notes and the Guarantees are subordinated to the payment of all Senior
Indebtedness then outstanding.
"Permitted Liens" means (i) Liens on Property or assets of, or any
shares of stock of or secured debt of, any corporation existing at the time such
corporation becomes a Restricted Subsidiary of the Company or at the time such
corporation is merged into the Company or any of its Restricted Subsidiaries,
provided that such Liens are not incurred in connection with, or in
contemplation of, such corporation becoming a Restricted Subsidiary of the
Company or merging into the Company or any of its Restricted Subsidiaries, (ii)
Liens securing Refinancing Indebtedness, provided that any such Lien does not
extend to or cover any Property, shares or debt other than the Property, shares
or debt securing the Indebtedness so refunded, refinanced or extended, (iii)
Liens in favor of the Company or any of its Restricted Subsidiaries, (iv) Liens
securing industrial revenue bonds, (v) Liens to secure Purchase Money
Indebtedness that is otherwise permitted under this Indenture, provided that (a)
any such Lien is created solely for the purpose of securing Indebtedness
representing, or incurred to finance, refinance or refund, the cost (including
sales and excise taxes, installation and delivery charges and other direct costs
of, and other direct expenses paid or charged in connection with, such purchase
or construction) of such Property, (b) the principal amount of the Indebtedness
secured by such Lien does not exceed 100% of such costs, and (c) such Lien does
not extend to or cover any Property other than such item of Property and any
improvements on such item, (vi) statutory liens or landlords', carriers',
warehouseman's, mechanics', suppliers', materialmen's, repairmen's or other like
Liens arising in the ordinary course of business which do not secure any
Indebtedness and with respect to amounts not yet delinquent or being contested
in good faith by appropriate proceedings, if a reserve or other appropriate
provision, if any, as shall be required in conformity with GAAP shall have been
made therefor, (vii) other Liens securing obligations incurred in the ordinary
course of business which obligations do not exceed $1,000,000 in the aggregate
at any one time outstanding, (viii) any extensions, substitutions, replacements
or renewals of the foregoing, (ix) Liens for taxes, assessments or governmental
charges that are being contested in good faith by appropriate proceedings, (x)
easements or minor defects or irregularities in title and other similar charges
or encumbrances on Property not interfering in any material respect with the use
of such property
<PAGE> 26
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by the Company or any Restricted Subsidiary (xi) customary deposit arrangements
entered into in connection with acquisitions (xii) Liens securing Capital Lease
Obligations permitted to be incurred under clause (v) of the definition of
"Permitted Indebtedness," provided that such Lien does not extend to any
property other than that subject to the underlying lease and (xiii) Liens
securing Indebtedness of the Company or any Restricted Subsidiary under a Credit
Facility.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government (including any agency or political subdivision thereof).
"Physical Notes" means certificated Notes in registered form in
substantially the form set forth in Exhibit A.
"Preferred Stock" means any Capital Stock of a Person, however
designated, which entitles the holder thereof to a preference with respect to
dividends, distributions or liquidation proceeds of such Person over the holders
of other Capital Stock issued by such Person.
"Private Exchange" has the meaning set forth in the Registration Rights
Agreement or, with respect to Notes issued under the Indenture subsequent to the
Issue Date pursuant to Section 2.01, a registration rights agreement
substantially identical to the Registration Rights Agreement.
"Private Exchange Notes" has the meaning set forth in the Registration
Rights Agreement or, with respect to Notes issued under the Indenture subsequent
to the Issue Date pursuant to Section 2.01, a registration rights agreement
substantially identical to the Registration Rights Agreement.
"Private Placement Legend" means the legend initially set forth on the
Rule 144A Notes in the form set forth in Exhibit B.
"Property" of any Person means all types of real, personal, tangible,
intangible or mixed property owned by such Person whether or not included in the
most recent consolidated balance sheet of such Person and its Subsidiaries under
GAAP.
"Public Equity Offering" means a public offering by the Company of
shares of its common stock (however designated and whether voting or non-voting)
and any and all rights, warrants or options to acquire such common stock.
<PAGE> 27
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"Purchase Agreement" means the Securities Purchase Agreement dated June
4, 1997 by and among the Company, the Guarantors and the Initial Purchasers.
"Purchase Money Indebtedness" means any Indebtedness incurred in the
ordinary course of business by a Person to finance the cost (including the cost
of construction) of an item of property, the principal amount of which
Indebtedness does not exceed the sum of (i) 100% of such cost and (ii)
reasonable fees and expenses of such Person incurred in connection therewith.
"Qualified Institutional Buyer" or "QIB" shall have the meaning
specified in Rule 144A promulgated under the Securities Act.
"Redeemable Dividend" means, for any dividend or distribution with
regard to Disqualified Capital Stock, the quotient of the dividend or
distribution divided by the difference between one and the maximum statutory
federal income tax rate (expressed as a decimal number between 1 and 0) then
applicable to the issuer of such Disqualified Capital Stock.
"Redemption Date" when used with respect to any Note to be redeemed
means the date fixed for such redemption pursuant to the terms of the Notes.
"Refinancing Indebtedness" means Indebtedness that refunds, refinances
or extends any Indebtedness of the Company or its Restricted Subsidiaries
outstanding on the Issue Date or other Indebtedness permitted to be incurred by
the Company or its Restricted Subsidiaries pursuant to the terms of this
Indenture, but only to the extent that (i) the Refinancing Indebtedness is
subordinated to the Notes or the Guarantees, as the case may be, to at least the
same extent as the Indebtedness being refunded, refinanced or extended, if at
all, (ii) the Refinancing Indebtedness is scheduled to mature either (a) no
earlier than the Indebtedness being refunded, refinanced or extended, or (b)
after the maturity date of the Notes, (iii) the portion, if any, of the
Refinancing Indebtedness that is scheduled to mature on or prior to the maturity
date of the Notes has a weighted average life to maturity at the time such
Refinancing Indebtedness is incurred that is equal to or greater than the
weighted average life to maturity of the portion of the Indebtedness being
refunded, refinanced or extended that is scheduled to mature on or prior to the
maturity date of the Notes, (iv) such Refinancing Indebtedness is in an
aggregate principal amount that is equal to or less than the sum of
<PAGE> 28
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(a) the aggregate principal amount then outstanding under the Indebtedness being
refunded, refinanced or extended, (b) the amount of accrued and unpaid interest,
if any, and premiums owed, if any, not in excess of preexisting prepayment
provisions on such Indebtedness being refunded, refinanced or extended and (c)
the amount of customary fees, expenses and costs related to the incurrence of
such Refinancing Indebtedness, and (v) such Refinancing Indebtedness is incurred
by the same Person that initially incurred the Indebtedness being refunded,
refinanced or extended, except that the Company may incur Refinancing
Indebtedness to refund, refinance or extend Indebtedness of any Wholly-Owned
Subsidiary of the Company; provided, however, that subclauses (ii) and (iii) of
this definition will not apply to any refunding or refinancing of any
Indebtedness under a Credit Facility.
"Registration Rights Agreement" means the Registration Rights Agreement
dated as of the Issue Date among the Company, the Guarantors and the Initial
Purchasers, as amended from time to time.
"Regulation S" means Regulation S promulgated under the Securities Act.
"Responsible Officer" when used with respect to the Trustee, means an
officer or assistant officer assigned to the corporate trust department of the
Trustee (or any successor group of the Trustee) with direct responsibility for
the administration of this Indenture 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 Note" has the same meaning as "Restricted Security" set
forth in Rule 144(a)(3) promulgated under the Securities Act; provided, that the
Trustee shall be entitled to request and conclusively rely upon an Opinion of
Counsel with respect to whether any Note is a Restricted Note.
"Restricted Payment" means any of the following: (i) the declaration or
payment of any dividend or any other distribution or payment on Capital Stock of
the Company or any Restricted Subsidiary of the Company or any payment made to
the direct or indirect holders (in their capacities as such) of Capital Stock of
the Company or any Restricted Subsidiary of the Company (other than (x)
dividends or distributions payable solely in Capital Stock (other than
Disqualified Capital Stock) or in options, warrants or other rights to purchase
Capital
<PAGE> 29
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Stock (other than Disqualified Capital Stock), and (y) in the case of Restricted
Subsidiaries of the Company, dividends or distributions payable to the Company
or to a Wholly-Owned Subsidiary of the Company), (ii) the purchase, redemption
or other acquisition or retirement for value of any Capital Stock of the Company
or any of its Restricted Subsidiaries (other than Capital Stock owned by the
Company or a Wholly-Owned Subsidiary of the Company, excluding Disqualified
Capital Stock), (iii) the making of any principal payment on, or the purchase,
defeasance, repurchase, redemption or other acquisition or retirement for value,
prior to any scheduled maturity, scheduled repayment or scheduled sinking fund
payment, of any Indebtedness which is subordinated in right of payment to the
Notes other than subordinated Indebtedness acquired in anticipation of
satisfying a scheduled sinking fund obligation, principal installment or final
maturity, in each case due within one year of the date of acquisition), (iv) the
making of any Investment or guarantee of any Investment in any Person other than
a Permitted Investment, (v) any designation of a Restricted Subsidiary as an
Unrestricted Subsidiary on the basis of the Investment by the Company therein,
(vi) forgiveness of any Indebtedness of an Affiliate of the Company to the
Company or a Restricted Subsidiary and (vii) the payment of Corporate Services
Fees. For purposes of determining the amount expended for Restricted Payments,
cash distributed or invested shall be valued at the face amount thereof and
property other than cash shall be valued at its fair market value (as determined
in good faith by the board of directors of the Company, as evidenced by a board
resolution).
"Restricted Subsidiary" means a Subsidiary of the Company other than an
Unrestricted Subsidiary and includes all of the Subsidiaries of the Company
existing as of the Issue Date. The Board of Directors of the Company may
designate any Unrestricted Subsidiary or any Person that is to become a
Subsidiary as a Restricted Subsidiary if immediately after giving effect to such
action (and treating any Acquired Indebtedness as having been incurred at the
time of such action), the Company could have incurred at least $1.00 of
additional Indebtedness (other than Permitted Indebtedness) pursuant to Section
4.06 of this Indenture.
"Rule 144" means Rule 144 promulgated under the Securities Act.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
<PAGE> 30
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"Sale and Lease-Back Transaction" means any arrangement with any Person
providing for the leasing by the Company or any Restricted Subsidiary of the
Company of any real or tangible personal property, which property has been or is
to be sold or transferred by the Company or such Restricted Subsidiary to such
Person in contemplation of such leasing.
"S&P" means Standard & Poor's Ratings Services and its successors.
"SEC" means the United States Securities and Exchange Commission as
constituted from time to time or any successor performing substantially the same
functions.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Indebtedness" means the principal of and premium, if any, and
interest on, and any and all other fees, expense reimbursement obligations and
other amounts due pursuant to the terms of all agreements, documents and
instruments providing for, creating, securing or evidencing or otherwise entered
into in connection with (a) all Indebtedness of the Company or any Restricted
Subsidiary owed to lenders under the Credit Facilities, (b) all obligations of
the Company or any Restricted Subsidiary with respect to any Interest Rate
Agreement, (c) all obligations of the Company or any Restricted Subsidiary to
reimburse any bank or other person in respect of amounts paid under letters of
credit, acceptances or other similar instruments, (d) all other Indebtedness of
the Company or any Restricted Subsidiary which does not provide that it is to
rank pari passu with or subordinate to the Notes and the Guarantees and (e) all
deferrals, renewals, extensions and refundings of, and amendments, modifications
and supplements to, any of the Senior Indebtedness described above.
Notwithstanding anything to the contrary in the foregoing, Senior Indebtedness
will not include (i) Indebtedness of the Company to any of its Subsidiaries,
(ii) Indebtedness represented by the Notes and the Guarantees, (iii) any
Indebtedness which by the express terms of the agreement or instrument creating,
evidencing or governing the same is junior or subordinate in right of payment to
any item of Senior Indebtedness, (iv) any trade payable arising from the
purchase of goods or materials or for services obtained in the ordinary course
of business, (v) Indebtedness incurred in violation of this Indenture.
"Subsidiary" of any specified Person means any corporation, partnership,
joint venture, association or other busi-
<PAGE> 31
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ness entity, whether now existing or hereafter organized or acquired, (i) in the
case of a corporation, of which more than 50% of the total voting power of the
Capital Stock entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, officers or trustees thereof is held by such
first-named Person or any of its Subsidiaries; or (ii) in the case of a
partnership, joint venture, association or other business entity, with respect
to which such first-named Person or any of its Subsidiaries has the power to
direct or cause the direction of the management and policies of such entity by
contract or otherwise or if in accordance with generally accepted accounting
principles such entity is consolidated with the first-named Person for financial
statement purposes.
"Subsidiary Corporate Services Agreements" means (i) the corporate
services agreement effective as of July 1, 1996 between UpRight and Griffin and
(ii) the corporate services agreement effective as of July 1, 1996 between
Horizon and Griffin, each as in effect on the Issue Date and each of which will
expire on June 29, 1997.
"Temporary Cash Investments" means (i) Investments in marketable, direct
obligations issued or guaranteed by the United States of America, or of any
governmental agency or political subdivision thereof, maturing within 365 days
of the date of purchase; (ii) Investments in certificates of deposit issued by a
bank organized under the laws of the United States of America or any state
thereof or the District of Columbia, in each case having capital, surplus and
undivided profits totaling more than $500,000,000 and rated at least A by
Standard & Poor's Corporation and A-2 by Moody's Investors Service, Inc.,
maturing within 365 days of purchase; or (iii) Investments not exceeding 365
days in duration in money market funds (including funds of the Trustee and/or
its affiliates) that invest substantially all of such funds' assets in the
Investments described in the preceding clauses (i) and (ii).
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code SectionSection
77aaa-77bbbb) as in effect on the date of this Indenture (except as provided in
Section 9.03 hereof).
"Trustee" means the party named as such in this Indenture until a
successor replaces it pursuant to this Indenture and thereafter means the
successor.
"Unrestricted Subsidiary" means (a) any Subsidiary of an Unrestricted
Subsidiary and (b) any Subsidiary of the Com-
<PAGE> 32
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pany which is classified after the Issue Date as an Unrestricted Subsidiary by a
resolution adopted by the Board of Directors of the Company; provided that a
Subsidiary organized or acquired after the Issue Date may be so classified as an
Unrestricted Subsidiary only if such classification is in compliance with the
covenant set forth under Section 4.09 hereof. The Trustee shall be given prompt
notice by the Company of each resolution adopted by the Board of Directors of
the Company under this provision, together with a copy of each such resolution
adopted.
"UpRight" means UpRight, Inc., a California corporation.
"U.S. Government Obligations" means (a) securities that are direct
obligations of the United States of America for the payment of which its full
faith and credit are pledged or (b) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America, the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case, are
not callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank (as defined in Section 3(a)(2) of
the Securities Act) as custodian with respect to any such U.S. Government
Obligation or a specific payment of principal of or interest on any such U.S.
Government Obligation held by such custodian for the account of the holder of
such depository receipt; provided that (except as required by law) such
custodian is not authorized to make any deduction from the amount payable to the
holder of such depository receipt from any amount received by the custodian in
respect of the U.S. Government Obligation or a specific payment of principal or
interest on any such U.S. Government Obligation held by such custodian for the
account of the holder of such depository receipt.
"Voting Stock" means, with respect to any Person, securities of any
class or classes of Capital Stock in such Person entitling the holders thereof
to vote under ordinary circumstances in the election of members of the board of
directors or other governing body of such Person.
"Wholly-Owned Subsidiary" means any Restricted Subsidiary, all of the
outstanding voting securities (other than directors' qualifying shares) of which
are owned, directly or indirectly, by the Company.
<PAGE> 33
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Section 1.02. Other Definitions.
The definitions of the following terms may be found in the sections
indicated as follows:
<TABLE>
<CAPTION>
Term Defined in Section
<S> <C>
"Affiliate Transaction"............................... 4.11
"Agent Members"....................................... 2.16(a)
"Bankruptcy Law"...................................... 6.01
"Blockage Period"..................................... 7.02
"Business Day"........................................ 12.07
"CEDEL"............................................... 2.16(a)
"Change of Control Offer"............................. 4.19
"Change of Control Purchase Price".................... 4.19
"Change of Control Payment Date"...................... 4.19
"Covenant Defeasance"................................. 10.03
"Custodian"........................................... 6.01
"Default Notice"...................................... 7.02
"Euroclear"........................................... 2.16(a)
"Event of Default".................................... 6.01
"Excess Proceeds Offer"............................... 4.10
"Global Notes"........................................ 2.01
"Guarantor Blockage Period"........................... 11.10
"Guarantor Default Notice"............................ 11.10
"Initial Blockage Period" 7.02
"Legal Defeasance".................................... 10.02
"Legal Holiday"....................................... 12.07
"Offer Period"........................................ 4.10
"Other Notes"......................................... 2.02
"Paying Agent"........................................ 2.04
"Payment Blockage Period" 7.02
"Purchase Date"....................................... 4.10
"Registrar"........................................... 2.04
"Regulation S Global Notes"........................... 2.16(a)
"Regulation S Notes".................................. 2.02
"Reinvestment Date"................................... 4.10
"Restricted Global Note".............................. 2.16(a)
"Rule 144A Notes"..................................... 2.02
"Subsequent Series Notes"............................. 2.01
</TABLE>
<PAGE> 34
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Section 1.03. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the portion of
such provision required to be incorporated herein in order for this Indenture to
be qualified under the TIA is incorporated by reference in and made a part of
this Indenture. The following TIA terms used in this Indenture have the
following meanings:
"Commission" means the SEC.
"indenture securities" means the Notes.
"indenture securityholder" means a Holder or Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor on the indenture securities" means the Company, the Guarantors
or any other obligor on the Notes.
All other terms used in this Indenture that are defined by the TIA,
defined in the TIA by reference to another statute or defined by SEC rule have
the meanings therein assigned to them.
Section 1.04. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it herein, whether defined
expressly or by reference;
(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;
(5) words used herein implying any gender shall apply to both genders;
and
<PAGE> 35
-27-
(6) whenever in this Indenture there is mentioned, in any context,
Principal, interest or any other amount payable under or with respect to any
Note, such mention shall be deemed to include mention of the payment of
Additional Interest to the extent that, in such context, Additional Interest
is, was or would be payable in respect thereof.
ARTICLE TWO
THE NOTES
Section 2.01. Amount of Notes.
The Trustee shall authenticate (i) Notes for original issue on the Issue
Date in the aggregate principal amount of $105,000,000 and (ii) Notes for
original issue subsequent to the Issue Date in an aggregate principal amount not
to exceed $45,000,000 in one or more series ("Subsequent Series Notes"), in each
case upon a written order of the Company in the form of an Officers' Certificate
of the Company; provided, however, that no Subsequent Series Notes may be
authenticated and delivered in an aggregate principal amount of less than
$20,000,000; and provided, further, that the Company must, in issuing any
Subsequent Series Notes, comply with Section 4.06. Each such written order shall
specify the amount of Notes to be authenticated, the date on which the Notes are
to be authenticated and the title of the Notes of the series (which shall
distinguish the Notes of the series from Notes of any other series). All Notes
issued on the Issue Date and Subsequent Series Notes shall be identical in all
respects other than issue dates and the date from which interest accrues and
except as provided in this Section 2.01 and except that any Subsequent Series
Notes may contain any notations, legends or endorsements permitted under Section
2.02, and that Subsequent Series Notes may be issued in the form of Exchange
Notes. The aggregate principal amount of Notes outstanding at any time may not
exceed $150,000,000, except as provided in Section 2.08.
Upon receipt of a Company Request and an Officers' Certificate
certifying that a registration statement relating to an exchange offer specified
in the Registration Rights Agreement or, with respect to Notes issued under the
Indenture subsequent to the Issue Date, a registration rights agreement
substantially identical to the Registration Rights Agreement, is effective and
that the conditions precedent to a private ex-
<PAGE> 36
-28-
change thereunder have been met, the Trustee shall authenticate an additional
series of Notes in an aggregate principal amount not to exceed $150.0 million
for issuance in exchange for the Notes tendered for exchange pursuant to such
exchange offer registered under the Securities Act or pursuant to a Private
Exchange. Exchange Notes or Private Exchange Notes may have such distinctive
series designations and such changes in the form thereof as are specified in the
Company Request referred to in the preceding sentence.
In the event that the Company shall issue and the Trustee shall
authenticate any Notes issued under this Indenture subsequent to the Issue Date
pursuant to the first paragraph of this Section 2.01, the Company shall use its
best efforts to obtain the same "CUSIP" number for such Notes as is printed on
the Notes outstanding at such time; provided, however, that if any series of
Notes issued under this Indenture subsequent to the Issue Date is determined,
pursuant to an Opinion of Counsel of the Company in a form reasonably
satisfactory to the Trustee to be a different class of security than the Notes
outstanding at such time for federal income tax purposes, the Company may obtain
a "CUSIP" number for such Notes that is different than the "CUSIP" number
printed on the Notes then outstanding. Notwithstanding the foregoing, all Notes
issued under this Indenture shall vote and consent together on all matters as
one class and no series of Notes will have the right to vote or consent as a
separate class on any matter.
Section 2.02. Form and Dating.
The Notes and the Trustee's certificate of authentication with respect
thereto shall be substantially in the form set forth in Exhibit A, which is
incorporated in and forms a part of this Indenture. The Notes may have
notations, legends or endorsements required by law, rule or usage to which the
Company is subject. Without limiting the generality of the foregoing, Notes
offered and sold to Qualified Institutional Buyers in reliance on Rule 144A
("Rule 144A Notes") shall bear the legend and include the form of assignment set
forth in Exhibit B, Notes offered and sold in offshore transactions in reliance
on Regulation S ("Regulation S Notes") shall bear the legend and include the
form of assignment set forth in Exhibit C, and Notes offered and sold to
Institutional Accredited Investors in transactions exempt from registration
under the Securities Act not made in reliance on Rule 144A or Regulation S
("Other Notes") may be represented by the Restricted Global Note or, if such an
investor may not hold an interest in the Restricted Global Note, a Physical Note
bearing the Private
<PAGE> 37
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Placement Legend. Each Note shall be dated the date of its authentication.
The terms and provisions contained in the Notes shall constitute, and
are expressly made, a part of this Indenture and, to the extent applicable, the
Company, the Guarantors and the Trustee, by their execution and delivery of this
Indenture, expressly agree to such terms and provisions and agree to be bound
thereby.
The Notes may be presented for registration of transfer and exchange at
the offices of the Registrar.
Section 2.03. Execution and Authentication.
Two Officers shall sign, or one Officer shall sign and one Officer (each
of whom shall, in each case, have been duly authorized by all requisite
corporate actions) shall attest to, the Notes for the Company by manual or
facsimile signature.
If an Officer whose signature is on a Note was an Officer at the time of
such execution but no longer holds that office at the time the Trustee
authenticates the Note, the Note shall be valid nevertheless.
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any Note
shall be conclusive evidence, and the only evidence, that such Note has been
duly authenticated and delivered hereunder. Notwithstanding the foregoing, if
any Note shall have been authenticated and delivered hereunder but never issued
and sold by the Company, and the Company shall deliver such Note to the Trustee
for cancellation as provided in Section 2.12, for all purposes of this Indenture
such Note shall be deemed never to have been authenticated and delivered
hereunder and shall never be entitled to the benefits of this Indenture.
The Trustee may appoint an authenticating agent reasonably acceptable to
the Company to authenticate the Notes. Unless otherwise provided in the
appointment, an authenticating agent may authenticate the Notes whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with the Com-
<PAGE> 38
-30-
pany and Affiliates of the Company. Each Paying Agent is designated as an
authenticating agent for purposes of this Indenture.
The Notes shall be issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof.
Section 2.04. Registrar and Paying Agent.
The Company shall maintain an office or agency (which shall be located
in the Borough of Manhattan in The City of New York, State of New York) where
Notes may be presented for registration of transfer or for exchange (the
"Registrar"), and an office or agency where Notes may be presented for payment
(the "Paying Agent") and an office or agency where notices and demands to or
upon the Company, if any, in respect of the Notes and this Indenture may be
served. The Registrar shall keep a register of the Notes and of their transfer
and exchange. The Company may have one or more additional Paying Agents. The
term "Paying Agent" includes any additional Paying Agent. Neither the Company
nor any Affiliate thereof may act as Paying Agent.
The Company shall enter into an appropriate agency agreement, which
shall incorporate the provisions of the TIA, with any Agent that is not a party
to this Indenture. The agreement shall implement the provisions of this
Indenture that relate to such Agent. The Company shall notify the Trustee of the
name and address of any such Agent. If the Company fails to maintain a Registrar
or Paying Agent, or fails to give the foregoing notice, the Trustee shall act as
such and shall be entitled to appropriate compensation in accordance with
Section 8.07.
The Company initially appoints the Trustee as Registrar, Paying Agent
and Agent for service of notices and demands in connection with the Notes and
this Indenture.
Section 2.05. Paying Agent To Hold Money in Trust.
Each Paying Agent shall hold in trust for the benefit of the Noteholders
or the Trustee all money held by the Paying Agent for the payment of principal
of or premium or interest on the Notes (whether such money has been paid to it
by the Company or any other obligor on the Notes or the Guarantors), and the
Company and the Paying Agent shall notify the Trustee of any default by the
Company (or any other obligor on the Notes)
<PAGE> 39
-31-
in making any such payment. Money held in trust by the Paying Agent need not be
segregated except as required by law and in no event shall the Paying Agent be
liable for any interest on any money received by it hereunder. The Company at
any time may require the Paying Agent to pay all money held by it to the Trustee
and account for any funds disbursed and the Trustee may at any time during the
continuance of any Event of Default specified in Section 6.01 (1) or (2), upon
written request to the Paying Agent, require such Paying Agent to pay forthwith
all money so held by it to the Trustee and to account for any funds disbursed.
Upon making such payment, the Paying Agent shall have no further liability for
the money delivered to the Trustee.
Section 2.06. Noteholder 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
the Noteholders. If the Trustee is not the Registrar, the Company shall furnish
to the Trustee at least five 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 Noteholders.
Section 2.07. Transfer and Exchange.
Subject to Sections 2.16 and 2.17, when Notes are presented to the
Registrar with a request from the Holder of such Notes to register a transfer or
to exchange them for an equal principal amount of Notes of other authorized
denominations, the Registrar shall register the transfer as requested. Every
Note presented or surrendered for registration of transfer or exchange shall be
duly endorsed or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Registrar, duly executed by the Holder
thereof or his attorneys duly authorized in writing. To permit registrations of
transfers and exchanges, the Company shall issue and execute and the Trustee
shall authenticate new Notes (and the Guarantors shall execute the guarantee
thereon) evidencing such transfer or exchange at the Registrar's request. No
service charge shall be made to the Noteholder for any registration of transfer
or exchange. The Company may require from the Noteholder payment of a sum
sufficient to cover any transfer taxes or other governmental charge that may be
imposed in relation to a transfer or exchange, but this provision shall not
apply to any exchange pursuant to Section 2.11, 3.06, 4.10, 4.19 or 8.05 (in
which events the Company shall be responsible for the pay-
<PAGE> 40
-32-
ment of such taxes). The Registrar shall not be required to exchange or register
a transfer of any Note for a period of 15 days immediately preceding the mailing
of notice of redemption of Notes to be redeemed or of any Note selected, called
or being called for redemption except the unredeemed portion of any Note being
redeemed in part.
Any Holder of the Global Note shall, by acceptance of such Global Note,
agree that transfers of the beneficial interests in such Global Note may be
effected only through a book entry system maintained by the Holder of such
Global Note (or its agent), and that ownership of a beneficial interest in the
Global Note shall be required to be reflected in a book entry.
Each Holder of a Note agrees to indemnify the Company and the Trustee
against any liability that may result from the transfer, exchange or assignment
of such Holder's Note in violation of any provision of this Indenture and/or
applicable U.S. Federal or state securities law.
Except as expressly provided herein, neither the Trustee nor the
Registrar shall have any duty to monitor the Company's compliance with or have
any responsibility with respect to the Company's compliance with any Federal or
state securities laws.
Section 2.08. Replacement Notes.
If a mutilated Note is surrendered to the Registrar or the Trustee, or
if the Holder of a Note claims that the Note has been lost, destroyed or
wrongfully taken, the Company shall issue and the Trustee shall authenticate a
replacement Note (and the Guarantors shall execute the guarantee thereon) if the
Holder of such Note furnishes to the Company and the Trustee evidence reasonably
acceptable to them of the ownership and the destruction, loss or theft of such
Note and if the requirements of Section 8-405 of the New York Uniform Commercial
Code as in effect on the date of this Indenture are met. If required by the
Trustee or the Company, an indemnity bond shall be posted, sufficient in the
judgment of both to protect the Company, the Guarantors, the Trustee or any
Paying Agent from any loss that any of them may suffer if such Note is replaced.
The Company may charge such Holder for the Company's reasonable out-of-pocket
expenses in replacing such Note and the Trustee may charge the Company for the
Trustee's expenses (including, without limitation, attorneys' fees and
disbursements) in replacing such Note. Every replacement Note shall constitute a
contractual obligation of the Company.
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Section 2.09. Outstanding Notes.
The Notes outstanding at any time are all Notes that have been
authenticated by the Trustee except for (a) those cancelled by it, (b) those
delivered to it for cancellation, (c) to the extent set forth in Sections 10.01
and 10.02, on or after the date on which the conditions set forth in Section
10.01 or 9.02 have been satisfied, those Notes theretofore authenticated and
delivered by the Trustee hereunder and (d) those described in this Section 2.09
as not outstanding. Subject to Section 2.10, a Note does not cease to be
outstanding because the Company or one of its Affiliates holds the Note.
If a Note is replaced pursuant to Section 2.08, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser in whose hands such Note is a
legal, valid and binding obligation of the Company.
If the Paying Agent holds, in its capacity as such, on any Maturity Date
or on any optional redemption date, money sufficient to pay all accrued interest
and principal with respect to the Notes payable on that date and is not
prohibited from paying such money to the Holders thereof pursuant to the terms
of this Indenture, then on and after that date such Notes cease to be
outstanding and interest on them ceases to accrue.
Section 2.10. Treasury Notes.
In determining whether the Holders of the required principal amount of
Notes have concurred in any declaration of acceleration or notice of default or
direction, waiver or consent or any amendment, modification or other change to
this Indenture, Notes owned by the Company or any other Affiliate of the Company
shall be disregarded as though they were not outstanding, except that for the
purposes of determining whether the Trustee shall be protected in relying on any
such direction, waiver or consent or any amendment, modification or other change
to this Indenture, only Notes as to which a Responsible Officer of the Trustee
has received an Officers' Certificate stating that such Notes are so owned shall
be so disregarded. Notes so owned which have been pledged in good faith shall
not be disregarded if the pledgee established to the satisfaction of the Trustee
the pledgee's right so to act with respect to the Notes and that the pledgee is
not the Company, a Guarantor, any other obligor on the Notes or any of their
respective Affiliates.
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Section 2.11. Temporary Notes.
Until definitive Notes are prepared and ready for delivery, the Company
may prepare and the Trustee shall authenticate temporary Notes. Temporary Notes
shall be substantially in the form of definitive Notes but may have variations
that the Company considers appropriate for temporary Notes. Without unreasonable
delay, the Company shall prepare and the Trustee shall authenticate definitive
Notes in exchange for temporary Notes. Until such exchange, temporary Notes
shall be entitled to the same rights, benefits and privileges as definitive
Notes.
Section 2.12. Cancellation.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Notes surrendered to them for registration of transfer, exchange or payment.
The Trustee shall cancel all Notes surrendered for registration of transfer,
exchange, payment, replacement or cancellation and shall (subject to the
record-retention requirements of the Exchange Act) destroy cancelled Notes and
deliver a certificate of destruction thereof to the Company. The Company may not
reissue or resell, or issue new Notes to replace, Notes that the Company has
redeemed or paid, or that have been delivered to the Trustee for cancellation.
Section 2.13. Defaulted Interest.
If the Company defaults on a payment of interest on the Notes, it shall
pay the defaulted interest, plus (to the extent permitted by law) any interest
payable on the defaulted interest, in accordance with the terms hereof, to the
Persons who are Noteholders on a subsequent special record date, which date
shall be at least five Business Days prior to the payment date. The Company
shall fix such special record date and payment date in a manner satisfactory to
the Trustee. At least 15 days before such special record date, the Company shall
mail to each Noteholder a notice that states the special record date, the
payment date and the amount of defaulted interest, and interest payable on
defaulted interest, if any, to be paid. The Company may make payment of any
defaulted interest in any other lawful manner not inconsistent with the
requirements (if applicable) of any securities exchange on which the Notes may
be listed and, upon such notice as may be required by such exchange, if, after
written notice given by the Company to the
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Trustee of the proposed payment pursuant to this sentence, such manner of
payment shall be deemed practicable by the Trustee.
Section 2.14. CUSIP Number.
The Company in issuing the Notes may use a "CUSIP" number, and if so,
such CUSIP number shall be included in notices of redemption or exchange as a
convenience to Holders; provided, that any such notice may state that no
representation is made as to the correctness or accuracy of the CUSIP number
printed in the notice or on the Notes, and that reliance may be placed only on
the other identification numbers printed on the Notes. The Company shall
promptly notify the Trustee of any such CUSIP number used by the Company in
connection with the issuance of the Notes and of any change in the CUSIP number.
Section 2.15. Deposit of Moneys.
Prior to 10:00 a.m., New York City time, on each Interest Payment Date
and Maturity Date, the Company shall have deposited with the Paying Agent in
immediately available funds money sufficient to make cash payments, if any, due
on such Interest Payment Date or Maturity Date, as the case may be, in a timely
manner which permits the Trustee to remit payment to the Holders on such
Interest Payment Date or Maturity Date, as the case may be. The principal and
interest on Global Notes shall be payable to the Depository or its nominee, as
the case may be, as the sole registered owner and the sole holder of the Global
Notes represented thereby. The principal and interest on Physical Notes shall be
payable, either in person or by mail, at the office of the Paying Agent.
Section 2.16. Book-Entry Provisions for Global Notes.
(a) Rule 144A Notes and Other Notes which may be held in global form,
other than Regulation S Notes, initially shall be represented by one or more
notes in registered, global form without interest coupons (collectively, the
"Restricted Global Note"). Regulation S Notes initially shall be represented by
one or more notes in registered, global form without interest coupons
(collectively, the "Regulation S Global Note," and, together with the Restricted
Global Note and any other global notes representing Notes, the "Global Notes").
The Global Notes initially shall (i) be registered in the name of the Depository
or the nominee of such Depository, in each case for credit to an account of an
Agent Member (or, in the case of the Regulation S Global Notes, of Euroclear
System ("Euroclear") and Cedel Bank, S.A. ("CEDEL")), (ii) be deliv-
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ered to the Trustee as custodian for such Depository and (iii) bear legends as
set forth in Exhibit D.
Members of, or direct or indirect participants in, the Depository
("Agent Members") shall have no rights under this Indenture with respect to any
Global Note held on their behalf by the Depository, or the Trustee as its
custodian, or under the Global Notes, and the Depository may be treated by the
Company, the Trustee and any agent of the Company or the Trustee as the absolute
owner of the Global Note for all purposes whatsoever. Notwithstanding the
foregoing, nothing herein shall prevent the Company, the Trustee or any agent of
the Company or the Trustee from giving effect to any written certification,
proxy or other authorization furnished by the Depository or impair, as between
the Depository and its Agent Members, the operation of customary practices
governing the exercise of the rights of a Holder of any Note.
(b) Transfers of Global Notes shall be limited to transfer in whole, but
not in part, to the Depository, its successors or their respective nominees.
Interests of beneficial owners in the Global Notes may be transferred or
exchanged for Physical Notes in accordance with the rules and procedures of the
Depository and the provisions of Section 2.17. In addition, a Global Note shall
be exchangeable for Physical Notes if (i) the Depository (x) notifies the
Company that it is unwilling or unable to continue as depository for such Global
Note and the Company thereupon fails to appoint a successor depository or (y)
has ceased to be a clearing agency registered under the Exchange Act, (ii) the
Company, at its option, notifies the Trustee in writing that it elects to cause
the issuance of such Physical Notes or (iii) there shall have occurred and be
continuing an Event of Default with respect to the Notes. In all cases, Physical
Notes delivered in exchange for any Global Note or beneficial interests therein
shall be registered in the names, and issued in any approved denominations,
requested by or on behalf of the Depository (in accordance with its customary
procedures).
(c) In connection with any transfer or exchange of a portion of the
beneficial interest in any Global Note to beneficial owners pursuant to
paragraph (b), the Registrar shall (if one or more Physical Notes are to be
issued) reflect on its books and records the date and a decrease in the
principal amount of the Global Note in an amount equal to the principal amount
of the beneficial interest in the Global Note to be transferred, and the Company
shall execute, and the Trustee shall upon receipt of a written order from the
Company authen-
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ticate and make available for delivery, one or more Physical Notes of like tenor
and amount.
(d) In connection with the transfer of Global Notes as an entirety to
beneficial owners pursuant to paragraph (b), the Global Notes shall be deemed to
be surrendered to the Trustee for cancellation, and the Company shall execute,
and the Trustee shall authenticate and deliver, to each beneficial owner
identified by the Depository in writing in exchange for its beneficial interest
in the Global Notes, an equal aggregate principal amount of Physical Notes of
authorized denominations.
(e) Any Physical Note constituting a Restricted Note delivered in
exchange for an interest in a Global Note pursuant to paragraph (b), (c) or (d)
shall, except as otherwise provided by paragraphs (a)(i)(x) and (c) of Section
2.17, bear the Private Placement Legend or, in the case of the Regulation S
Global Note, the legend set forth in Exhibit C, in each case, unless the Company
determines otherwise in compliance with applicable law.
(f) On or prior to the 40th day after the later of the commencement of
the offering of the Notes represented by the Regulation S Global Note and the
issue date of such Notes (such period through and including such 40th day, the
"Restricted Period"), a beneficial interest in a Regulation S Global Note may be
transferred to a Person who takes delivery in the form of an interest in the
corresponding Restricted Global Note only upon receipt by the Trustee of a
written certification from the transferor to the effect that such transfer is
being made (i)(a) to a Person whom the transferor reasonably believes is a
Qualified Institutional Buyer in a transaction meeting the requirements of Rule
144A or (b) pursuant to another exemption from the registration requirements
under the Securities Act which is accompanied by an opinion of counsel regarding
the availability of such exemption and (ii) in accordance with all applicable
securities laws of any state of the United States or any other jurisdiction.
(g) Beneficial interests in the Restricted Global Note may be
transferred to a Person who takes delivery in the form of an interest in the
Regulation S Global Note, whether before or after the expiration of the
Restricted Period, only if the transferor first delivers to the Trustee a
written certificate to the effect that such transfer is being made in accordance
with Rule 903 or 904 of Regulation S or Rule 144 (if available) and that, if
such transfer occurs prior to the expi-
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ration of the Restricted Period, the interest transferred will be held
immediately thereafter through Euroclear or CEDEL.
(h) Any beneficial interest in one of the Global Notes that is
transferred to a Person who takes delivery in the form of an interest in another
Global Note shall, upon transfer, cease to be an interest in such Global Note
and become an interest in such other Global Note and, accordingly, shall
thereafter be subject to all transfer restrictions and other procedures
applicable to beneficial interests in such other Global Note for as long as it
remains such an interest.
(i) The Holder of any Global Note may grant proxies and otherwise
authorize any Person, including Agent Members and Persons that may hold
interests through Agent Members, to take any action which a Holder is entitled
to take under this Indenture or the Notes.
Section 2.17. Special Transfer Provisions.
(a) Transfers to Non-QIB Institutional Accredited Investors and Non-U.S.
Persons. The following provisions shall apply with respect to the registration
of any proposed transfer of a Note constituting a Restricted Note to any
Institutional Accredited Investor which is not a QIB or to any Non-U.S. Person:
(i) the Registrar shall register the transfer of any Note
constituting a Restricted Note, whether or not such Note bears the
Private Placement Legend, if (x) the requested transfer is after June
10, 1999 or such other date as such Note shall be freely transferable
under Rule 144 as certified in an Officer's Certificate or (y) (1) in
the case of a transfer to an Institutional Accredited Investor which is
not a QIB (excluding Non-U.S. Persons), the proposed transferee has
delivered to the Registrar a certificate substantially in the form of
Exhibit E hereto or (2) in the case of a transfer to a Non-U.S. Person
(including a QIB), the proposed transferor has delivered to the
Registrar a certificate substantially in the form of Exhibit F hereto;
provided that in the case of a transfer of a Note bearing the Private
Placement Legend for a Note not bearing the Private Placement Legend,
the Registrar has received an Officers' Certificate authorizing such
transfer; and
(ii) if the proposed transferor is an Agent Member holding a
beneficial interest in a Global Note, upon re-
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ceipt by the Registrar of (x) the certificate, if any, required by
paragraph (i) above and (y) instructions given in accordance with the
Depository's and the Registrar's procedures,
whereupon (a) the Registrar shall reflect on its books and records the date and
(if the transfer does not involve a transfer of outstanding Physical Notes) a
decrease in the principal amount of a Global Note in an amount equal to the
principal amount of the beneficial interest in a Global Note to be transferred,
and (b) the Registrar shall reflect on its books and records the date and an
increase in the principal amount of a Global Note in an amount equal to the
principal amount of the beneficial interest in the Global Note transferred or
the Company shall execute and the Trustee shall authenticate and make available
for delivery one or more Physical Notes of like tenor and amount.
(b) Transfers to QIBs. The following provisions shall apply
with respect to the registration of any proposed registration of transfer of a
Note constituting a Restricted Note to a QIB (excluding transfers to Non-U.S.
Persons):
(i) the Registrar shall register the transfer if such transfer
is being made by a proposed transferor who has checked the box provided
for on such Holder's Note stating, or has otherwise advised the Company
and the Registrar in writing, that the sale has been made in compliance
with the provisions of Rule 144A to a transferee who has signed the
certification provided for on such Holder's Note stating, or has
otherwise advised the Company and the Registrar in writing, that it is
purchasing the Note for its own account or an account with respect to
which it exercises sole investment discretion and that it and any such
account is a QIB within the meaning of Rule 144A, and is aware that the
sale to it is being made in reliance on Rule 144A and acknowledges that
it has received such information regarding the Company as it has
requested pursuant to Rule 144A or has determined not to request such
information and that it is aware that the transferor is relying upon its
foregoing representations in order to claim the exemption from
registration provided by Rule 144A; and
(ii) if the proposed transferee is an Agent Member, and the Notes
to be transferred consist of Physical Notes which after transfer are to
be evidenced by an interest in the Global Note, upon receipt by the
Registrar of instructions given in accordance with the Depository's and
the
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Registrar's procedures, the Registrar shall reflect on its books and
records the date and an increase in the principal amount of the Global
Note in an amount equal to the principal amount of the Physical Notes to
be transferred, and the Trustee shall cancel the Physical Notes so
transferred.
(c) Private Placement Legend. Upon the registration of transfer,
exchange or replacement of Notes not bearing the Private Placement Legend, the
Registrar shall deliver Notes that do not bear the Private Placement Legend.
Upon the registration of transfer, exchange or replacement of Notes bearing the
Private Placement Legend, the Registrar shall deliver only Notes that bear the
Private Placement Legend unless (i) it has received the Officers' Certificate
required by paragraph (a)(i)(y) of this Section 2.17, (ii) there is delivered to
the Registrar an Opinion of Counsel reasonably satisfactory to the Company and
the Trustee to the effect that neither such legend nor the related restrictions
on transfer are required in order to maintain compliance with the provisions of
the Securities Act or (iii) such Note has been sold pursuant to an effective
registration statement under the Securities Act and the Registrar has received
an Officers' Certificate from the Company to such effect.
(d) General. By its acceptance of any Note bearing the Private
Placement Legend, each Holder of such Note acknowledges the restrictions on
transfer of such Note set forth in this Indenture and in the Private Placement
Legend and agrees that it will transfer such Note only as provided in this
Indenture.
The Registrar shall retain for a period of two years copies of
all letters, notices and other written communications received pursuant to
Section 2.16 or this Section 2.17. The Company shall have the right to inspect
and make copies of all such letters, notices or other written communications at
any reasonable time upon the giving of reasonable notice to the Registrar.
Section 2.18. Computation of Interest.
Interest on the Notes shall be computed on the basis of a 360-day
year of twelve 30-day months.
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ARTICLE THREE
REDEMPTION
Section 3.01. Election to Redeem; Notices to Trustee.
If the Company elects to redeem Notes pursuant to paragraph 5 of the
Notes, at least 45 days prior to the Redemption Date (unless a shorter notice
shall be agreed to in writing by the Trustee) but not more than 65 days before
the Redemption Date, the Company shall notify the Trustee in writing of the
Redemption Date, the principal amount of Notes to be redeemed and the redemption
price, and deliver to the Trustee an Officers' Certificate stating that such
redemption will comply with the conditions contained in paragraph 5 of the
Notes. Notice given to the Trustee pursuant to this Section 3.01 may not be
revoked after the time that notice is given to Noteholders pursuant to Section
3.03.
Section 3.02. Selection by Trustee of Notes To Be Redeemed.
In the event that fewer than all of the Notes are to be redeemed, the
Trustee shall select the Notes to be redeemed, if the Notes are listed on a
national securities exchange, in accordance with the rules of such exchange or,
if the Notes are not so listed, either on a pro rata basis or by lot, or such
other method as it shall deem fair and equitable; provided, however, that if a
partial redemption is made with the proceeds of a Public Equity Offering,
selection of the Notes or portion thereof for redemption shall be made by the
Trustee on a pro rata basis to the extent practical, unless such a method is
prohibited. The Trustee shall promptly notify the Company of the Notes selected
for redemption and, in the case of any Notes selected for partial redemption,
the principal amount thereof to be redeemed. The Trustee may select for
redemption portions of the principal of the Notes that have denominations larger
than $1,000. Notes and portions thereof the Trustee selects shall be redeemed in
amounts of $1,000 or whole multiples of $1,000. For all purposes of this
Indenture unless the context otherwise requires, provisions of this Indenture
that apply to Notes called for redemption also apply to portions of Notes called
for redemption.
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Section 3.03. Notice of Redemption.
At least 30 days, and no more than 60 days, before a Redemption Date,
the Company shall mail, or cause to be mailed, a notice of redemption by
first-class mail to each Holder of Notes to be redeemed at his or her last
address as the same appears on the registry books maintained by the Registrar
pursuant to Section 2.04 hereof.
The notice shall identify the Notes to be redeemed (including the CUSIP
numbers thereof) and shall state:
(1) the Redemption Date;
(2) the redemption price and the amount of premium and accrued interest
to be paid;
(3) if any Note is being redeemed in part, the portion of the principal
amount of such Note to be redeemed and that, after the Redemption Date and
upon surrender of such Note, a new Note or Notes in principal amount equal
to the unredeemed portion will 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 default in making the redemption payment,
interest on Notes called for redemption ceases to accrue on and after the
Redemption Date;
(7) the provision of paragraph 5 of the Notes pursuant to which the
Notes called for redemption are being redeemed; and
(8) the aggregate principal amount of Notes that are being redeemed.
At the Company's written request made at least five Business Days prior
to the date on which notice is to be given, the Trustee shall give the notice of
redemption in the Company's name and at the Company's sole expense.
Section 3.04. Effect of Notice of Redemption.
Once the notice of redemption described in Section 3.03 is mailed, Notes
called for redemption become due and pay-
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able on the Redemption Date and at the redemption price, including any premium,
plus interest accrued to the Redemption Date. Upon surrender to the Paying
Agent, such Notes shall be paid at the redemption price, including any premium,
plus interest accrued to the Redemption Date, provided that if the Redemption
Date is after a regular record date and on or prior to the Interest Payment
Date, the accrued interest shall be payable to the Holder of the redeemed Notes
registered on the relevant record date, and provided, further, that if a
Redemption Date is a Legal Holiday, payment shall be made on the next succeeding
Business Day and no interest shall accrue for the period from such Redemption
Date to such succeeding Business Day.
Section 3.05. Deposit of Redemption Price.
On or prior to 10:00 A.M., New York City time, on each Redemption Date,
the Company shall deposit with the Paying Agent in immediately available funds
money sufficient to pay the redemption price of, including premium, if any, and
accrued interest on all Notes to be redeemed on that date other than Notes or
portions thereof called for redemption on that date which have been delivered by
the Company to the Trustee for cancellation.
On and after any Redemption Date, if money sufficient to pay the
redemption price of, including premium, if any, and accrued interest on Notes
called for redemption shall have been made available in accordance with the
preceding paragraph, the Notes called for redemption will cease to accrue
interest and the only right of the Holders of such Notes will be to receive
payment of the redemption price of and, subject to the first proviso in Section
3.04, accrued and unpaid interest on such Notes to the Redemption Date. If any
Note surrendered for redemption shall not be so paid, interest will be paid,
from the Redemption Date until such redemption payment is made, on the unpaid
principal of the Note and any interest not paid on such unpaid principal, in
each case, at the rate and in the manner provided in the Notes.
Section 3.06. Notes Redeemed in Part.
Upon surrender of a Note that is redeemed in part, the Trustee shall
authenticate for the Holder thereof a new Note equal in principal amount to the
unredeemed portion of the Note surrendered.
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ARTICLE FOUR
COVENANTS
Section 4.01. Payment of Notes.
The Company shall pay the principal of and interest (including all
Additional Interest as provided in the Registration Rights Agreement or, in the
case of Notes issued subsequent to the Issue Date, a registration rights
agreement substantially identical to the Registration Rights Agreement) on the
Notes on the dates and in the manner provided in the Notes and this Indenture.
An installment of principal or interest shall be considered paid on the date it
is due if the Trustee or Paying Agent holds on that date money designated for
and sufficient to pay such installment.
The Company shall pay interest on overdue principal (including
post-petition interest in a proceeding under any Bankruptcy Law), and overdue
interest, to the extent lawful, at the rate specified in the Notes.
Section 4.02. SEC Reports.
(a) The Company will file with the SEC all information, documents and
reports to be filed with the SEC pursuant to Section 13 or 15(d) of the Exchange
Act, whether or not the Company is subject to such filing requirements, so long
as the SEC will accept such filings; provided, however, that the Company shall
not be required to make any such filings prior to the date on which the
Company's Annual Report on Form 10-K for the fiscal year ended June 29, 1997
would have been required to be filed if, at the time such filings would have
been required to be made with the SEC, either (i) the Company shall have
provided to each Holder of the Notes the information that would have been
required to be filed or (ii) the Exchange Registration Statement (as such term
is defined in the Registration Rights Agreement) has been filed with the SEC but
has not yet been declared effective and copies of the Exchange Offer
Registration Statement and any amendments thereto (to the extent such
Registration Statement and/or amendments contain additional information not
disclosed in the Offering Memorandum that would have been the subject of a
filing required to be made under Section 13 or 15(d) of the Exchange Act) have
been provided to each Holder of the Notes, provided that any exhibits to the
Exchange Registration Statement (or any amendments thereto) need not be
delivered to any Holder of the Notes, but
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sufficient copies thereof shall be furnished to the Trustee as reasonably
requested to permit the Trustee to deliver any such exhibits to any Holder of
the Notes upon request. The Company (at its own expense) shall file with the
Trustee within 100 days after the end of each fiscal year of the Company, or
within 50 days after the end of each of the first three fiscal quarters of each
fiscal year of the Company, as the case may be, copies of the annual reports or
unaudited quarterly consolidated financial statements, as the case may be, and
the information, documents and other reports (or copies of such portions of any
of the foregoing as the SEC may be rules and regulations prescribe) which the
Company files with the SEC pursuant to Section 13 or 15(d) of the Exchange Act.
Upon qualification of this Indenture under the TIA, the Company shall also
comply with the provisions of TIA Section 314(a).
(b) At the Company's expense, regardless of whether the Company is
required to furnish such reports and other information referred to in paragraph
(a) above to its stockholders pursuant to the Exchange Act, the Company shall
cause such reports and other information to be mailed to the Holders at their
addresses appearing in the register of Notes maintained by the Registrar within
100 days after the end of each fiscal year of the Company, or within 50 days
after the end of each of the first three fiscal quarters of each fiscal year of
the Company, as the case may be. Such reports shall be delivered to the
Registrar and the Registrar will mail them, at the Company's expense, to the
Holders at their addresses appearing in the register of Notes maintained by the
Registrar.
(c) The Company shall, upon request, provide to any Holder of Notes or
any prospective transferee of any such Holder any information concerning the
Company (including financial statements) necessary in order to permit such
Holder to sell or transfer Notes in compliance with Rule 144A under the
Securities Act; provided, however, that the Company shall not be required to
furnish such information in connection with any request made on or after the
date which is three years (or such other date as the Notes shall be freely
transferable pursuant to Rule 144) from the later of (i) the date such Note (or
any predecessor Note) was acquired from the Company or (ii) the date such Note
(or any predecessor Note) was last acquired from an "affiliate" of the Company
within the meaning of Rule 144 under the Securities Act.
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Section 4.03. Waiver of Stay, Extension or Usury Laws.
The Company and the Guarantors covenant (to the extent that they may
lawfully do so) that they shall not at any time insist upon, or plead (as a
defense or otherwise) or in any manner whatsoever claim or take the benefit or
advantage of, any stay or extension law or any usury law or other law which
would prohibit or forgive the Company and the Guarantors from paying all or any
portion of the principal of, premium, if any, and/or interest on the Notes as
contemplated herein, wherever enacted, now or at any time hereafter in force, or
which may affect the covenants or the performance of this Indenture; and (to the
extent that they may lawfully do so) the Company and the Guarantors hereby
expressly waive all benefit or advantage of any such law, and covenant that they
will not hinder, delay or impede the execution of any power herein granted to
the Trustee, but will suffer and permit the execution of every such power as
though no such law had been enacted.
Section 4.04. Compliance Certificate.
(a) The Company and the Guarantors shall deliver to the Trustee, within
100 days after the end of each fiscal year and on or before 50 days after the
end of the first, second and third quarters of each fiscal year, an Officers'
Certificate (one of the signers on behalf of each of the Company and the
Guarantors of which shall be the principal executive officer, principal
financial officer or principal accounting officer of the Company and such
Guarantors) stating that a review of the activities of the Company and its
Subsidiaries during such fiscal year or fiscal quarter, as the case may be, has
been made under the supervision of the signing Officers with a view to
determining whether the Company and the Guarantors have kept, observed,
performed and fulfilled their obligations under this Indenture, and further
stating, as to each such Officer signing such certificate, that to the best of
his or her knowledge, the Company and the Guarantors have kept, observed,
performed and fulfilled each and every covenant contained in this Indenture and
are not in default in the performance or observance of any of the terms,
provisions and conditions hereof (or, if a Default or Event of Default shall
have occurred, describing all such Defaults or Events of Default of which he or
she may have knowledge and what action they are taking or propose to take with
respect thereto) and that to the best of his or her knowledge no event has
occurred and remains in existence by reason of which payments on account of the
principal of or interest, if any, on the Notes is prohibited or if such event
has occurred, a description of the event and what action the Company
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and the Guarantors is taking or propose to take with respect thereto.
(b) So long as the Trustee has not received an Officer's Certificate
stating that it would be contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.02 above shall be accompanied by a
written statement of the Company's independent public accountants (who shall be
a firm of established national reputation) 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 the Company or any
Guarantor has violated any provisions of this Article 4 or Article 5 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 for any failure to obtain knowledge of any such
violation.
(c) The Company and the Guarantors shall, so long as any of the Notes
are outstanding, deliver to the Trustee, forthwith upon any Officer becoming
aware of any Default or Event of Default, an Officers' Certificate specifying
such Default or Event of Default and what action the Company and the Guarantors
are taking or propose to take with respect thereto.
(d) The Company's fiscal year currently ends on the Sunday closest to
June 30 of each year. The Company will provide written notice to the Trustee of
any change in its fiscal year.
Section 4.05. Taxes.
The Company and the Guarantors shall, and shall cause each of their
Subsidiaries to, pay prior to delinquency all material taxes, assessments, and
governmental levies except as contested in good faith and by appropriate
proceedings.
Section 4.06. Limitation on Additional Indebtedness.
The Company will not, and will not permit any Restricted Subsidiary of
the Company to, directly or indirectly, incur (as defined) any Indebtedness
(including Acquired Indebtedness) unless (a) after giving effect to the
incurrence of such Indebtedness and the receipt and application of the proceeds
thereof, the Company's Fixed Charge Coverage Ratio (determined on a pro forma
basis for the last four fiscal quar-
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ters of the Company for which financial statements are available at the date of
determination) is greater than 2.0 to 1 if the Indebtedness is incurred prior to
June 15, 1999 and 2.25 to 1 if the Indebtedness is incurred thereafter;
provided, however, that if the Indebtedness which is the subject of a
determination under this provision is Acquired Indebtedness, or Indebtedness
incurred in connection with the simultaneous acquisition of any Person,
business, property or assets or Indebtedness of an Unrestricted Subsidiary being
designated as a Restricted Subsidiary, then such ratio shall be determined by
giving effect to (on a pro forma basis, as if the transaction had occurred at
the beginning of the four-quarter period) both the incurrence or assumption of
such Acquired Indebtedness or such other Indebtedness by the Company or such
Restricted Subsidiary and the inclusion in the Company's EBITDA of the EBITDA of
the acquired Person, business, property or assets or redesignated Subsidiary,
and (b) no Default or Event of Default shall have occurred and be continuing at
the time or as a consequence of the incurrence of such Indebtedness.
Notwithstanding the foregoing, the Company and its Restricted
Subsidiaries may incur Permitted Indebtedness; provided that the Company will
not incur any Permitted Indebtedness that ranks pari passu or junior in right of
payment to the Notes and that has a maturity or mandatory sinking fund payment
prior to the maturity of the Notes unless it meets the Fixed Charge Coverage
Ratio test specified in the previous paragraph.
Section 4.07. Limitation on Preferred Stock of Restricted Subsidiaries.
The Company will not permit any Restricted Subsidiary to issue any
Preferred Stock (except Preferred Stock to the Company or a Restricted
Subsidiary) or permit any Person (other than the Company or a Restricted
Subsidiary) to hold any such Preferred Stock unless the Company or such
Restricted Subsidiary would be entitled to incur or assume Indebtedness under
the covenant described under Section 4.06 in the aggregate principal amount
equal to the aggregate liquidation value of the Preferred Stock to be issued.
Section 4.08. Limitation on Capital Stock of Restricted Subsidiaries.
The Company will not (i) sell, pledge, hypothecate or otherwise convey
or dispose of any Capital Stock of a Re-
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stricted Subsidiary or (ii) permit any of its Restricted Subsidiaries to issue
any Capital Stock, other than to the Company or a Wholly-Owned Subsidiary of the
Company. The foregoing restrictions shall not apply to an Asset Sale made in
compliance with Section 4.10 hereof or the issuance of Preferred Stock in
compliance with Section 4.07 hereof.
Section 4.09. Limitation on Restricted Payments.
The Company will not make, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, make, any Restricted Payment, unless:
(a) no Default or Event of Default shall have occurred and be
continuing at the time of or immediately after giving effect to such
Restricted Payment;
(b) immediately after giving pro forma effect to such Restricted
Payment, the Company could incur $1.00 of additional Indebtedness (other
than Permitted Indebtedness) under the covenant set forth under Section
4.06 hereof; and
(c) immediately after giving effect to such Restricted Payment,
the aggregate of all Restricted Payments declared or made after the
Issue Date does not exceed the sum of (1) 50% of the cumulative
consolidated Net Income of the Company subsequent to the Issue Date (or
minus 100% of any cumulative deficit in Consolidated Net Income during
such period), (2) 100% of the aggregate Net Proceeds and the fair market
value of securities or other property received by the Company from the
issue or sale, after the Issue Date, of Capital Stock (other than
Disqualified Capital Stock or Capital Stock of the Company issued to any
Subsidiary of the Company) of the Company or any Indebtedness or other
securities of the Company convertible into or exercisable or
exchangeable for Capital Stock (other than Disqualified Capital Stock)
of the Company which has been so converted or exercised or exchanged, as
the case may be and (3) $2,000,000. For purposes of determining under
this clause (c) the amount expended for Restricted Payments, cash
distributed shall be valued at the face amount thereof and property
other than cash shall be valued at its fair market value (as determined
in good faith by the Company's board of directors, and evidenced by a
board resolution).
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The provisions of this Section 4.09 shall not prohibit (i) the payment
of any distribution within 60 days after the date of declaration thereof, if at
such date of declaration such payment would comply with the provisions of the
Indenture, (ii) the retirement of any shares of Capital Stock of the Company or
subordinated Indebtedness by conversion into, or by or in exchange for, shares
of Capital Stock (other than Disqualified Capital Stock), or out of, the Net
Proceeds of the substantially concurrent sale (other than to a Subsidiary of the
Company) of other shares of Capital Stock of the Company (other than
Disqualified Capital Stock), (iii) the redemption or retirement of Indebtedness
of the Company subordinated to the Notes in exchange for, by conversion into, or
out of the Net Proceeds of, a substantially concurrent sale or incurrence of
Indebtedness (other than any Indebtedness owed to a Subsidiary) of the Company
that is contractually subordinated in right of payment to the Notes to at least
the same extent as the subordinated Indebtedness being redeemed or retired, (iv)
the retirement of any shares of Disqualified Capital Stock by conversion into,
or by exchange for, shares of Disqualified Capital Stock, or out of the Net
Proceeds of the substantially concurrent sale (other than to a Subsidiary of the
Company) of other shares of Disqualified Capital Stock or (v) the payment of
Corporate Services Fees not to exceed $880,000 in fiscal 1997 and 8.5% of the
Company's EBITDA on a consolidated basis for any fiscal year thereafter.
Not later than the date of making any Restricted Payment, the Company
shall 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 Section 4.09 were computed, which calculations may
be based upon the Company's latest available financial statements, and that no
Default or Event of Default exists and is continuing and no Default or Event of
Default will occur immediately after giving effect to any Restricted Payments.
Section 4.10. Limitation on Certain Asset Sales.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless (i) the Company or its
Restricted Subsidiaries, as the case may be, receives consideration at the time
of such sale or other disposition at least equal to the fair market value
thereof (as determined in good faith by the Company's board of directors, and
evidenced by a board resolution); (ii) not less than 85% of the consideration
received by the Company or its Subsidiaries, as the case may be, is in the form
of cash or Temporary Cash
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Investments; and (iii) the Asset Sale Proceeds received by the Company or such
Restricted Subsidiary are applied (a) first, to the extent the Company elects,
or is required, to prepay, repay or purchase debt of the Company or any
Restricted Subsidiary under a Credit Facility within 180 days following the
receipt of the Asset Sale Proceeds from any Asset Sale, provided that any such
repayment shall result in a permanent reduction of the commitments thereunder in
an amount equal to the principal amount so repaid; (b) second, to the extent of
the balance of Asset Sale Proceeds after application as described above, to the
extent the Company elects, to an investment in assets (including Capital Stock
or other securities purchased in connection with the acquisition of Capital
Stock or property of another person) used or useful in businesses similar or
ancillary to the business of the Company or Restricted Subsidiary as conducted
at the time of such Asset Sale, provided that such investment occurs or the
Company or a Restricted Subsidiary enters into contractual commitments to make
such investment, subject only to customary conditions (other than the obtaining
of financing), on or prior to the 181st day following receipt of such Asset Sale
Proceeds (the "Reinvestment Date") and Asset Sale Proceeds contractually
committed are so applied within 270 days following the receipt of such Asset
Sale Proceeds; and (c) third, if on the Reinvestment Date with respect to any
Asset Sale, the Available Asset Sale Proceeds exceed $5 million, the Company
shall apply an amount equal to such Available Asset Sale Proceeds to an offer to
repurchase the Notes, at a purchase price in cash equal to 100% of the principal
amount thereof plus accrued and unpaid interest, if any, to the date of
repurchase (an "Excess Proceeds Offer"). If an Excess Proceeds Offer is not
fully subscribed, the Company may retain the portion of the Available Asset Sale
Proceeds not required to repurchase Notes.
If the Company is required to make an Excess Proceeds Offer, the
Company shall mail, within 30 days following the Reinvestment Date, a notice to
the Holders stating, among other things: (1) that such Holders have the right to
require the Company to apply the Available Asset Sale Proceeds to repurchase
such Notes at a purchase price in cash equal to 100% of the principal amount
thereof plus accrued and unpaid interest, if any, to the date of purchase; (2)
the purchase date (the "Purchase Date"), which shall be no earlier than 30 days
and not later than 60 days from the date such notice is mailed; (3) the
instructions, determined by the Company, that each Holder must follow in order
to have such Notes repurchased; and (4) the calculations used in determining the
amount of Available Asset Sale Proceeds to be applied to the repurchase of
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such Notes. The Excess Proceeds Offer shall remain open for a period of 20
Business Days following its commencement (the "Offer Period"). The notice, which
shall govern the terms of the Excess Proceeds Offer, shall state:
(1) that the Excess Proceeds Offer is being made pursuant to this
Section 4.10 and the length of time the Excess Proceeds Offer will remain
open;
(2) the purchase price and the Purchase Date;
(3) that any Note not tendered or accepted for payment will continue to
accrue interest;
(4) that any Note accepted for payment pursuant to the Excess Proceeds
Offer shall cease to accrue interest on and after the Purchase Date and the
deposit of the purchase price with the Trustee;
(5) that Holders electing to have a Note purchased pursuant to any
Excess Proceeds Offer will be required to surrender the Note, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the Note
completed, to the Company, a depositary, if appointed by the Company, or a
Paying Agent at the address specified in the notice prior to the close of
business on the Business Day preceding the Purchase Date;
(6) that Holders will be entitled to withdraw their election if the
Company, depositary or Paying Agent, as the case may be, receives, not later
than the expiration of the Offer Period, a facsimile transmission or letter
setting forth the name of the Holder, the principal amount of the Note the
Holder delivered for purchase and a statement that such Holder is
withdrawing his election to have the Note purchased;
(7) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Available Asset Sale Proceeds, the Company shall select
the Notes to be purchased on a pro rata basis (with such adjustments as may
be deemed appropriate by the Company so that only Notes in denominations of
$1,000, or integral multiples thereof, shall be purchased); and
(8) that Holders whose Notes were purchased only in part will be issued
new Notes equal in principal amount to the unpurchased portion of the Notes
surrendered.
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On or before the Purchase Date, the Company shall, to the extent lawful,
accept for payment, on a pro rata basis to the extent necessary, Notes or
portions thereof tendered pursuant to the Excess Proceeds Offer, deposit with
the Paying Agent U.S. legal tender sufficient to pay the purchase price plus
accrued interest, if any, on the Notes to be purchased and deliver to the
Trustee an Officers' Certificate stating that such Notes or portions thereof
were accepted for payment by the Company in accordance with the terms of this
Section 4.10. The Paying Agent shall promptly (but in any case not later than 5
days after the Purchase Date) mail or deliver to each tendering Holder an amount
equal to the purchase price of the Note tendered by such Holder and accepted by
the Company for purchase, and the Company shall promptly issue a new Note, the
Guarantors shall endorse the guarantee thereon and the Trustee shall
authenticate and mail or make available for delivery such new Note to such
Holder equal in principal amount to any unpurchased portion of the Note
surrendered. Any Note not so accepted shall be promptly mailed or delivered by
the Company to the Holder thereof. The Company will publicly announce the
results of the Excess Proceeds Offer on the Purchase Date by sending a press
release to the Dow Jones News Service or similar business news service in the
United States. If an Excess Proceeds Offer is not fully subscribed, the Company
may retain that portion of the Available Asset Sale Proceeds not required to
repurchase Notes.
Section 4.11. Limitation on Transactions with Affiliates.
The Company will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly, enter into or suffer to exist any transaction or
series of related transactions (including, without limitation, the sale,
purchase, exchange or lease of assets, property or services) with any Affiliate
(including entities in which the Company or any of its Restricted Subsidiaries
own a minority interest) or holder of 10% or more of the Company's Common Stock
(an "Affiliate Transaction") or extend, renew, waive or otherwise modify the
terms of any Affiliate Transaction entered into prior to the Issue Date unless
(i) such Affiliate Transaction is between or among the Company and its
Wholly-Owned Subsidiaries or between or among Wholly-Owned Subsidiaries of the
Company; or (ii) the terms of such Affiliate Transaction are fair and reasonable
to the Company or such Restricted Subsidiary, as the case may be, and the terms
of such Affiliate Transaction are commercially reasonable and at least as
favorable as the terms which could be obtained by the Company or such Restricted
Subsidiary, as the case may be, in a comparable transaction made on an
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arm's-length basis between unaffiliated parties. In any Affiliate Transaction
involving an amount or having a value in excess of $1 million which is not
permitted under clause (i) above, the Company must obtain a resolution of the
Board of Directors certifying that such Affiliate Transaction complies with
clause (ii) above. In transactions with a value in excess of $3 million which
are not permitted under clause (i) above, the Company must obtain a written
opinion as to the fairness of such a transaction from an independent investment
banking firm, provided, that, in the case of loans from the Company to an
Affiliate or loans from an Affiliate to the Company, no such fairness opinion
shall be required if the Company has obtained a resolution of the Board of
Directors certifying that such Affiliate Transaction complies with clause (ii)
above.
The foregoing provisions will not apply to (i) any Restricted Payment
that is not prohibited by Section 4.09 hereof, (ii) any transaction, approved by
the Board of Directors of the Company, with an officer or director of the
Company or of any Subsidiary in his or her capacity as officer or director
entered into in the ordinary course of business, or (iii) any transaction
entered into in the ordinary course of business, consistent with past practice,
with any of UpRight Ireland, Instant Deutschand or Instant Australia.
Section 4.12. Limitations on Liens.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, create, incur or otherwise cause or suffer to exist or become
effective any Liens of any kind (other than Permitted Liens) upon any property
or asset of the Company or any Restricted Subsidiary or any shares of stock or
debt of any Restricted Subsidiary which owns property or assets, now owned or
hereafter acquired, unless (i) if such Lien secures Indebtedness which is pari
passu with the Notes or the Guarantees, then the Notes or the Guarantees, as the
case may be, are secured on an equal and ratable basis with the obligations so
secured until such time as such obligation is no longer secured by a Lien or
(ii) if such Lien secures Indebtedness which is subordinated to the Notes or the
Guarantees, any such Lien shall be subordinated to the Lien granted to the
Holders of the Notes to the same extent as such subordinated Indebtedness is
subordinated to the Notes or the Guarantees, as the case may be.
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Section 4.13. Limitations on Investments.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, make any Investment other than (i) a Permitted Investment or
(ii) an Investment that is made as a Restricted Payment in compliance with
Section 4.09 hereof, after the Issue Date.
Section 4.14. Limitation on Creation of Subsidiaries.
The Company shall not create or acquire, nor permit any of its
Restricted Subsidiaries to create or acquire, any Subsidiary other than (i) a
Restricted Subsidiary existing as of the date of the Indenture, (ii) a
Restricted Subsidiary that is acquired or created after the date of the
Indenture, or (iii) an Unrestricted Subsidiary; provided, however, that each
Restricted Subsidiary acquired or created pursuant to clause (ii) shall have
executed a guarantee, satisfactory in form and substance to the Trustee (and
with such documentation relating thereto as the Trustee shall require,
including, without limitation a supplement or amendment to the Indenture and
opinions of counsel as to the enforceability of such guarantee), pursuant to
which such Restricted Subsidiary shall become a Guarantor. As of the Issue Date,
the Company will have no Subsidiaries, other than the Guarantors.
Section 4.15. Limitation on Sale and Lease-Back Transactions.
The Company will not, and will not permit any Restricted Subsidiary to,
enter into any Sale and Lease-Back Transaction unless (i) the consideration
received in such Sale and Lease-Back Transaction is at least equal to the fair
market value of the property sold, as determined in good faith by the Company's
board of directors and evidenced by a board resolution and (ii) the Company
could incur the Attributable Indebtedness in respect of such Sale and Lease-Back
Transaction in compliance with Section 4.06.
Section 4.16. Limitation on Dividend and Other Payment Restrictions Affecting
Subsidiaries.
The Company will not, and will not permit any of its Restricted
Subsidiaries 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 to (a)(i) pay dividends or make any other distributions to
the Company or any of its Restricted Subsidiaries (A) on its
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Capital stock or (B) with respect to any other interest or participation in, or
measured by, its profits, or (ii) pay any Indebtedness owed to the Company or
any of its Restricted Subsidiaries, (b) make loans or advances or capital
contributions to the Company or any of its Restricted Subsidiaries or (c)
transfer any of its properties or assets to the Company or any of its Restricted
Subsidiaries, except for such encumbrances or restrictions existing under or by
reason of (i) encumbrances or restrictions existing on the Issue Date, (ii) the
Indenture, the Notes and the Guarantees, (iii) applicable law, (iv) any
instrument governing Indebtedness or Capital Stock of a Person acquired by the
Company or any of its Restricted Subsidiaries or of any Person that becomes a
Restricted Subsidiary as in effect at the time of such acquisition or such
Person becoming a Restricted Subsidiary (except to the extent such Indebtedness
was incurred in connection with or in contemplation of such acquisition of such
Person becoming a Restricted Subsidiary), which encumbrance or restriction is
not applicable to any Person, or the properties or assets of any Person, other
than the Person, or the property of assets of the Person (including any
Subsidiary of the Person), so acquired, provided that the EBITDA of such Person
is not taken into account (to the extent of such restriction) in determining
whether any financing or Restricted Payment in connection with such acquisition
was permitted by the terms of the Indenture, (v) customary non-assignment
provisions in leases or other agreements entered into in the ordinary course of
business and consistent with past practices, (vi) encumbrances or restrictions
under a Credit Facility, provided that such encumbrances or restrictions are no
more restrictive than those typically contained in senior credit facilities,
(vii) Refinancing Indebtedness provided that such encumbrances or restrictions
are in the aggregate no more restrictive than those contained in the agreements
governing the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded, or (viii) customary restrictions in security agreements or
mortgages securing Indebtedness of the Company or a Restricted Subsidiary to the
extent such restrictions restrict the transfer of the property subject to such
security agreements and mortgages.
Section 4.17. Payments for Consent.
Neither the Company nor any of the Guarantors shall, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any
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Holder of any Notes for or as an inducement to any consent, waiver or amendment
of any of the terms or provisions of this Indenture or the Notes unless such
consideration is offered to be paid or agreed to be paid to all Holders of the
Notes which so consent, waive or agree to amend in the time frame set forth in
solicitation documents relating to such consent, waiver or agreement.
Section 4.18. Legal Existence.
Subject to Article 5 hereof, the Company shall do or cause to be done
all things necessary to preserve and keep in full force and effect (i) its legal
existence, and the corporate, partnership or other existence of each Restricted
Subsidiary, in accordance with the respective organizational documents (as the
same may be amended from time to time) of each Restricted Subsidiary and the
rights (charter and statutory), licenses and franchises of the Company and its
Restricted Subsidiaries; provided, however, that the Company shall not be
required to preserve any such right, license or franchise, or the corporate,
partnership or other existence of any of its Restricted Subsidiaries if the
Board of Directors of the Company shall determine that the preservation thereof
is no longer desirable in the conduct of the business of the Company and its
Restricted Subsidiaries, taken as a whole, and that the loss thereof is not
adverse in any material respect to the Holders.
Section 4.19. Change of Control.
(a) Within 30 days of the occurrence of a Change of Control, the Company
shall notify the Trustee in writing of such occurrence and shall make an offer
to purchase (the "Change of Control Offer") the outstanding Notes at a purchase
price equal to 101% of the principal amount thereof plus any accrued and unpaid
interest thereon to the Change of Control Payment Date (as hereinafter defined)
(such applicable purchase price being hereinafter referred to as the "Change of
Control Purchase Price") in accordance with the procedures set forth below.
If a Credit Facility is in effect, or any amounts are owing thereunder,
at the time of the occurrence of a Change of Control, prior to the mailing of
the notice to Holders described in paragraph (b) below, but in any event within
30 days following any Change of Control, the Company covenants to (i) repay in
full all obligations under such Credit Facility or offer to repay in full all
obligations under or in re-
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spect of such Credit Facility and repay the obligations under or in respect of
such Credit Facility of each lender who has accepted such offer or (ii) obtain
the requisite consent under the Credit Facility to permit the repurchase of the
Notes pursuant to this Section 4.19. The Company must first comply with the
covenant described in the preceding sentence before they shall be required to
purchase Notes in the event of a Change of Control; provided that the Company's
failure to comply with the covenant described in the preceding sentence
constitutes an Event of Default described in clause (3) under Section 6.01
hereof if not cured within 30 days after the notice required by such clause.
(b) Within 30 days of the occurrence of a Change of Control, the Company
also shall (i) cause a notice of the Change of Control Offer to be sent at least
once to the Dow Jones News Service or similar business news service in the
United States and (ii) send by first-class mail, postage prepaid, to the Trustee
and to each Holder of the Notes, at the address appearing in the register
maintained by the Registrar of the Notes, a notice stating:
(1) that the Change of Control Offer is being made pursuant to this
Section 4.19 and that all Notes tendered will be accepted for payment, and
otherwise subject to the terms and conditions set forth herein;
(2) the Change of Control Purchase Price and the purchase date (which
shall be a Business Day no earlier than 20 Business Days from the date such
notice is mailed (the "Change of Control Payment Date"));
(3) that any Note not tendered will continue to accrue interest;
(4) that, unless the Company defaults in the payment of the Change of
Control Purchase Price, any Notes accepted for payment pursuant to the
Change of Control Offer shall cease to accrue interest after the Change of
Control Payment Date;
(5) that Holders accepting the offer to have their 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 Note completed, to a depository, if appointed, or the Paying
Agent at the address specified in the notice prior to the close of business
on the Business Day preceding the Change of Control Payment Date;
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(6) that Holders will be entitled to withdraw their acceptance if the
depository or Paying Agent receives, not later than the close of business on
the third 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 the Notes delivered for purchase, and a
statement that such Holder is withdrawing his election to have such Notes
purchased;
(7) that Holders 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, provided that each Note purchased and each such new Note
issued shall be in an original principal amount in denominations of $1,000
and integral multiples thereof;
(8) any other procedures that a Holder must follow to accept a Change of
Control Offer or effect withdrawal of such acceptance; and
(9) the name and address of the depository or Paying Agent.
On the Change of Control Payment Date, the Company shall, to the extent
lawful, (i) accept for payment Notes or portions thereof tendered pursuant to
the Change of Control Offer, (ii) deposit with the depository or Paying Agent
money sufficient to pay the purchase price of all Notes or portions thereof so
tendered and (iii) deliver or cause to be delivered to the Trustee Notes so
accepted together with an Officers' Certificate stating the Notes or portions
thereof tendered to the Company. 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 Company shall execute and issue, and the Trustee shall
promptly authenticate and mail to such Holder, a new Note equal in principal
amount to any unpurchased portion of the Notes surrendered; provided that each
such new Note shall be issued in an original principal amount in denominations
of $1,000 and integral multiples thereof.
(c) (A) If either Company or any Subsidiary thereof has issued any
outstanding (i) Indebtedness that is subordinated in right of payment to the
Notes or (ii) Preferred Stock, and the Company or such Subsidiary is required to
repurchase or redeem, or make an offer to repurchase or redeem, such
Indebtedness or Preferred Stock, in the event of a Change of Control or to make
a distribution with respect to such subordinated Indebtedness or Preferred Stock
in the event of a Change of Con-
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trol, the Company shall not consummate any such redemption, repurchase offer or
distribution with respect to such subordinated Indebtedness or Preferred Stock
until such time as the Company shall have paid the Change of Control Purchase
Price in full to the Holders of Notes that have accepted the Company's Change of
Control Offer and shall otherwise have consummated the Change of Control Offer
made to Holders of the Notes and (B) the Company will not issue Indebtedness
that is subordinated in right of payment to the Notes or Preferred Stock with
change of control provisions requiring the payment of such Indebtedness or
Preferred Stock prior to the payment of the Notes in the event of a Change in
Control under this Indenture.
In the event that a Change of Control occurs and the Holders of Notes
exercise their right to require the Company to purchase Notes, if such purchase
constitutes a "tender offer" for purposes of Rule 14e-1 under the Exchange Act
at that time, the Company will comply with the requirements of Rule 14e-1 as
then in effect with respect to such repurchase.
Section 4.20. Maintenance of Properties; Insurance; Books and Records;
Compliance with Law.
(a) The Company shall, and shall cause each of its Restricted
Subsidiaries to, at all times cause all properties used or useful in the conduct
of their business to be maintained and kept in good condition, repair and
working order (reasonable wear and tear excepted) and supplied with all
necessary equipment, and shall cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereto.
(b) The Company shall maintain, and shall cause to be maintained for
each of its Restricted Subsidiaries, insurance covering such risks as are
usually and customarily insured against by corporations similarly situated, in
such amounts as shall be customary for corporations similarly situated and with
such deductibles and by such methods as shall be customary and reasonably
consistent with past practice.
(c) The Company shall, and shall cause each of its Subsidiaries to, keep
proper books of record and account, in which full and correct entries shall be
made of all financial transactions and the assets and business of the Company
and each Subsidiary of the Company, in accordance with GAAP consistently applied
to the Company and its Subsidiaries taken as a whole.
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(d) The Company shall, and shall cause each of its Subsidiaries to,
comply with all statutes, laws, ordinances or government rules and regulations
to which they are subject, non-compliance with which would materially adversely
affect the business, prospects, earnings, properties, assets or financial
condition of the Company and their Subsidiaries taken as a whole.
Section 4.21. Further Assurance to the Trustee.
The Company shall, upon the reasonable request of the Trustee, execute
and deliver such further instruments and do such further acts as may be
reasonably necessary or proper to carry out more effectively the provisions of
this Indenture.
Section 4.22. Limitation on Other Senior Subordinated Indebtedness.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, incur, contingently or otherwise, any
Indebtedness that is both (i) subordinate in right of payment to any Senior
Indebtedness of the Company or its Restricted Subsidiaries, as the case may be,
and (ii) senior in right of payment to the Notes and the Guarantees, as the case
may be. For purposes of this covenant, Indebtedness is deemed to be senior in
right of payment to the Notes and the Guarantees, as the case may be, if it is
not explicitly subordinate in right of payment to Senior Indebtedness at least
to the same extent as the Notes and the Guarantees, as the case may be, are
subordinate to Senior Indebtedness.
Section 4.23. Limitation on Lines of Business.
The company will not, and will not permit any of its Restricted
Subsidiaries to, engage in or conduct any business other than (i) participation
in the equipment rental industry, including the sale and rental of industrial
equipment, (ii) participation in the aerial work platform industry or the
materials handling industry, including the manufacture and distribution of
industrial equipment the purpose of which is the movement of people and
material, (iii) the manufacture and distribution of scaffolds and scaffolding
and (iv) businesses complementary, ancillary or related to, any of the
foregoing, or that can be vertically integrated with, any of the foregoing.
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ARTICLE FIVE
SUCCESSOR CORPORATION
Section 5.01. Limitation on Consolidation, Merger and Sale of Assets.
(a) The Company will not and will not permit any Guarantor to
consolidate with, merge with or into, or transfer all or substantially all of
its assets (as an entirety or substantially as an entirety in one transaction or
a series of related transactions), to any Person unless: (i) the Company or the
Guarantor, as the case may be, shall be the continuing Person, or the Person (if
other than the Company or the Guarantor) formed by such consolidation or into
which the Company or the Guarantor, as the case may be, is merged or to which
the properties and assets of the Company or the Guarantor, as the case may be,
are transferred shall be a corporation organized and existing under the laws of
the United States or any State thereof or the District of Columbia and shall
expressly assume, by a supplemental indenture, executed and delivered to the
Trustee, in form satisfactory to the Trustee, all of the obligations of the
Company or the Guarantor, as the case may be, under the Notes and the Indenture,
and the obligations under the Indenture shall remain in full force and effect;
(ii) immediately before and immediately after giving effect to such transaction,
no Default or Event of Default shall have occurred and be continuing; and (iii)
immediately after giving effect to such transaction on a pro forma basis the
Company or such Person could incur at least $1.00 additional Indebtedness (other
than Permitted Indebtedness) under Section 4.06 hereof, provided that a Person
that is a Guarantor on the Issue Date may merge into the Company or another
Person that is a Guarantor on the Issue Date without complying with this clause
(iii).
(b) In connection with any consolidation, merger or transfer of assets
contemplated by this Section 5.01, the Company shall deliver, or cause to be
delivered, to the Trustee, in form and substance reasonably satisfactory to the
Trustee, an Officers' Certificate and an opinion of counsel, each stating that
such consolidation, merger or transfer and the supplemental indenture in respect
thereto comply with this provision and that all conditions precedent herein
provided for relating to such transaction or transactions have been complied
with.
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Section 5.02. Successor Person Substituted.
Upon any consolidation or merger, or any transfer of all or
substantially all of the assets of the Company or any Guarantor in accordance
with Section 5.01 above, the successor corporation formed by such consolidation
or into which the Company is merged or to which such transfer is made shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company or such Guarantor under this Indenture with the same effect as if
such successor corporation had been named as the Company or such Guarantor
herein, and thereafter the predecessor corporation shall be relieved of all
obligations and covenants under this Indenture and the Notes.
ARTICLE SIX
DEFAULTS AND REMEDIES
Section 6.01. Events of Default.
An "Event of Default" occurs if:
(1) there is a default in the payment of any principal of, or premium,
if any, on the Notes when the same becomes due and payable at maturity, upon
acceleration, redemption or otherwise;
(2) there is a default in the payment of any interest on any Note when
the same becomes due and payable and the Default continues for a period of
30 days;
(3) either the Company or any Guarantor defaults in the observance or
performance of any other covenant in the Notes or this Indenture for 60 days
after written notice from the Trustee or the Holders of not less than 25% in
the aggregate principal amount of the Notes then outstanding;
(4) there is a default in the payment when due of principal, interest or
premium in an aggregate amount of $5,000,000 or more with respect to any
Indebtedness of the Company or any Restricted Subsidiary thereof (other than
Indebtedness owed to the Company or any Subsidiary of the Company), or there
is an acceleration of any such Indebtedness aggregating $5,000,000 or more,
which default shall not be cured, waived or postponed pursuant to an
agreement
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with the holders of such Indebtedness within 60 days after written notice of
such default to the Company by the Trustee or to the Company and the Trustee
by any Holder, or which acceleration shall not be rescinded or annulled
within 20 days after written notice of such Default to the Company by the
Trustee or to the Company and the Trustee by any Holder;
(5) the entry of a final judgment or judgments which can no longer be
appealed for the payment of money in excess of $5,000,000 against the
Company or any Restricted Subsidiary thereof and such judgment remains
undischarged, for a period of 60 consecutive days during which a stay of
enforcement of such judgment shall not be in effect;
(6) the Company or any Restricted Subsidiary 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,
(D) makes a general assignment for the benefit of its creditors, or
(E) generally is not paying its debts as they become due; or
(7) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(A) is for relief against either of the Company or any Restricted
Subsidiary in an involuntary case,
(B) appoints a Custodian of either of the Company or any Restricted
Subsidiary or for all or substantially all of the property of either of
the Company or any Restricted Subsidiary, or
(C) orders the liquidation of either of the Company or any
Restricted Subsidiary,
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and the order or decree remains unstayed and in effect for 60 days.
The term "Bankruptcy Law" means Title 11, U.S. Code or any similar
Federal or state law for the relief of debtors. The term "Custodian" means any
receiver, trustee, assignee, liquidator or similar official under any Bankruptcy
Law.
Subject to Sections 8.01 and 8.02, the Trustee shall not be charged with
knowledge of any Default, Event of Default, Change of Control or Asset Sale or
the requirement for payment of Additional Interest unless written notice thereof
shall have been given to a Responsible Officer at the Corporate Trust Office of
the Trustee by the Company or any other Person.
Section 6.02. Acceleration.
If an Event of Default (other than an Event of Default arising under
Section 6.01(6) or (7) with respect to the Company) occurs and is continuing,
the Trustee by notice to the Company, or the Holders of not less than 25% in
aggregate principal amount of the Notes then outstanding may by written notice
to the Company and the Trustee declare to be immediately due and payable the
entire principal amount of all the Notes then outstanding plus accrued but
unpaid interest to the date of acceleration and (i) such amounts shall become
immediately due and payable or (ii) if there are any amounts outstanding under
or in respect of the Senior Credit Facility, such amounts shall become due and
payable upon the first to occur of an acceleration of amounts outstanding under
or in respect of the Senior Credit Facility or five Business Days after receipt
by the Company and the representative of the holders of Indebtedness under or in
respect of a Credit Facility, of notice of the acceleration of the Notes;
provided, however, that after such acceleration but before a judgment or decree
based on such acceleration is obtained by the Trustee, the Holders of a majority
in aggregate principal amount of the outstanding Notes may rescind and annul
such acceleration and its consequences if all existing Events of Default, other
than the nonpayment of accelerated principal, premium, if any, or interest that
has become due solely because of the acceleration, have been cured or waived and
if the rescission would not conflict with any judgment or decree. No such
rescission shall affect any subsequent Default or impair any right consequent
thereto. In case an Event of Default specified in Section 6.01(6) or (7) with
respect to the Company occurs, such principal, premium, if any, and interest
amount with respect to all of the Notes shall be
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due and payable immediately without any declaration or other act on the part of
the Trustee or the Holders of the Notes.
Section 6.03. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may pursue
any available remedy by proceeding at law or in equity to collect the payment of
principal of, or premium, if any, and interest on the Notes or to enforce the
performance of any provision of the Notes or this Indenture and may take any
necessary action requested of it as Trustee to settle, compromise, adjust or
otherwise conclude any proceedings to which it is a party.
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 Noteholder 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. No remedy is exclusive of any other
remedy. All available remedies are cumulative.
Section 6.04. Waiver of Past Defaults and Events of Default.
Subject to Sections 6.02, 6.08 and 9.02 hereof, the Holders of a
majority in principal amount of the Notes then outstanding have the right to
waive any existing Default or Event of Default or compliance with any provision
of this Indenture or the Notes. 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 Event of Default or impair any right
consequent thereto.
Section 6.05. Control by Majority.
The Holders of a majority in principal amount of the Notes then
outstanding 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 the Trustee by this Indenture. The Trustee, however, may refuse to
follow any direction that conflicts with law or this Indenture or that the
Trustee determines may be unduly prejudicial to the rights of another Noteholder
not taking part in such direction, and the Trustee shall have the right to
decline to follow any such
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direction if the Trustee, being advised by counsel, determines that the action
so directed may not lawfully be taken or if the Trustee in good faith shall, by
a Responsible Officer, determine that the proceedings so directed may involve it
in personal liability; provided that the Trustee may take any other action
deemed proper by the Trustee which is not inconsistent with such direction.
Section 6.06. Limitation on Suits.
Subject to Section 6.08 below, a Noteholder may not institute any
proceeding or pursue any remedy with respect to this Indenture or the Notes
unless:
(1) the Holder gives to the Trustee written notice of a continuing Event
of Default;
(2) the Holders of at least 25% in aggregate principal amount of the
Notes then outstanding make a written request to the Trustee to pursue the
remedy;
(3) such Holder or Holders offer and if requested provide to the Trustee
indemnity reasonably satisfactory to the Trustee against any loss, liability
or expense;
(4) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer, and, if requested, provision of,
indemnity; and
(5) no direction inconsistent with such written request has been given
to the Trustee during such 60 day period by the Holders of a majority in
aggregate principal amount of the Notes then outstanding.
A Noteholder may not use this Indenture to prejudice the rights of
another Noteholder or to obtain a preference or priority over another
Noteholder.
Section 6.07. No Personal Liability of Directors, Officers,
Employees and Stockholders.
No director, officer, employee, incorporator or stockholder of the
Company or any Guarantor shall have any liability for any obligations of the
Company or the Guarantors under the Notes, the Guarantees or this Indenture or
for a 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
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release are part of the consideration for issuance of the Notes.
Section 6.08. 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 of, or premium, if any, and
interest of the Note (including Additional Interest) 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, is absolute and unconditional
and shall not be impaired or affected without the consent of the Holder.
Section 6.09. Collection Suit by Trustee.
If an Event of Default in payment of principal, premium or interest
specified in Section 6.01(1) or (2) hereof occurs and is continuing, the Trustee
may recover judgment in its own name and as trustee of an express trust against
the Company or the Guarantors (or any other obligor on the Notes) for the whole
amount of unpaid principal and accrued interest remaining unpaid, together with
interest on overdue principal and, to the extent that payment of such interest
is lawful, interest on overdue installments of interest, in each case at the
rate set forth in the Notes, and such further amounts 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 6.10. Trustee May File Proofs of Claim.
The Trustee may 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 any other amounts due
the Trustee under Section 8.07 hereof) and the Noteholders allowed in any
judicial proceedings relative to the Company or the Guarantors (or any other
obligor upon the Notes), its creditors or its property and shall be entitled and
empowered to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same after deduction of its
charges and expenses to the extent that any such charges and expenses are not
paid out of the estate in any such proceedings and any custodian in any such
judicial proceeding is hereby authorized by each Noteholder to make such
payments to the Trustee, and in the event that the Trustee
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shall consent to the making of such payments directly to the Noteholders, 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 8.07 hereof.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Noteholder any plan
or 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 Noteholder in any such proceedings.
Section 6.11. Priorities.
If the Trustee collects any money pursuant to this Article 6, it shall
pay out the money in the following order:
FIRST: to the Trustee for amounts due under Section 8.07 hereof;
SECOND: to Noteholders for amounts due and unpaid on the Notes for
principal, premium, if any, and interest (including Additional Interest, if
any) as to each, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Notes; and
THIRD: to the Company or, to the extent the Trustee collects any amount
from any Guarantor, to such Guarantor.
The Trustee may fix a record date and payment date for any payment to
Noteholders pursuant to this Section 6.11.
Section 6.12. 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 Trustee, a court in its discretion may require the filing by any party
litigant in 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 6.12 does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.07 hereof or a suit by Holders of
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more than 10% in principal amount of the Notes then outstanding.
Section 6.13. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every case, subject to any
determination in such proceeding, the Company, the Guarantors, the Trustee and
the Holders shall be restored severally and respectively to their former
positions hereunder and thereafter all rights and remedies of the Trustee and
the Holders shall continue as though no such proceeding had been instituted.
ARTICLE SEVEN
SUBORDINATION
Section 7.01. Notes Subordinated to Senior Indebtedness.
The Company covenants and agrees and the Trustee and each Holder of the
Notes, by its acceptance thereof, likewise covenants and agrees, that all Notes
shall be issued subject to the provisions of this Article Seven; and the Trustee
and each person holding any Note, whether upon original issue or upon transfer,
assignment or exchange thereof, accepts and agrees that the payment of all
Obligations on the Notes by the Company shall, to the extent and in the manner
herein set forth, be subordinated and junior in right of payment to the prior
payment in full in cash or Cash Equivalents of all Obligations on the Senior
Indebtedness; that the subordination is for the benefit of, and shall be
enforceable directly by, the holders of Senior Indebtedness, and that each
holder of Senior Indebtedness whether now outstanding or hereinafter created,
incurred, assumed or guaranteed shall be deemed to have acquired Senior
Indebtedness in reliance upon the covenants and provisions contained in this
Indenture and the Notes.
Section 7.02. No Payment on Notes in Certain Circumstances.
(a) No payment or distribution (other than a payment or distribution in
the form of Permitted Junior Securities) of
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any assets or securities of the Company or any Restricted Subsidiary of any kind
or character (including, without limitation, cash, property and any payment or
distribution which may be payable or deliverable by reason of the payment of any
other Indebtedness of the Company being subordinated to the payment of the Notes
by the Company) may be made by or on behalf of the Company or any Restricted
Subsidiary, including, without limitation, by way of set-off or otherwise, for
or on account of the Notes, or for or on account of the purchase, redemption or
other acquisition of the Notes, and neither the Trustee nor any holder or owner
of any Notes shall take or receive from the Company or any Restricted
Subsidiary, directly or indirectly in any manner, payment in respect of all or
any portion of Notes following the delivery by the representative of the holders
of Designated Senior Indebtedness (the "Representative") to the Trustee of
written notice of the occurrence of a Payment Default, and in any such event,
such prohibition shall continue until such Payment Default is cured, waived in
writing or ceases to exist. At such time as the prohibition set forth in the
preceding sentence shall no longer be in effect, subject to the provisions of
the following paragraph, the Company shall resume making any and all required
payments in respect of the Notes, including any missed payments.
Upon the occurrence of a Non-Payment Event of Default on Designated
Senior Indebtedness, no payment or distribution (other than a payment or
distribution in the form of Permitted Junior Securities) of any assets of the
Company of any kind may be made by the Company, including, without limitation,
by way of set-off or otherwise, on account of the Notes, or on account of the
purchase or redemption or other acquisition of Notes, for a period (a "Payment
Blockage Period") commencing on the date of receipt by the Trustee of written
notice from the Representative of such Non-Payment Event of Default unless and
until (subject to any blockage of payments that may then be in effect under the
preceding paragraph) the earliest of (x) more than 179 days shall have elapsed
since receipt of such written notice by the Trustee, (y) such Non-Payment Event
of Default shall have been cured or waived in writing or shall have ceased to
exist or such Designated Senior Indebtedness shall have been paid in full or (z)
such Payment Blockage Period shall have been terminated by written notice to the
Company or the Trustee from such Representative, after which, in the case of
clause (x), (y) or (z), the Company shall resume making any and all required
payments in respect of the Notes, including any missed payments. Notwithstanding
any other provision of the Indenture, in no event shall a Payment Blockage
Period commenced in accordance with the provisions of the Indenture described in
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this paragraph extend beyond 179 days from the date of the receipt by the
Trustee of the notice referred to above (the "Initial Blockage Period"). Any
number of additional Payment Blockage Periods may be commenced during the
Initial Blockage Period; provided, however, that no such additional Payment
Blockage Period shall extend beyond the Initial Blockage Period. After the
expiration of the Initial Blockage Period, no Payment Blockage Period may be
commenced until at least 180 consecutive days have elapsed from the last day of
the Initial Blockage Period. Notwithstanding any other provision of the
Indenture, no event of default with respect to Designated Senior Indebtedness
(other than a Payment Default) which existed or was continuing on the date of
the commencement of any Payment Blockage Period initiated by the Representative
shall be, or be made, the basis for the commencement of a second Payment
Blockage Period initiated by the Representative, whether or not within the
Initial Blockage Period, unless such event of default shall have been cured or
waived for a period of not less than 90 consecutive days.
(b) In the event that, notwithstanding the foregoing, any payment shall
be received by the Trustee or any Holder when such payment is prohibited by
Section 7.02(a), such payment shall be held in trust for the benefit of, and
shall be paid over or delivered to, the holders of Senior Indebtedness (pro rata
to such holders on the basis of the respective amount of Senior Indebtedness
held by such holders) or their respective Representatives, as their respective
interests may appear. The Trustee shall be entitled to rely on information
regarding amounts then due and owing on the Senior Indebtedness, if any,
received from the holders of Senior Indebtedness (or their Representatives) or,
if such information is not received from such holders or their Representatives,
from the Company and only amounts included in the information provided to the
Trustee shall be paid to the holders of Senior Indebtedness.
Nothing contained in this Article Seven shall limit the right of the
Trustee or the Holders of Notes to take any action to accelerate the maturity of
the Notes pursuant to Section 6.02 or to pursue any rights or remedies
hereunder; provided that all Senior Indebtedness thereafter due or declared to
be due shall first be paid in full in cash or Cash Equivalents before the
Holders are entitled to receive any payment of any kind or character with
respect to the Obligations on the Notes.
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Section 7.03. Payment Over of Proceeds Upon Dissolution, Etc.
(a) In the event of any insolvency or bankruptcy case or proceeding, or
any receivership, liquidation, arrangement, reorganization or other similar case
or proceeding in connection therewith, relative to the Company or to its
creditors, as such, or to its assets, whether voluntary or involuntary, or any
liquidation, dissolution or other winding-up of the Company, whether voluntary
or involuntary and whether or not involving insolvency or bankruptcy, or any
general assignment for the benefit of creditors or other marshaling of assets or
liabilities of the Company (except in connection with the merger or
consolidation of the Company or its liquidation or dissolution following the
transfer of substantially all of its assets, upon the terms and condition
permitted under Article Five hereof (all of the foregoing referred to herein
individually as a "Bankruptcy Proceeding" and collectively as Bankruptcy
Proceedings"), the holders of Senior Indebtedness of the Company will be
entitled to receive payment and satisfaction in full in cash of all amounts due
on or in respect of all Senior Indebtedness of the Company before the holders of
the Notes are entitled to receive or retain any payment or distribution of any
kind (other than a payment or distribution in the form of Permitted Junior
Securities) on account of the Notes; and until all such Obligations with respect
to all Senior Indebtedness are paid in full in cash or Cash Equivalents, any
distribution to which the Holders of the Notes would be entitled but for the
subordination provisions will be made to the holders of Senior Indebtedness as
their interests may appear. Upon any such dissolution, winding-up, liquidation,
reorganization, bankruptcy, insolvency, receivership or similar proceeding or
assignment for the benefit of creditors or marshalling of assets, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, to which the Holders of the Notes or the Trustee under
this Indenture would be entitled, except for the provisions hereof, shall be
paid by the Company or by any receiver, trustee in bankruptcy, liquidating
trustee, agent or other person making such payment or distribution, or by the
Holders of the Notes or by the Trustee under this Indenture if received by them,
directly to the holders of Senior Indebtedness (pro rata to such holders on the
basis of the respective amounts of Senior Indebtedness held by such holders) or
their respective Representatives, or to the trustee or trustees under any
indenture pursuant to which any of such Senior
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Indebtedness may have been issued, as their respective interests may appear, for
application to the payment of Senior Indebtedness remaining unpaid until all
such Senior Indebtedness has been paid in full in cash or Cash Equivalents after
giving effect to any concurrent payment, distribution or provision therefor to
or for the holders of Senior Indebtedness.
(b) To the extent any payment of Senior Indebtedness (whether by or on
behalf of the Company, as proceeds of security or enforcement of any right of
setoff or otherwise) is declared to be fraudulent or preferential, set aside or
required to be paid to any receiver, trustee in bankruptcy, liquidating trustee,
agent or other similar person under any bankruptcy, insolvency, receivership,
fraudulent conveyance or similar law, then, if such payment is recovered by, or
paid over to, such receiver, trustee in bankruptcy, liquidating trustee, agent
or other similar person, the Senior Indebtedness or part thereof originally
intended to be satisfied shall be deemed to be reinstated and outstanding as if
such payment had not occurred.
(c) In the event that, notwithstanding the foregoing, the Trustee or any
holder of Notes receives any payment or distribution of assets of the Company of
any kind, whether in cash, property or securities, including, without
limitation, by way of set-off or otherwise, in respect of the Notes before all
Senior Indebtedness of the Company is paid and satisfied in full in cash, then
such payment or distribution (other than a payment or distribution in the form
of Permitted Junior Securities) will be held by the recipient in trust for the
benefit of holders of Senior Indebtedness and will be immediately paid over or
delivered to the holders of Senior Indebtedness or their representative or
representatives to the extent necessary to make payment in full of all Senior
Indebtedness remaining unpaid, after giving effect to any concurrent payment or
distribution, or provision therefor, to or for the holders of Senior
Indebtedness.
Section 7.04. Payments May Be Paid Prior to Dissolution.
Nothing contained in this Article Seven or elsewhere in this Indenture
shall prevent (i) the Company, except under the conditions described in Sections
7.02 and 7.03, from making payments at any time for the purpose of making
payments of principal of and interest on the Notes, or from depositing with the
Trustee any moneys for such payments, or (ii) in the absence of actual knowledge
of the Trustee that a given payment would be prohibited by Section 7.02 or 7.03,
the application by the Trustee of any moneys deposited with it for the purpose
of making such payments of principal of and interest on the Notes to the Holders
entitled thereto unless at least one Business
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Day prior to the date upon which such payment would otherwise become due and
payable, the Trustee shall have received the written notice provided for in
Section 7.02(a) or in Section 7.07 (provided that, notwithstanding the
foregoing, such application shall otherwise be subject to the provisions of the
first sentence of Section 7.02a) and Section 7.03). The Company shall give
prompt written notice to the Trustee of any dissolution, winding-up, liquidation
or reorganization of the Company.
Section 7.05. Subrogation.
Subject to the payment in full in cash or Cash Equivalents of all Senior
Indebtedness, the rights of the Holders of the Notes shall be subrogated to the
rights of the holders of Senior Indebtedness to receive payments or
distributions of cash, property or securities of the Company applicable to the
Senior Indebtedness until the Notes shall be paid in full; and, for the purposes
of such subrogation, no such payments or distributions to the holders of the
Senior Indebtedness by or on behalf of the Company or by or on behalf of the
Holders by virtue of this Article Seven which otherwise would have been made to
the Holders shall, as between the Company and the Holders of the Notes, be
deemed to be a payment by the Company to or on account of the Senior
Indebtedness, it being understood that the provisions of this Article Seven are
and are intended solely for the purpose of defining the relative rights of the
Holders of the Notes, on the one hand, and the holders of the Senior
Indebtedness, on the other hand.
If any payment or distribution to which the Holders would otherwise have
been entitled but for the provisions of this Article Seven shall have been
applied, pursuant to the provisions of this Article Seven, to the payment of
amounts payable under the Senior Indebtedness, then the Holders shall be
entitled to receive from the holders of such Senior Indebtedness any payments or
distributions received by such holders of Senior Indebtedness in excess of the
amount sufficient to pay all amounts payable under or in respect of the Senior
Indebtedness in full in cash or Cash Equivalents.
Section 7.06. Obligations of the Company Unconditional.
Nothing contained in this Article Seven or elsewhere in this Indenture
or in the Notes is intended to or shall impair, as among the Company, its
creditors other than the holders of Senior Indebtedness, and the Holders of the
Notes, the obligation of the Company, which is absolute and unconditional,
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to pay to the Holders of the Notes the principal of and any interest on the
Notes as and when the same shall become due and payable in accordance with their
terms, or is intended to or shall affect the relative rights of the Holders of
the Notes and creditors of the Company other than the holders of the Senior
Indebtedness, nor shall anything herein or therein prevent the Holder of any
Note or the Trustee on its behalf from exercising all remedies otherwise
permitted by applicable law upon default under this Indenture, subject to the
rights, if any, in respect of cash, property or securities of the Company
received upon the exercise of any such remedy.
Section 7.07. Notice to Trustee.
The Company shall give prompt written notice to the Trustee of any fact
known to the Company which would prohibit the making of any payment to or by the
Trustee in respect of the Notes pursuant to the provisions of this Article
Seven. Regardless of anything to the contrary contained in this Article Seven or
elsewhere in this Indenture, the Trustee shall not be charged with knowledge of
the existence of any default or event of default with respect to any Senior
Indebtedness or of any other facts which would prohibit the making of any
payment to or by the Trustee unless and until the Trustee shall have received
notice in accordance with the notice provisions of Section 12.02 from the
Company, or from a holder of Senior Indebtedness or a Representative therefor,
and, prior to the receipt of any such written notice, the Trustee shall be
entitled to assume (in the absence of actual knowledge to the contrary) that no
such facts exist.
In the event that the Trustee determines in good faith that any evidence
is required with respect to the right of any person as a holder of Senior
Indebtedness to participate in any payment or distribution pursuant to this
Article Seven, the Trustee may request such person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amounts of Senior Indebtedness
held by such person, the extent to which such person is entitled to participate
in such payment or distribution and any other facts pertinent to the rights of
such person under this Article Seven and, if such evidence is not furnished, the
Trustee may defer any payment to such person pending judicial determination as
to the right of such person to receive such payment.
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Section 7.08. Reliance on Judicial Order or Certificate of Liquidating Agent.
Upon any payment or distribution of assets of the Company referred to in
this Article Seven, the Trustee, subject to the provisions of Article Seven
hereof, and the Holders of the Notes shall be entitled to rely upon any order or
decree made by any court of competent jurisdiction in which bankruptcy,
dissolution, winding-up, liquidation or reorganization proceedings are pending,
or upon certificate of the receiver, trustee in bankruptcy, liquidating trustee,
agent or other person making such payment or distribution, delivered to the
Trustee or the holders of the Notes, for the purpose of ascertaining the Persons
entitled to participate in such distribution, the holders of the Senior
Indebtedness and other Indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article Seven.
Section 7.09. Trustee's Relation to Senior Indebtedness.
The Trustee and any agent of the Company or the Trustee shall be
entitled to all the rights set forth in this Article Seven with respect to any
Senior Indebtedness which may at any time be held by it in its individual or any
other capacity to the same extent as any other holder of Senior Indebtedness and
nothing in this Indenture shall deprive the Trustee or any such agent of any of
its rights as such holder.
With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article Seven, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into this Indenture against the Trustee. The Trustee shall not be deemed to owe
any fiduciary duty to the holders of Senior Indebtedness and shall not be liable
to any such holders if the Trustee shall pay over or distribute to or on behalf
of Holders or the Company or any other person money or assets to which any
holders of Senior Indebtedness shall be entitled by virtue of this Article,
except if such payment is made as a result of willful misconduct or gross
negligence of the Trustee.
Whenever a distribution is to be made or a notice given to holders or
owners of Senior Indebtedness, the distribution may be made and the notice given
to their Representatives, if any.
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Section 7.10. Subordination Rights Not Impaired by Acts or Omissions of the
Company or Holders of Senior Indebtedness.
No right of any present or future holders of any Senior Indebtedness to
enforce subordination as provided herein shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company with the terms of this Indenture, regardless of any
knowledge thereof which any such holder may have or otherwise be charged with.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Indebtedness may, at any time and from time to time,
without the consent of or notice to the Trustee, without incurring
responsibility to the Trustee or the Holders of the Notes and without impairing
or releasing the subordination provided in this Article Seven or the obligations
hereunder of the Holders of the Notes to the holders of the Senior Indebtedness,
do any one or more of the following: (i) change the manner, place or terms of
payment or extend the time of payment of, or renew or alter, Senior
Indebtedness, or otherwise amend or supplement in any manner Senior
Indebtedness, or any instrument evidencing the same or any agreement under which
Senior Indebtedness is outstanding; (ii) sell, exchange, release or otherwise
deal with any property pledged, mortgaged or otherwise securing Senior
Indebtedness; (iii) release any Person liable in any manner for the payment or
collection of Senior Indebtedness; and (iv) exercise or refrain from exercising
any rights against the Company and any other Person.
Section 7.11. Noteholders Authorize Trustee To Effectuate
Subordination of Notes.
Each Holder of Notes by its acceptance of them authorizes and expressly
directs the Trustee on its behalf to take such action as may be necessary or
appropriate to effectuate, as between the holders of Senior Indebtedness and the
Holders of Notes, the subordination provided in this Article Seven, and appoints
the Trustee its attorney-in-fact for such purposes, including, in the event of
any dissolution, winding-up, liquidation or reorganization of the Company
(whether in bankruptcy, insolvency, receivership, reorganization or similar
proceedings or upon an assignment for the benefit of creditors or otherwise)
tending towards liquidation of the business as assets of the Company, the filing
of a claim for the unpaid
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balance of its or his Notes and accrued interest in the form required in those
proceedings.
If the Trustee does not file a proper claim or proof of debt in the form
required in such proceeding prior to 30 days before the expiration of the time
to file such claim or claims, then the holders of the Senior Indebtedness or
their Representative are or is hereby authorized to have the right to file and
are or is hereby authorized to file an appropriate claim for and on behalf of
the Holders of said Notes. Nothing herein contained shall be deemed to authorize
the Trustee or the holders of Senior Indebtedness or their Representative to
authorize or consent to or accept or adopt on behalf of any Holders any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder thereof, or to authorize the Trustee or the holders of
Senior Indebtedness or their Representative to vote in respect of the claim of
any Holder in any such proceeding.
Section 7.12. This Article Seven Not To Prevent Events of Default.
The failure to make a payment on account of principal of or interest on
the Notes by reason of any provision of this Article Seven will not be construed
as preventing the occurrence of an Event of Default.
Section 7.13. Trustee's Compensation Not Prejudiced.
Nothing in this Article Seven will apply to amounts due to the Trustee
pursuant to other sections in this Indenture.
ARTICLE EIGHT
TRUSTEE
Section 8.01. Duties of Trustee.
(a) If an Event of Default actually known to a Responsible Officer of
the Trustee 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 man would exercise or use under
the same circumstances in the conduct of his own affairs.
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(b) Except during the continuance of an Event of Default:
(1) The Trustee need perform only those duties that are specifically set
forth in this Indenture and no others.
(2) 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 but, in the
case of any such certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee shall be
under a duty to examine the same to determine whether or not they conform on
their face to the requirements of this Indenture (but need not confirm or
investigate the accuracy of mathematical calculations or other facts stated
therein).
(c) The Trustee may not be relieved from liability for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:
(1) This paragraph does not limit the effect of paragraph (b) of this
Section 8.01.
(2) The Trustee shall not be liable for any error of judgment made in
good faith, unless it is proved that the Trustee was negligent in
ascertaining the pertinent facts.
(3) 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 the terms hereof.
(4) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its rights, powers or duties if it shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity satisfactory to it against such risk or liability is not
reasonably assured to it.
(d) Whether or not therein expressly so provided, paragraphs (a), (b),
(c) and (e) of this Section 8.01 shall govern every provision of this Indenture
that in any way relates to the Trustee.
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(e) The Trustee may refuse to perform any duty or exercise any right or
power unless it receives indemnity satisfactory to it in its sole discretion
against any loss, liability, expense or fee.
(f) 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 or any
Guarantor. Money held in trust by the Trustee need not be segregated from other
funds except to the extent required by the law.
Section 8.02. Rights of Trustee.
Subject to Section 8.01 hereof:
(1) The Trustee may rely on any document reasonably 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, which shall conform
to the provisions of Section 12.05 hereof. The Trustee shall be protected
and shall not be liable for any action it takes or omits to take in good
faith in reliance on such certificate or opinion.
(3) The Trustee may act through its attorneys and agents and shall not
be responsible for the misconduct or negligence of any agent appointed by it
with due care.
(4) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it reasonably believes to be authorized or within
its rights or powers.
(5) The Trustee may consult with counsel of its selection, and the
advice or opinion of such counsel as to matters of law shall be full and
complete authorization and protection from liability in respect of any
action taken, omitted or suffered by it hereunder in good faith and in
accordance with the advice or opinion of such counsel.
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Section 8.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the owner
or pledgee of Notes and may make loans to, accept deposits from, perform
services for or otherwise deal with the either of the Company or any Guarantor,
or any Affiliates thereof, with the same rights it would have if it were not
Trustee. Any Agent may do the same with like rights. The Trustee, however, shall
be subject to Sections 8.10 and 8.11 hereof.
Section 8.04. 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 or any Guarantee, it
shall not be accountable for the Company's or any Guarantor's use of the
proceeds from the sale of Notes or any money paid to the Company or any Guaranty
pursuant to the terms of this Indenture and it shall not be responsible for any
statement in the Notes, Guarantee or this Indenture other than its certificate
of authentication.
Section 8.05. Notice of Defaults.
If a Default occurs and is continuing and if it is known to the Trustee,
the Trustee shall mail to each Noteholder notice of the Default within 90 days
after it occurs. Except in the case of a Default in payment of the principal of,
or premium, if any, or interest on any Note, the Trustee may withhold the notice
if and so long as a committee of its Responsible Officers in good faith
determine(s) that withholding the notice is in the interests of the Noteholders.
Section 8.06. Reports by Trustee to Holders.
If required by TIA Section 313(a), within 60 days after May 15 of any
year, commencing May 15, 1998 the Trustee shall mail to each Noteholder a brief
report dated as of such May 15 that complies with TIA Section 313(a). The
Trustee also shall comply with TIA Section 313(b)(2). The Trustee shall also
transmit by mail all reports as required by TIA Section 313(c) and TIA Section
313(d).
Reports pursuant to this Section 8.06 shall be transmitted by mail:
(1) to all Holders of Notes, as the names and addresses of such Holders
appear on the Registrar's books; and
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(2) to such Holders of Notes as have, within the two years preceding
such transmission, filed their names and addresses with the Trustee for that
purpose.
A copy of each report at the time of its mailing to Noteholders shall be
filed with the SEC 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 8.07. Compensation and Indemnity.
The Company and the Guarantors shall pay to the Trustee and Agents from
time to time such compensation as shall be agreed in writing between the Company
and the Trustee for its services hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust). The Company and the Guarantors shall reimburse the Trustee and
Agents upon request for all reasonable disbursements, expenses and advances
incurred or made by it in connection with its duties under this Indenture,
including the reasonable compensation, disbursements and expenses of the
Trustee's agents and counsel.
The Company and the Guarantors shall indemnify each of the Trustee and
any predecessor Trustee for, and hold each of them harmless against, any and all
loss, damage, claim, liability or expense, including without limitation taxes
(other than taxes based on the income of the Trustee or such Agent) and
reasonable attorneys' fees and expenses incurred by each of them in connection
with the acceptance or performance of its duties under this Indenture including
the reasonable costs and expenses of defending itself against any claim or
liability in connection with the exercise or performance of any of its powers or
duties hereunder (including, without limitation, settlement costs). The Trustee
or Agent shall notify the Company and the Guarantors in writing promptly of any
claim asserted against the Trustee or Agent for which it may seek indemnity.
However, the failure by the Trustee or Agent to so notify the Company and the
Guarantors shall not relieve the Company and Guarantors of their obligations
hereunder except to the extent the Company and the Guarantors are prejudiced
thereby.
Notwithstanding the foregoing, the Company and the Guarantors need not
reimburse the Trustee for any expense or indemnify it against any loss or
liability incurred by the Trustee through its negligence or bad faith. To secure
the payment obligations of the Company and the Guarantors in this
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Section 8.07, the Trustee shall have a lien prior to the Notes on all money or
property held or collected by the Trustee except such money or property held in
trust to pay principal of and interest on particular Notes. The obligations of
the Company and the Guarantors under this Section 8.07 to compensate and
indemnify the Trustee, Agents and each predecessor Trustee and to pay or
reimburse the Trustee, Agents and each predecessor Trustee for expenses,
disbursements and advances shall be joint and several liabilities of the Company
and each of the Guarantors and shall survive the resignation or removal of the
Trustee and the satisfaction, discharge or other termination of this Indenture,
including any termination or rejection hereof under any Bankruptcy Law.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(6) or (7) hereof occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
For purposes of this Section 8.07, the term "Trustee" shall include any
trustee appointed pursuant to Article 8.
Section 8.08. Replacement of Trustee.
The Trustee may resign by so notifying the Company and the Guarantors in
writing. The Holders of a majority in principal amount of the outstanding Notes
may remove the Trustee by notifying the Company and the removed Trustee in
writing and may appoint a successor Trustee with the Company's written consent,
which consent shall not be unreasonably withheld. The Company may remove the
Trustee at its election if:
(1) the Trustee fails to comply with Section 8.10 hereof;
(2) the Trustee is adjudged a bankrupt or an insolvent;
(3) a receiver or other public officer takes charge of the Trustee or
its property; or
(4) the Trustee otherwise 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.
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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 a majority in principal amount of the outstanding Notes may petition
any court of competent jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 8.10 hereof, any Noteholder
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. Immediately following
such delivery, the retiring Trustee shall, subject to its rights under Section
8.07 hereof, transfer all property held by it as Trustee to the successor
Trustee, 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. A successor Trustee shall mail
notice of its succession to each Noteholder. Notwithstanding replacement of the
Trustee pursuant to this Section 8.08, the Company obligations under Section
8.07 hereof shall continue for the benefit of the retiring Trustee.
Section 8.09. Successor Trustee by Consolidation, Merger, etc.
If the Trustee consolidates with, merges or converts into, or transfers
all or substantially all of its corporate trust assets to, another corporation,
subject to Section 8.10 hereof, the successor corporation without any further
act shall be the successor Trustee.
Section 8.10. Eligibility; Disqualification.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a)(1) and (2) in every respect. The Trustee
(together with its corporate parent) shall have a combined capital and surplus
of at least $100,000,000 as set forth in the most recent applicable published
annual report of condition. The Trustee shall comply with TIA Section 310(b),
including the provision in Section 310(b)(1).
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Section 8.11. Preferential Collection of Claims Against Company.
The Trustee shall comply with 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.
Section 8.12. Paying Agents.
The Company shall cause each Paying Agent other than the Trustee to
execute and deliver to it and the Trustee an instrument in which such agent
shall agree with the Trustee, subject to the provisions of this Section 8.12:
(A) that it will hold all sums held by it as agent for the payment of
principal of, or premium, if any, or interest on, the Notes (whether such
sums have been paid to it by the Company or by any obligor on the Notes) in
trust for the benefit of Holders of the Notes or the Trustee;
(B) that it will at any time during the continuance of any Event of
Default, upon written request from the Trustee, deliver to the Trustee all
sums so held in trust by it together with a full accounting thereof; and
(C) that it will give the Trustee written notice within three (3)
Business Days of any failure of the Company (or by any obligor on the Notes)
in the payment of any installment of the principal of, premium, if any, or
interest on, the Notes when the same shall be due and payable.
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 9.01. Without Consent of Holders.
The Company and the Guarantors, when authorized by a Board Resolution of
each of them, and the Trustee may amend, waive or supplement this Indenture
or the Notes without notice to or consent of any Noteholder:
(1) to comply with Section 5.01 hereof;
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(2) to provide for uncertificated Notes in addition to or in place of
certificated Notes;
(3) to comply with any requirements of the SEC under the TIA;
(4) to cure any ambiguity, defect or inconsistency;
(5) to make any other change that does not adversely affect the rights
of any Noteholders hereunder;
(6) to add a Guarantor; or
(7) to provide for the issuance of the Exchange Notes, the Private
Exchange Notes and the Subsequent Series Notes in accordance with Section
2.01 in a manner that does not adversely affect the rights of any
Noteholder.
The Trustee is hereby authorized to join with the Company and the
Guarantors in the execution of any supplemental indenture authorized or
permitted by the terms of this Indenture and to make any further appropriate
agreements and stipulations which may be therein contained, but the Trustee
shall not be obligated to enter into any such supplemental indenture which
adversely affects its own rights, duties or immunities under this Indenture.
Section 9.02. With Consent of Holders.
The Company (when authorized by a Board Resolution), the Guarantors
(each when authorized by a Board Resolution) and the Trustee may modify or
supplement this Indenture or the Notes with the written consent of the Holders
of not less than a majority in aggregate principal amount of the outstanding
Notes. The Holders of not less than a majority in aggregate principal amount of
the outstanding Notes may waive compliance in a particular instance by the
Company or Guarantors with any provision of this Indenture or the Notes. Subject
to Section 9.04, without the consent of each Noteholder affected, however, an
amendment, supplement or waiver, including a waiver pursuant to Section 6.04,
may not:
(1) reduce the principal amount of outstanding Notes whose Holders must
consent to an amendment, supplement or waiver to this Indenture or the
Notes;
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(2) reduce the rate of or change the time for payment of interest on any
Note;
(3) reduce the principal of or premium on or change the stated maturity
of any Note;
(4) make any Note payable in money other than that stated in the Note or
change the place of payment from New York, New York;
(5) change the amount or time of any payment required by the Notes or
reduce the premium payable upon any redemption of the Notes in accordance
with Section 3.01 hereof, or change the time before which no such redemption
may be made;
(6) waive a default in the payment of the principal of, or interest on,
or redemption payment with respect to, any Note (including any obligation to
make a Change of Control Offer or, after the Company's obligation to
purchase Notes arises thereunder, an Excess Proceeds Offer or modify any of
the provisions or definitions with respect to such offers);
(7) make any changes in Sections 6.04 or 6.08 hereof or this sentence of
Section 9.02; or
(8) affect the ranking of the Notes or the Guarantee in a manner adverse
to the Holders.
After an amendment, supplement or waiver under this Section 9.02 becomes
effective, the Company shall mail to the Holders a notice briefly describing the
amendment, supplement or waiver.
Upon the written request of the Company, accompanied by a Board
Resolution authorizing the execution of any such supplemental indenture, and
upon the receipt by the Trustee of evidence reasonably satisfactory to the
Trustee of the consent of the Noteholders as aforesaid and upon receipt by the
Trustee of the documents described in Section 9.06 hereof, the Trustee shall
join with the Company and the Guarantors in the execution of such supplemental
indenture unless such supplemental indenture affects the Trustee's own rights,
duties or immunities under this Indenture, in which case the Trustee may, but
shall not be obligated to, enter into such supplemental indenture.
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It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment, supplement or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
Section 9.03. Compliance with Trust Indenture Act.
Every amendment or supplement to this Indenture or the Notes shall
comply with the TIA as then in effect.
Section 9.04. Revocation and Effect of Consents.
Until an amendment, supplement, waiver or other action becomes
effective, a consent to it by a Holder of a Note is a continuing consent
conclusive and binding upon such Holder and every subsequent Holder of the same
Note or portion thereof, and of any Note issued upon the transfer thereof or in
exchange therefor or in place thereof, even if notation of the consent is not
made on any such Note. Any such Holder or subsequent Holder, however, may revoke
the consent as to his Note or portion of a Note, if the Trustee receives the
written notice of revocation before the date the amendment, supplement, waiver
or other action becomes effective.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement, or waiver. If a record date is fixed, then, notwithstanding the
preceding paragraph, those Persons who were Holders at such record date (or
their duly designated proxies), and only such Persons, shall be entitled to
consent to such amendment, supplement, or waiver or to revoke any consent
previously given, whether or not such Persons continue to be Holders after such
record date. No such consent shall be valid or effective for more than 90 days
after such record date unless the consent of the requisite number of Holders has
been obtained.
After an amendment, supplement, waiver or other action becomes
effective, it shall bind every Noteholder, unless it makes a change described in
any of clauses (1) through (8) of Section 9.02 hereof. In that case the
amendment, supplement, waiver or other action shall bind each Holder of a Note
who has consented to it and every subsequent Holder of a Note or portion of a
Note that evidences the same debt as the consenting Holder's Note.
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Section 9.05. Notation on or Exchange of Notes.
If an amendment, supplement, or waiver changes the terms of a Note, the
Trustee (in accordance with the specific written direction of the Company) shall
request the Holder of the Note (in accordance with the specific written
direction of the Company) to deliver it to the Trustee. In such case, the
Trustee shall place an appropriate notation on the Note about the changed terms
and return it to the Holder. Alternatively, if the Company or the Trustee so
determines, the Company in exchange for the Note shall issue, the Guarantors
shall endorse, and the Trustee shall authenticate a new Note that reflects the
changed terms. Failure to make the appropriate notation or issue a new Note
shall not affect the validity and effect of such amendment, supplement or
waiver.
Section 9.06. Trustee To Sign Amendments, etc.
The Trustee shall sign any amendment, supplement or waiver authorized
pursuant to this Article 8 if the amendment, supplement or waiver 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, supplement or waiver the Trustee shall be entitled to
receive and, subject to Section 8.01 hereof, shall be fully protected in relying
upon an Officers' Certificate and an Opinion of Counsel stating, in addition to
the matters required by Section 12.04, that such amendment, supplement or waiver
is authorized or permitted by this Indenture and is a legal, valid and binding
obligation of the Company and Guarantors, enforceable against the Company and
Guarantors in accordance with its terms (subject to customary exceptions).
ARTICLE TEN
DISCHARGE OF INDENTURE; DEFEASANCE
Section 10.01. Discharge of Indenture.
The Company and the Guarantors may terminate their obligations under the
Notes, the Guarantees and this Indenture, except the obligations referred to in
the last paragraph of this Section 10.01, if there shall have been cancelled by
the Trustee or delivered to the Trustee for cancellation all Notes theretofore
authenticated and delivered (other than any Notes that are asserted to have been
destroyed, lost or stolen and
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that shall have been replaced as provided in Section 2.08 hereof) and the
Company has paid all sums payable by them hereunder or deposited all required
sums with the Trustee.
After such delivery, the Trustee upon Company Request shall acknowledge
in writing the discharge of the Company's and the Guarantors' obligations under
the Notes, the Guarantees and this Indenture except for those surviving
obligations specified below.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company in Sections 8.07, 10.05 and 10.06 hereof shall
survive.
Section 10.02. Legal Defeasance.
The Company may at its option, by Board Resolution of the Board of
Directors of the Company, be discharged from its obligations with respect to the
Notes and the Guarantors discharged from their obligations under the Guarantees
on the date the conditions set forth in Section 10.04 below are satisfied
(hereinafter, "Legal Defeasance"). For this purpose, such Legal Defeasance means
that the Company shall be deemed to have paid and discharged the entire
indebtedness represented by the Notes and to have satisfied all its other
obligations under such Notes and this Indenture insofar as such Notes are
concerned (and the Trustee, at the expense of the Company, shall, subject to
Section 10.06 hereof, execute instruments in form and substance reasonably
satisfactory to the Trustee and Company acknowledging the same), except for the
following which shall survive until otherwise terminated or discharged
hereunder: (A) the rights of Holders of outstanding Notes to receive solely from
the trust funds described in Section 10.04 hereof and as more fully set forth in
such Section, payments in respect of the principal of, premium, if any, and
interest on such Notes when such payments are due, (B) the Company's obligations
with respect to such Notes under Sections 2.03, 2.04, 2.05, 2.06, 2.07, 2.08,
2.11 and 4.20 hereof, (C) the rights, powers, trusts, duties, and immunities of
the Trustee hereunder (including claims of, or payments to, the Trustee under or
pursuant to Section 8.07 hereof) and (D) this Article 10. Subject to compliance
with this Article 10, the Company may exercise its option under this Section
10.02 with respect to the Notes notwithstanding the prior exercise of its option
under Section 10.03 below with respect to the Notes.
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Section 10.03. Covenant Defeasance.
At the option of the Company, pursuant to a Board Resolution of the
Board of Directors of the Company, the Company and the Guarantors shall be
released from their respective obligations under Sections 4.02 (except for
obligations mandated by the TIA), 4.05 through 4.17, 4.19 and 4.21 through 4.23,
inclusive, and clause (a)(iii) of Section 5.01 hereof with respect to the
outstanding Notes on and after the date the conditions set forth in Section
10.04 hereof are satisfied (hereinafter, "Covenant Defeasance"). For this
purpose, such Covenant Defeasance means that the Company and the Guarantors may
omit to comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such specified Section or portion
thereof, whether directly or indirectly by reason of any reference elsewhere
herein to any such specified Section or portion thereof or by reason of any
reference in any such specified Section or portion thereof to any other
provision herein or in any other document, but the remainder of this Indenture
and the Notes shall be unaffected thereby.
Section 10.04. Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to application of Section 10.02 or
Section 10.03 hereof to the outstanding Notes:
(1) the Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the requirements
of Section 8.10 hereof who shall agree to comply with the provisions of this
Article 10 applicable to it) as funds in trust for the purpose of making the
following payments, specifically pledged as security for, and dedicated
solely to, the benefit of the Holders of the Notes, (A) money in an amount,
or (B) U.S. Government Obligations which through the scheduled payment of
principal and interest in respect thereof in accordance with their terms
will provide, not later than the due date of any payment, money in an
amount, or (C) a combination thereof, sufficient, in the opinion of a
nationally-recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, to pay and
discharge, and which shall be applied by the Trustee (or other qualifying
trustee) to pay and discharge, the principal of, premium, if any, and
accrued interest on the outstanding Notes at the maturity
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date of such principal, premium, if any, or interest, or on dates for
payment and redemption of such principal, premium, if any, and interest
selected in accordance with the terms of this Indenture and of the Notes;
(2) no Event of Default or Default with respect to the Notes shall have
occurred and be continuing on the date of such deposit, or shall have
occurred and be continuing at any time during the period ending on the 91st
day after the date of such deposit or, if longer, ending on the day
following the expiration of the longest preference period under any
Bankruptcy Law applicable to the Company in respect of such deposit (it
being understood that this condition shall not be deemed satisfied until the
expiration of such period);
(3) such Legal Defeasance or Covenant Defeasance shall not cause the
Trustee to have a conflicting interest for purposes of the TIA with respect
to any securities of the Company;
(4) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute default under any other agreement or
instrument to which the Company or any Guarantor is a party or by which they
are bound;
(5) the Company shall have delivered to the Trustee an Opinion of
Counsel stating that, as a result of such Legal Defeasance or Covenant
Defeasance, neither the trust nor the Trustee will be required to register
as an investment company under the Investment Company Act of 1940, as
amended;
(6) in the case of an election under Section 10.02 above, the Company
shall have delivered to the Trustee an Opinion of Counsel stating that (i)
the Company has received from, or there has been published by, the Internal
Revenue Service a ruling to the effect that or (ii) there has been a change
in any applicable Federal income tax law with the effect that, and such
opinion shall confirm that, the Holders of the outstanding Notes or Persons
in their positions will not recognize income, gain or loss for Federal
income tax purposes solely as a result of such Legal Defeasance and will be
subject to Federal income tax on the same amounts, in the same manner,
including as a result of prepayment, and at the same times as would have
been the case if such Legal Defeasance had not occurred;
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(7) in the case of an election under Section 10.03 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel to the effect that
the Holders of the outstanding Notes will not recognize income, gain or loss
for Federal income tax purposes as a result of such Covenant Defeasance and
will be subject to Federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such Covenant
Defeasance had not occurred;
(8) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for relating to either the Legal Defeasance under Section
10.02 above or the Covenant Defeasance under Section 10.03 hereof (as the
case may be) have been complied with;
(9) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit under clause (1) was not made by the
Company with the intent of defeating, hindering, delaying or defrauding any
creditors of the Company or others; and
(10) the Company shall have paid or duly provided for payment under
terms mutually satisfactory to the Company and the Trustee all amounts then
due to the Trustee pursuant to Section 8.07 hereof.
Section 10.05. Deposited Money and U.S. Government Obligations To Be Held in
Trust; Other Miscellaneous Provisions.
All money and U.S. Government Obligations (including the proceeds
thereof) deposited with the Trustee pursuant to Section 10.04 hereof in respect
of the outstanding Notes shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Notes and this Indenture, to the payment,
either directly or through any Paying Agent, to the Holders of such Notes, of
all sums due and to become due thereon in respect of principal, premium, if any,
and accrued interest, but such money need not be segregated from other funds
except to the extent required by law.
The Company and the Guarantors shall (on a joint and several basis) pay
and indemnify the Trustee against any tax, fee or other charge imposed on or
assessed against the U.S. Government Obligations deposited pursuant to Section
10.04 hereof or the principal, premium, if any, and interest received
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in respect thereof other than any such tax, fee or other charge which by law is
for the account of the Holders of the outstanding Notes.
Anything in this Article 10 to the contrary notwithstanding, the Trustee
shall deliver or pay to the Company from time to time upon an Company Request
any money or U.S. Government Obligations held by it as provided in Section 10.04
hereof which, in the opinion of a nationally-recognized firm of independent
public accountants expressed in a written certification thereof delivered to the
Trustee, are in excess of the amount thereof which would then be required to be
deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.
Section 10.06. Reinstatement.
If the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with Section 10.01, 10.02 or 10.03 hereof
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 Company's and each Guarantor's obligations under this
Indenture, the Notes and the Guarantees shall be revived and reinstated as
though no deposit had occurred pursuant to this Article 10 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 10.01 hereof; provided,
however, that if the Company or the Guarantors have made any payment of
principal of, premium, if any, or accrued interest on any Notes because of the
reinstatement of their obligations, the Company or the Guarantors, as the case
may be, 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.
Section 10.07. Moneys Held by Paying Agent.
In connection with the satisfaction and discharge of this Indenture, all
moneys then held by any Paying Agent under the provisions of this Indenture
shall, upon written demand of the Company, be paid to the Trustee, or if
sufficient moneys have been deposited pursuant to Section 10.01 hereof, to the
Company upon an Company Request (or, if such moneys had been deposited by the
Guarantors, to such Guarantors), and thereupon such Paying Agent shall be
released from all further liability with respect to such moneys.
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Section 10.08. Moneys Held by Trustee.
Any moneys deposited with the Trustee or any Paying Agent or then held
by the Company or the Guarantors in trust for the payment of the principal of,
or premium, if any, or interest on any Note that are not applied but remain
unclaimed by the Holder of such Note for two years after the date upon which the
principal of, or premium, if any, or interest on such Note shall have
respectively become due and payable shall be repaid to the Company (or, if
appropriate, the Guarantors) upon a Company Request, or if such moneys are then
held by the Company or the Guarantors in trust, such moneys shall be released
from such trust; and the Holder of such Note entitled to receive such payment
shall thereafter, as an unsecured general creditor, look only to the Company and
the Guarantors for the payment thereof, and all liability of the Trustee or such
Paying Agent with respect to such trust money shall thereupon cease; provided,
however, that the Trustee or any such Paying Agent, before being required to
make any such repayment, may, at the expense of the Company and the Guarantors,
either mail to each Noteholder affected, at the address shown in the register of
the Notes maintained by the Registrar pursuant to Section 2.03 hereof, or cause
to be published once a week for two successive weeks, in a newspaper published
in the English language, customarily published each Business Day and of general
circulation in the City of New York, New York, a notice that such money remains
unclaimed and that, after a date specified therein, which shall not be less than
30 days from the date of such mailing or publication, any unclaimed balance of
such moneys then remaining will be repaid to the Company. After payment to the
Company or the Guarantors or the release of any money held in trust by the
Company or any Guarantors, as the case may be, Noteholders entitled to the money
must look only to the Company and the Guarantors for payment as general
creditors unless applicable abandoned property law designates another Person.
ARTICLE ELEVEN
GUARANTEE OF NOTES
Section 11.01. Unconditional Guarantee.
Each Guarantor hereby unconditionally, jointly and severally, guarantees
to each Holder of a Note authenticated and delivered by the Trustee and to the
Trustee and its successors and assigns, the Notes or the obligations of the
Company
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hereunder or thereunder, that: (i) the principal of and interest on the Notes
will be promptly paid in full when due, subject to any applicable grace period,
whether at maturity, by acceleration or otherwise and interest on the overdue
principal, if any, and interest on any interest, to the extent lawful, of the
Notes and all other obligations of the Company to the Holders or the Trustee
hereunder or thereunder will be promptly paid in full or performed, all in
accordance with the terms hereof and thereof; and (ii) in case of any extension
of time of payment or renewal of any Notes or of any such other obligations, the
same will be promptly paid in full when due or performed in accordance with the
terms of the extension or renewal, subject to any applicable grace period,
whether at stated maturity, by acceleration or otherwise, subject, however, in
the case of clauses (i) and (ii) above, to the limitations set forth in Section
11.05. Each Guarantor hereby agrees that its Obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of the
Notes or this Indenture, the absence of any action to enforce the same, any
waiver or consent by any Holder of the Notes with respect to any provisions
hereof or thereof, the recovery of any judgment against the Company, any action
to enforce the same or any other circumstances which might otherwise constitute
a legal or equitable discharge or defense of a guarantor. Each Guarantor hereby
waives diligence, presentment, demand of payment, filing of claims with a court
in the event of insolvency or bankruptcy of the Company, any right to require a
proceeding first against the Company, protest, notice and all demands whatsoever
and covenants that this Guarantee will not be discharged except by complete
performance of the obligations contained in the Notes, this Indenture and in
this Guarantee. If any Noteholder or the Trustee is required by any court or
otherwise to return to the Company, any Guarantor, or any custodian, trustee,
liquidator or other similar official acting in relation to the Company or any
Guarantor, any amount paid by the Company or any Guarantor to the Trustee or
such Noteholder, this Guarantee, to the extent theretofore discharged, shall be
reinstated in full force and effect as to such amount only. Each Guarantor
further agrees that, as between each Guarantor, on the one hand, and the Holders
and the Trustee, on the other hand, (x) the maturity of the Obligations
guaranteed hereby may be accelerated as provided in Article Six for the purposes
of this Guarantee, notwithstanding any stay, injunction or other prohibition
preventing such acceleration in respect of the Obligations guaranteed hereby,
and (y) in the event of any acceleration of such obligations as provided in
Article Six, such Obligations (whether or not due and payable)
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shall forthwith become due and payable by each Guarantor for the purpose of this
Guarantee.
Section 11.02. Subordination of Guarantee.
Each Guarantor agrees, and each Holder by accepting a Guarantee agrees,
that all Obligations owed under and in respect of such Guarantees are
subordinated in right of payment, to the extent and in the manner provided in
this Article Eleven, to the prior indefeasible payment in full in cash or Cash
Equivalents, of all Senior Indebtedness of such Guarantor, and that the
subordination of the Guarantees pursuant to this Article Eleven is for the
benefit of all holders of all Senior Indebtedness of such Guarantor, whether
outstanding on the Issue Date or issued thereafter.
Section 11.03. Severability.
In case any provision of this Guarantee 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.
Section 11.04. Release of a Guarantor.
Upon the sale or disposition of a Guarantor (or all or substantially all
of its assets) to an entity which is not a Subsidiary of the Company, which is
otherwise in compliance with this Indenture, such Guarantor shall be deemed
released from all its obligations under this Article Eleven and its Guarantee.
The Trustee shall deliver an appropriate instrument evidencing such release upon
receipt of a written request by the Company accompanied by an Officers'
Certificate certifying as to the compliance with this Section 11.04 and the
other provisions of this Indenture. Any Guarantor not so released remains liable
for the full amount of principal of and interest on the Notes as provided in
this Article Eleven.
Section 11.05. Limitation of 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 Guarantee not constitute a fraudulent transfer or
conveyance for purposes of the Bankruptcy Law, the Uniform Fraudulent Conveyance
Act, the Uniform Fraudulent Transfer Act or any similar Federal or state law. To
effectuate the foregoing intention, the Holders and such Guarantor hereby
irrevocably agree that
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the Obligations of such Guarantor under its Guarantee 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 Guarantee or pursuant to Section
11.07, result in the Obligations of such Guarantor under its Guarantee not
constituting such fraudulent transfer or conveyance.
Section 11.06. Guarantors May Consolidate, Etc., on Certain Terms.
(a) Nothing contained in this Indenture or in any of the Notes shall
prevent any consolidation or merger of a Guarantor with or into the
Company or another Guarantor or shall prevent any sale or conveyance of
the assets of a Guarantor to the Company or another Guarantor. Upon any
such consolidation, merger, sale or conveyance, the Guarantee given by
such Guarantor shall no longer have any force or effect.
(b) Except as set forth in Article Four hereof, nothing contained in
this Indenture or in any of the Notes shall prevent any consolidation or
merger of a Guarantor with or into a corporation or corporations other
than the Company or another Guarantor (whether or not affiliated with
the Guarantor), or successive consolidations or mergers in which a
Guarantor or its successor or successors shall be a party or parties, or
shall prevent any sale or conveyance of all or substantially all of the
assets of a Guarantor to a corporation other than the Company or another
Guarantor (whether or not affiliated with the Guarantor); provided,
however, that, subject to Sections 11.04 and 11.06(a), either (x) the
transaction is an Asset Sale consummated in accordance with Section
4.10, or (y) (i) immediately after such transaction, and giving effect
thereto, no Default or Event of Default shall have occurred as a result
of such transaction and be continuing, and (ii) each Guarantor hereby
covenants and agrees that, upon any such consolidation, merger, sale or
conveyance, the Guarantee of such Guarantor set forth in this Article
Eleven, and the due and punctual performance and observance of all of
the covenants and conditions of this Indenture to be performed by such
Guarantor, shall be expressly assumed (in the event that the Guarantor
is not the surviving corporation in such transaction), by supplemental
indenture satisfactory in form to the Trustee, exe-
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cuted and delivered to the Trustee, together with an Officers'
Certificate of the Company and an Opinion of Counsel stating that the
transaction and such supplemental indenture comply with this Indenture,
by the corporation formed by such consolidation, or into which the
Guarantor shall have merged, or by the corporation that shall have
acquired such property. In the case of any such consolidation, merger,
sale or conveyance that is not an Asset Sale consummated in accordance
with Section 4.10, upon the assumption by the successor corporation, by
supplemental indenture executed and delivered to the Trustee and
satisfactory in form to the Trustee of the due and punctual performance
of all of the covenants and conditions of this Indenture to be performed
by the Guarantor, such successor corporation shall succeed to and be
substituted for the Guarantor with the same effect as if it had been
named herein as a Guarantor.
Section 11.07. Contribution.
In order to provide for just and equitable contribution among the
Guarantors, the Guarantors agree, inter se, that in the event any payment or
distribution is made by any Guarantor (a "Funding Guarantor") under this
Guarantee, such Funding Guarantor shall be entitled to a contribution from all
other Guarantors in a pro rata amount based on the Adjusted Net Assets of each
Guarantor (including the Funding Guarantor) for all payments, damages and
expenses incurred by that Funding Guarantor in discharging the Company's
obligations with respect to the Notes or any other Guarantor's Obligations with
respect to this Guarantee.
Section 11.08. Waiver of Subrogation.
Each Guarantor hereby irrevocably waives any claim or other rights which
it may now or hereafter acquire against the Company that arise from the
existence, payment, performance or enforcement of such Guarantor's Obligations
under this Guarantee and this Indenture, including, without limitation, any
right of subrogation, reimbursement, exoneration, indemnification, and any right
to participate in any claim or remedy of any Holder of Notes against the
Company, whether or not such claim, remedy or right arises in equity, or under
contract, statute or common law, including, without limitation, the right to
take or receive from the Company, directly or indirectly, in cash or other
property or by set-off or in any other manner, payment or security on account of
such claim or other rights. If any amount shall be paid to any Guarantor in
violation of
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the preceding sentence and the Notes shall not have been paid in full, such
amount shall have been deemed to have been paid to such Guarantor for the
benefit of, and held in trust for the benefit of, the Holders of the Notes, and
shall forthwith be paid to the Trustee for the benefit of such Holders to be
credited and applied upon the Notes, whether matured or unmatured, in accordance
with the terms of this Indenture. Each Guarantor acknowledges that it will
receive direct and indirect benefits from the financing arrangements
contemplated by this Indenture and that the waiver set forth in this Section
11.08 is knowingly made in contemplation of such benefits.
Section 11.09. Execution of Guarantee.
To evidence their guarantee to the Noteholders specified in Section
11.01, the Guarantors hereby agree to execute the Guarantee in substantially the
form of Exhibit A recited to be endorsed on each Note ordered to be
authenticated and delivered by the Trustee. Each Guarantor hereby agrees that
its Guarantee set forth in Section 11.01 shall remain in full force and effect
notwithstanding any failure to endorse on each Note a notation of such
Guarantee. Each such Guarantee shall be signed on behalf of each Guarantor by
two Officers, or an Officer and an Assistant Secretary or one Officer shall sign
and one Officer or an Assistant Secretary (each of whom shall, in each case,
have been duly authorized by all requisite corporate actions) shall attest to
such Guarantee prior to the authentication of the Note on which it is endorsed,
and the delivery of such Note by the Trustee, after the authentication thereof
hereunder, shall constitute due delivery of such Guarantee on behalf of such
Guarantor. Such signatures upon the Guarantee may be by manual or facsimile
signature of such officers and may be imprinted or otherwise reproduced on the
Guarantee, and in case any such officer who shall have signed the Guarantee
shall cease to be such officer before the Note on which such Guarantee is
endorsed shall have been authenticated and delivered by the Trustee or disposed
of by the Company, such Note nevertheless may be authenticated and delivered or
disposed of as though the person who signed the Guarantee had not ceased to be
such officer of the Guarantor.
Section 11.10. No Payment on Guarantees in Certain Circumstances.
(a) No payment or distribution (other than a payment or distribution in
the form of Permitted Junior Securities) of any assets or securities of a
Guarantor or any subsidiary thereof of any kind or character (including, without
limita-
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tion, cash, property and any payment or distribution which may be payable
or deliverable by reason of the payment of any other Indebtedness of such
Guarantor being subordinated to its Obligations on its Guarantee) may be made by
or on behalf of such Guarantor, including, without limitation, by way of set-off
or otherwise, for or on account of its Obligations on its Guarantee, and neither
the Trustee nor any holder or owner of any Notes shall take or receive from any
Guarantor, directly or indirectly in any manner, payment in respect of all or
any portion of its Obligations on its Guarantee following the delivery by the
representative of the holders of Guarantor Senior Indebtedness (the "Guarantor
Representative") to the Trustee of written notice of the occurrence of a Payment
Default in respect of Guarantor Senior Indebtedness, and in any such event, such
prohibition shall continue until such Payment Default is cured, waived in
writing or ceases to exist. At such time as the prohibition set forth in the
preceding sentence shall no longer be in effect, subject to the provisions of
the following paragraph, the Guarantor shall resume making any and all required
payments in respect of the Obligations on its Guarantee, including any missed
payments.
Upon the occurrence of a Non-Payment Event of Default on Designated
Senior Indebtedness which constitutes Guarantor Senior Indebtedness of any
Guarantor, no payment or distribution (other than a payment or distribution in
the form of Permitted Junior Securities) of any assets of such Guarantor of any
kind may be made by such Guarantor, including, without limitation, by way of
set-off or otherwise, on account of any of its Obligations on its Guarantee, for
a period (a "Guarantor Blockage Period") commencing on the date of receipt by
the Trustee of written notice from the Guarantor Representative of such
Non-Payment Event of Default unless and until (subject to any blockage of
payments that may then be in effect under the preceding paragraph) (x) more than
179 days shall have elapsed since receipt of such written notice by the Trustee,
(y) such Non-Payment Event of Default shall have been cured or waived in writing
or shall have ceased to exist or such Designated Senior Indebtedness
constituting Guarantor Senior Indebtedness shall have been paid in full or (z)
such Guarantor Blockage Period shall have been terminated by written notice to
the Guarantor or the Trustee from such Guarantor Representative, after which, in
the case of clause (x), (y) or (z), the Guarantor shall resume making any and
all required payments in respect of Obligations on its Guarantee, including any
missed payments. Notwithstanding any other provision of the Indenture, in no
event shall a Guarantor Blockage Period commenced in accordance with the
provisions of the Indenture described in this paragraph ex-
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tend beyond 179 days from the date of the receipt by the Trustee of the notice
referred to above (the "Initial Guarantor Blockage Period"). Any number of
additional Guarantor Blockage Periods may be commenced during the Initial
Guarantor Blockage Period; provided, however, that no such additional Guarantor
Blockage Period shall extend beyond the Initial Guarantor Blockage Period. After
the expiration of the Initial Guarantor Blockage Period, no Guarantor Blockage
Period may be commenced until at least 180 consecutive days have elapsed from
the last day of the Initial Guarantor Blockage Period. Notwithstanding any other
provision of the Indenture, no event of default with respect to Designated
Senior Indebtedness constituting Guarantor Senior Indebtedness (other than a
Payment Default) which existed or was continuing on the date of the commencement
of any Guarantor Blockage Period initiated by the Guarantor Representative shall
be, or be made, the basis for the commencement of a second Guarantor Blockage
Period initiated by the Guarantor Representative, whether or not within the
Initial Guarantor Blockage Period, unless such event of default shall have been
cured or waived for a period of not less than 90 consecutive days.
(b) In the event that, notwithstanding the foregoing, any payment shall
be received by the Trustee or any Holder when such payment is prohibited by
Section 11.10(a), such payment shall be held in trust for the benefit of, shall
be paid over or delivered to, the holders of Guarantor Senior Indebtedness (pro
rata to such holders on the basis of the respective amount of Guarantor Senior
Indebtedness held by such holders) or their respective Representatives, as their
respective interests may appear. The Trustee shall be entitled to rely on
information regarding amounts then due and owing on the Guarantor Senior
Indebtedness, if any, received from the holders of Guarantor Senior Indebtedness
(or their Representatives) or, if such information is not received from such
holders or their Representatives, from such Guarantor and only amounts included
in the information provided to the Trustee shall be paid to the holders of
Guarantor Senior Indebtedness.
Nothing contained in this Article Eleven shall limit the right of the
Trustee or the Holders of Notes to take any action to accelerate the maturity of
the Notes pursuant to Section 6.02 or to pursue any rights or remedies
hereunder; provided that all Senior Indebtedness thereafter due or declared to
be due shall first be paid in full in cash or Cash Equivalents before the
Holders are entitled to receive any payment of any kind or character with
respect to the Obligations on the Notes or on account of any Guarantor's
Guarantee.
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Section 11.11. Payment Over of Proceeds Upon Dissolution, Etc.
(a) In the event of any insolvency or bankruptcy case or proceeding, or
any receivership, liquidation, arrangement, reorganization or other similar case
or proceeding in connection therewith, relative to any Guarantor or to its
creditors, as such, or to its assets, whether voluntary or involuntary, or any
liquidation, dissolution or other winding-up of such Guarantor, whether
voluntary or involuntary and whether or not involving insolvency or bankruptcy,
or any general assignment for the benefit of creditors or other marshalling of
assets or liabilities of such Guarantor (except in connection with the merger or
consolidation of such Guarantor or its liquidation or dissolution following the
transfer of substantially all of its assets, upon the terms and conditions
permitted under Article Five hereof) (all of the foregoing referred to herein
individually as a "Bankruptcy Proceeding" and collectively as "Bankruptcy
Proceedings"), the holders of Guarantor Senior Indebtedness of such Guarantor
will be entitled to receive payment and satisfaction in full in cash of all
amounts due on or in respect of all Guarantor Senior Indebtedness of such
Guarantor before the holders of the Notes are entitled to receive or retain any
payment or distribution of any kind (other than a payment or distribution in the
form of Permitted Junior Securities) by such Guarantor on account of its
Obligations on its Guarantee; and until all such Obligations with respect to all
Guarantor Senior Indebtedness are paid in full in cash or Cash Equivalents, any
distribution to which the Holders of the Notes would be entitled but for the
subordination provisions will be made to the holders of Guarantor Senior
Indebtedness as their interests may appear. Upon any such dissolution,
winding-up, liquidation, reorganization, bankruptcy, insolvency, receivership or
similar proceeding or assignment for the benefit of creditors or marshalling of
assets, any payment or distribution of assets of any Guarantor of any kind or
character, whether in cash, property or securities, to which the Holders of the
Notes or the Trustee under this Indenture would be entitled, except for the
provisions hereof, shall be paid by such Guarantor or by any receiver, trustee
in bankruptcy, liquidating trustee, agent or other person making such payment or
distribution, or by the Holders of the Notes or by the Trustee under this
Indenture if received by them, directly to the holders of Guarantor Senior
Indebtedness (pro rata to such holders on the basis of the respective amounts of
Guarantor Senior Indebtedness held by such holders) or their respective
Representatives, or to the trustee or trustees under any indenture pursuant to
which any of such Guarantor Senior Indebtedness may
<PAGE> 113
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have been issued, as their respective interests may appear, for application to
the payment of Guarantor Senior Indebtedness remaining unpaid until all such
Guarantor Senior Indebtedness has been paid in full in cash or Cash Equivalents
after giving effect to any concurrent payment, distribution or provision
therefor to or for the holders of Guarantor Senior Indebtedness.
(b) To the extent any payment of Guarantor Senior Indebtedness (whether
by or on behalf of such Guarantor, as proceeds of security or enforcement of any
right of setoff or otherwise) is declared to be fraudulent or preferential, set
aside or required to be paid to any receiver, trustee in bankruptcy, liquidating
trustee, agent or other similar person under any bankruptcy, insolvency,
receivership, fraudulent conveyance or similar law, then, if such payment is
recovered by, or paid over to, such receiver, trustee in bankruptcy, liquidating
trustee, agent or other similar person, the Guarantor Senior Indebtedness or
part thereof originally intended to be satisfied shall be deemed to be
reinstated and outstanding as if such payment had not occurred.
(c) In the event that, notwithstanding the foregoing, the Trustee or any
holder of Notes receives any payment or distribution of assets of a Guarantor of
any kind, whether in cash, property or securities, including, without
limitation, by way of set-off or otherwise, in respect of such Guarantor's
Obligations on its Guarantee before all Guarantor Senior Indebtedness of such
Guarantor is paid and satisfied in full in cash, then such payment or
distribution (other than a payment or distribution in the form of Permitted
Junior Securities) will be held by the recipient in trust for the benefit of
holders of Guarantor Senior Indebtedness and will be immediately paid over or
delivered to the holders of Guarantor Senior Indebtedness or their
representative or representatives to the extent necessary to make payment in
full of all Guarantor Senior Indebtedness remaining unpaid, after giving effect
to any concurrent payment or distribution, or provision therefor, to or for the
holders of Guarantor Senior Indebtedness. By reason of such subordination, in
the event of liquidation or insolvency, creditors of such Guarantor who are
holders of Guarantor Senior Indebtedness may recover more, ratably, than other
creditors of such Guarantor, and creditors of the Company who are not holders of
Guarantor Senior Indebtedness or of the Notes may recover more, ratably, than
the holders of the Notes.
<PAGE> 114
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Section 11.12. Payments May Be Paid Prior to Dissolution.
Nothing contained in this Article Eleven or elsewhere in this Indenture
shall prevent (i) any Guarantor, except under the conditions described in
Sections 11.10 and 11.11, from making payments at any time for the purpose of
making payments of principal of and interest on the Notes, or from depositing
with the Trustee any moneys for such payments, or (ii) in the absence of actual
knowledge by the Trustee that a given payment would be prohibited by Section
11.10 or 11.11, the application by the Trustee of any moneys deposited with it
for the purpose of making such payments of principal of and interest on the
Notes to the Holders entitled thereto unless at least one Business Day prior to
the date upon which such payment would otherwise become due and payable, the
Trustee shall have received the written notice provided for in Section 11.10(a)
or in Section 11.15 (provided that, notwithstanding the foregoing, such
application shall otherwise be subject to the provisions of the first sentence
of Section 11.10(a) and Section 11.11). Each Guarantor shall give prompt written
notice to the Trustee of any dissolution, winding-up, liquidation or
reorganization of any Guarantor.
Section 11.13. Subrogation.
Subject to the payment in full in cash or Cash Equivalents of all Senior
Indebtedness, the Holders of the Notes shall be subrogated to the rights of the
holders of Senior Indebtedness to receive payments or distributions of cash,
property or securities of such Guarantor applicable to the Senior Indebtedness
of such Guarantor until the Notes shall be paid in full; and, for the purposes
of such subrogation, no such payments or distributions to the holders of the
Senior Indebtedness by or on behalf of such Guarantor or by or on behalf of the
Holders by virtue of this Article Eleven which otherwise would have been made to
the Holders shall, as between the Guarantors and the Holders of the Notes, be
deemed to be a payment by such Guarantor to or on account of the Senior
Indebtedness, it being understood that the provisions of this Article Eleven are
and are intended solely for the purpose of defining the relative rights of the
Holders of the Notes, on the one hand, and the holders of the Senior
Indebtedness, on the other hand.
If any payment or distribution to which the Holders would otherwise have
been entitled but for the provisions of this Article Eleven shall have been
applied, pursuant to the provisions of this Article Eleven, to the payment of
amounts payable under the Senior Indebtedness, then the Holders shall
<PAGE> 115
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be entitled to receive from the holders of such Senior Indebtedness any payments
or distributions received by such holders of Senior Indebtedness in excess of
the amount sufficient to pay all amounts payable under or in respect of the
Senior Indebtedness in full in cash or Cash Equivalents.
Section 11.14. Obligations of Each Guarantor Unconditional.
Nothing contained in this Article Eleven or elsewhere in this Indenture
or in the Notes or the Guarantees is intended to or shall impair, as among any
Guarantor, its creditors other than the holders of Senior Indebtedness, and the
Holders of the Notes, the obligation of such Guarantor, which is absolute and
unconditional, to pay to the Holders of the Notes the principal of and any
interest on the Notes as and when the same shall become due and payable in
accordance with the terms of the Guarantees, or is intended to or shall affect
the relative rights of the Holders of the Notes and creditors of any Guarantor
other than the holders of Senior Indebtedness, nor shall anything herein or
therein prevent the Holder of any Note or the Trustee on its behalf from
exercising all remedies otherwise permitted by applicable law upon default under
this Indenture, subject to the rights, if any, in respect of cash, property or
securities of any Guarantor received upon the exercise of any such remedy.
Section 11.15. Notice to Trustee.
The Company or any Guarantor shall give prompt written notice to the
Trustee of any fact known to the Company or any such Guarantor which would
prohibit the making of any payment to or by the Trustee in respect of the
Guarantees pursuant to the provisions of this Article Eleven. Regardless of
anything to the contrary contained in this Article Eleven or elsewhere in this
Indenture, the Trustee shall not be charged with knowledge of the existence of
any default or event of default with respect to any Senior Indebtedness or of
any other facts which would prohibit the making of any payment to or by the
Trustee unless and until the Trustee shall have received notice in writing from
the Company or a Guarantor, or from a holder of Senior Indebtedness or a
Representative therefor, and, prior to the receipt of any such written notice,
the Trustee shall be entitled to assume (in the absence of actual knowledge to
the contrary) that no such facts exist.
In the event that the Trustee determines in good faith that any evidence
is required with respect to the right
<PAGE> 116
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of any person as a holder of Senior Indebtedness to participate in any payment
or distribution pursuant to this Article Eleven, the Trustee may request such
person to furnish evidence to the reasonable satisfaction of the Trustee as to
the amounts of Senior Indebtedness held by such person, the extent to which such
person is entitled to participate in such payment or distribution and any other
facts pertinent to the rights of such person under this Article Eleven, and if
such evidence is not furnished the Trustee may defer any payment to such person
pending judicial determination as to the right of such person to receive such
payment.
Section 11.16. Reliance on Judicial Order or Certificate of Liquidating Agent.
Upon any payment or distribution of assets of any Guarantor referred to
in this Article Eleven, the Trustee, subject to the provisions of Article Seven
hereof, and the Holders of the Notes shall be entitled to rely upon any order or
decree made by any court of competent jurisdiction in which bankruptcy,
dissolution, winding-up, liquidation or reorganization proceedings are pending,
or upon certificate of the receiver, trustee in bankruptcy, liquidating trustee,
agent or other person making such payment or distribution, delivered to the
Trustee or the holders of the Notes, for the purpose of ascertaining the persons
entitled to participate in such distribution, the holders of the Senior
Indebtedness and other Indebtedness of such Guarantor, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article Eleven.
Section 11.17. Trustee's Relation to Senior Indebtedness.
The Trustee and any agent of any Guarantor or the Trustee shall be
entitled to all the rights set forth in this Article Eleven with respect to any
Senior Indebtedness which may at any time be held by it in its individual or any
other capacity to the same extent as any other holder of Senior Indebtedness and
nothing in this Indenture shall deprive the Trustee or any such agent of any of
its rights as such holder.
With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article Eleven, and no implied covenants
or obligations with respect to the holders of Senior Indebtedness shall be read
into this Indenture against the Trustee. The Trustee shall not be deemed to owe
any fiduciary duty to the holders of
<PAGE> 117
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Senior Indebtedness and shall not be liable to any such holders if the Trustee
shall pay over or distribute to or on behalf of Holders or any such Guarantor or
any other person money or assets to which any holders of Senior Indebtedness
shall be entitled by virtue of this Article, except if such payment is made as a
result of willful misconduct or gross negligence of the Trustee.
Whenever a distribution is to be made or a notice given to holders or
owners of Senior Indebtedness, the distribution may be made and the notice given
to their Representatives, if any.
Section 11.18. Subordination Rights Not Impaired by Acts or Omissions of a
Guarantor or Holders of Senior Indebtedness.
No right of any present or future holders of any Senior Indebtedness to
enforce subordination as provided herein shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of any Guarantor
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by such Guarantor with the terms of this Indenture, regardless of
any knowledge thereof which any such holder may have or otherwise be charged
with.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Indebtedness may, at any time and from time to time,
without the consent of or notice to the Trustee, without incurring
responsibility to the Trustee or the Holders of the Notes and without impairing
or releasing the subordination provided in this Article Eleven or the
obligations hereunder of the Holders of the Notes to the holders of the Senior
Indebtedness, do any one or more of the following: (i) change the manner, place
or terms of payment or extend the time of payment of, or renew or alter, Senior
Indebtedness, or otherwise amend or supplement in any manner Senior
Indebtedness, or any instrument evidencing the same or any agreement under which
Senior Indebtedness is outstanding; (ii) sell, exchange, release or otherwise
deal with any property pledged, mortgaged or otherwise securing Senior
Indebtedness; (iii) release any person liable in any manner for the payment or
collection of Senior Indebtedness; and (iv) exercise or refrain from exercising
any rights against such Guarantor and any other person.
<PAGE> 118
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Section 11.19. Noteholders Authorize Trustee To Effectuate
Subordination of Guarantees.
Each Holder of Notes by its acceptance of them authorizes and expressly
directs the Trustee on its behalf to take such action as may be necessary or
appropriate to effectuate, as between the holders of Senior Indebtedness and the
Holders of Notes, the subordination provided in this Article Eleven, and
appoints the Trustee its attorney-in-fact for such purposes, including, in the
event of any dissolution, winding-up, liquidation or reorganization of any
Guarantor (whether in bankruptcy, insolvency, receivership, reorganization or
similar proceedings or upon an assignment for the benefit of creditors or
otherwise) tending towards liquidation of the business as assets of such
Guarantor, the filing of a claim for the unpaid balance of its or his Notes and
accrued interest in the form required in those proceedings.
If the Trustee does not file a proper claim or proof of debt in the form
required in such proceeding prior to 30 days before the expiration of the time
to file such claim or claims, then the holders of the Senior Indebtedness or
their Representative are or is hereby authorized to have the right to file and
are or is hereby authorized to file an appropriate claim for and on behalf of
the Holders of said Notes. Nothing herein contained shall be deemed to authorize
the Trustee or the holders of Senior Indebtedness or their Representative to
authorize or consent to or accept or adopt on behalf of any Holders any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder thereof, or to authorize the Trustee or the holders of
Senior Indebtedness or their Representative to vote in respect of the claim of
any Holder in any such proceeding.
Section 11.20. This Article Eleven Not To Prevent Events of Default.
The failure to make a payment on account of principal of or interest on
the Notes by reason of any provision of this Article Eleven will not be
construed as preventing the occurrence of an Event of Default.
Section 11.21. Trustee's Compensation Not Prejudiced.
Nothing in this Article Eleven will apply to amounts due to the Trustee
pursuant to other sections in this Indenture.
<PAGE> 119
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ARTICLE TWELVE
MISCELLANEOUS
Section 12.01. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts with
another provision which is required to be included in this Indenture by the TIA,
the required provision shall control.
Section 12.02. Notices.
Except for notice or communications to Holders, any notice or
communication shall be given in writing and delivered in person, sent by
facsimile, delivered by commercial courier service or mailed by first-class
mail, postage prepaid, addressed as follows:
If to the Company or any Guarantor:
W.R. CARPENTER NORTH AMERICA, INC.
1775 Park Street
Selma, California 93662
Attention: Chief Financial Officer
Fax Number: (209) 896-2007
with, in the case of any notice furnished pursuant to Article 6,
a copy to:
Pillsbury, Madison & Sutro
235 Montgomery Street
San Francisco, California 94104
Attention: James C. Olson, Esq.
Fax Number: (415) 983-1200
If to the Trustee:
U.S. TRUST COMPANY OF CALIFORNIA, N.A.
515 South Flower Street, Suite 2700
Los Angeles, CA 90071
Attention: Corporate Trust Department
<PAGE> 120
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Fax Number: (213) 488-1370
Such notices or communications shall be effective when received and
shall be sufficiently given if so given within the time prescribed in this
Indenture.
The Company, the Guarantors or the Trustee by written notice to the
others may designate additional or different addresses for subsequent notices or
communications.
Any notice or communication mailed to a Noteholder shall be mailed to
him by first-class mail, postage prepaid, at his address shown on the register
kept by the Registrar.
Failure to mail a notice or communication to a Noteholder or any defect
in it shall not affect its sufficiency with respect to other Noteholders. If a
notice or communication to a Noteholder is mailed in the manner provided above,
it shall be deemed duly given, whether or not the addressee receives it.
In case by reason of the suspension of regular mail service, or by
reason of any other cause, it shall be impossible to mail any notice as required
by this Indenture, then such method of notification as shall be made with the
approval of the Trustee shall constitute a sufficient mailing of such notice.
Section 12.03. Communications by Holders with Other Holders.
Noteholders may communicate pursuant to TIA Section 312(b) with other
Noteholders with respect to their rights under this Indenture or the Notes. The
Company, the Guarantors, the Trustee, the Registrar and anyone else shall have
the protection of TIA Section 312(c).
Section 12.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company or any Guarantor to the
Trustee to take any action under this Indenture, the Company or such Guarantor
shall furnish to the Trustee:
(1) an Officers' Certificate (which shall include the statements
set forth in Section 12.05 below) stating that, in the opinion of the
signers, all conditions prece-
<PAGE> 121
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dent, if any, provided for in this Indenture relating to the proposed
action have been complied with; and
(2) an Opinion of Counsel (which shall include the statements
set forth in Section 12.05 below) stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
Section 12.05. Statements Required in Certificate and Opinion.
Each certificate and opinion with respect to compliance by or on behalf
of the Company or any Guarantor with a condition or covenant provided for in
this Indenture shall include:
(1) a statement that the Person making such certificate or
opinion has read such covenant or condition;
(2) 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;
(3) a statement that, in the opinion of such Person, it or he
has made such examination or investigation as is necessary to enable it
or him to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(4) a statement as to whether or not, in the opinion of such
Person, such covenant or condition has been complied with.
Section 12.06. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or meetings of
Noteholders. The Registrar and Paying Agent may make reasonable rules for their
functions.
Section 12.07. Business Days; Legal Holidays.
A "Business Day" is a day that is not a Legal Holiday. A "Legal Holiday"
is a Saturday, a Sunday, a federally-recognized holiday or a day on which
banking institutions are not required to be open in the State of New York. 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 Le-
<PAGE> 122
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gal Holiday, and no interest shall accrue for the intervening period.
Section 12.08. Governing Law.
THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED 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. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS INDENTURE OR THE NOTES.
Section 12.09. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan,
security or debt agreement of the Company or any Subsidiary thereof. No such
indenture, loan, security or debt agreement may be used to interpret this
Indenture.
Section 12.10. No Recourse Against Others.
No recourse for the payment of the principal of or premium, if any, or
interest, including Additional Interest, on any of the Notes, or for any claim
based thereon or otherwise in respect thereof, and no recourse under or upon any
obligation, covenant or agreement of the Company or any Guarantor in this
Indenture or in any supplemental indenture, or in any of the Notes, or because
of the creation of any Indebtedness represented thereby, shall be had against
any stockholder, officer, director or employee, as such, past, present or
future, of the Company or of any successor corporation or against the property
or assets of any such stockholder, officer, employee or director, either
directly or through the Company or any Guarantor, or any successor corporation
thereof, whether by virtue of any constitution, statute or rule of law, or by
the enforcement of any assessment or penalty or otherwise; it being expressly
understood that this Indenture and the Notes are solely obligations of the
Company and the Guarantors, and that no such personal liability whatever shall
attach to, or is or shall be incurred by, any stockholder, officer, employee or
director of the Company or any Guarantor, or any successor corporation thereof,
because of the creation of the indebtedness hereby authorized, or under or by
reason of the obligations, covenants or agreements contained in this Indenture
or the Notes or implied therefrom, and that any and all such personal
<PAGE> 123
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liability of, and any and all claims against every stockholder, officer,
employee and director, are hereby expressly waived and released as a condition
of, and as a consideration for, the execution of this Indenture and the issuance
of the Notes. It is understood that this limitation on recourse is made
expressly for the benefit of any such shareholder, employee, officer or director
and may be enforced by any of them.
Section 12.11. Successors.
All agreements of the Company and the Guarantors in this Indenture and
the Notes shall bind their respective successors. All agreements of the Trustee,
any additional trustee and any Paying Agents in this Indenture shall bind its
successor.
Section 12.12. Multiple Counterparts.
The parties may sign multiple counterparts of this Indenture. Each
signed counterpart shall be deemed an original, but all of them together
represent one and the same agreement.
Section 12.13. Table of Contents, Headings, etc.
The table of contents, cross-reference sheet 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.
Section 12.14. Separability.
Each provision of this Indenture shall be considered separable and if
for any reason any provision which is not essential to the effectuation of the
basic purpose of this Indenture or 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.
<PAGE> 124
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IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed all as of the date and year first written above.
W.R. CARPENTER NORTH AMERICA, INC.
By: /s/ David K. Sargent
------------------------------------
Name: David K. Sargent
Title: President
UPRIGHT, INC.
By: /s/ David K. Sargent
------------------------------------
Name: David K. Sargent
Title: President
HORIZON HIGH REACH, INC.
By: /s/ David K. Sargent
------------------------------------
Name: David K. Sargent
Title: President
UPRIGHT FOREIGN SALES CORPORATION
By: /s/ David K. Sargent
------------------------------------
Name: David K. Sargent
Title: President
<PAGE> 125
S-2
U.S. TRUST COMPANY OF CALIFORNIA, N.A.,
as Trustee
By: /s/ James J.McGinley
------------------------------------
Name: James J. McGinley
Title: Authorized Signatory
<PAGE> 126
EXHIBIT A
CUSIP
W.R. CARPENTER NORTH AMERICA, INC.
No. $
10 5/8% SENIOR SUBORDINATED NOTE DUE 2007
W.R. CARPENTER NORTH AMERICA, INC., a Delaware corporation (the
"Company"), for value received, promises to pay to
or registered assigns the principal sum of $
dollars on June 15, 2007.
Interest Payment Dates: June 15 and December 15
Record Dates: June 1 and December 1
Reference is made to the further provisions of this Note contained
herein, which will for all purposes have the same effect as if set forth at this
place.
<PAGE> 127
IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officers.
W.R. CARPENTER NORTH AMERICA, INC.
By:______________________________
Name:
Title: President
By:______________________________
Name:
Title: Chief Financial Officer
Dated:
Certificate of Authentication
This is one of the 10 5/8% Senior Subordinated Notes due 2007 referred
to in the within-mentioned Indenture.
U.S. TRUST COMPANY OF CALIFORNIA, N.A.,
as Trustee
By:_____________________________
Authorized Signature
<PAGE> 128
[FORM OF REVERSE OF NOTE]
W.R. CARPENTER NORTH AMERICA, INC.
10 5/8% SENIOR SUBORDINATED NOTE DUE 2007
1. Interest. W.R. CARPENTER NORTH AMERICA, INC., a Delaware
corporation (the "Company"), promises to pay, until the principal hereof is paid
or made available for payment, interest on the principal amount set forth on the
face hereof at a rate of 10 5/8% per annum. Interest hereon will accrue from and
including the most recent date to which interest has been paid or, if no
interest has been paid, from and including June 10, 19971 to but excluding the
date on which interest is paid. Interest shall be payable in arrears on each
June 15 and December 15 commencing December 15, 1997. Interest will be computed
on the basis of a 360-day year of twelve 30-day months. The Company shall pay
interest on overdue principal and on overdue interest (to the full extent
permitted by law) at a rate of 10 5/8% per annum.
2. Method of Payment. The Company will pay interest hereon
(except defaulted interest) to the Persons who are registered Holders at the
close of business on June 1 or December 1 next preceding the interest payment
date (whether or not a Business Day). Holders must surrender Notes to a Paying
Agent to collect principal payments. The Company will pay principal and interest
in money of the United States of America that at the time of payment is legal
tender for payment of public and private debts. Interest may be paid by check
mailed to the Holder entitled thereto at the address indicated on the register
maintained by the Registrar for the Notes.
3. Paying Agent and Registrar. Initially, U.S. TRUST COMPANY OF
CALIFORNIA, N.A. (the "Trustee") will act as a Paying Agent and Registrar. The
Company may change any Paying Agent or Registrar without notice. Neither the
Company nor any of its Affiliates may act as Paying Agent or Registrar.
- --------
* For Subsequent Series Notes, will be the original issue date or such other
date as the Company and the Holder may agree.
<PAGE> 129
4. Indenture. The Company issued the Notes under an Indenture
dated as of June 10, 1997 (the "Indenture") among the Company, the Guarantors
(as defined in the Indenture) and the Trustee. This is one of an issue of Notes
of the Company issued, or to be issued, under the Indenture. 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 (15 U.S. Code Section
77aaa-77bbbb), as amended from time to time. The Notes are subject to all such
terms, and Holders are referred to the Indenture and such Act for a statement of
them. Capitalized and certain other terms used herein and not otherwise defined
have the meanings set forth in the Indenture. The Notes are obligations of the
Company limited in aggregate principal amount to $150.0 million.
5. Optional Redemption. The Company, at its option, may redeem
the Notes, in whole or in part, at any time on or after June 15, 2002 upon not
less than 30 nor more than 60 days' notice, at the redemption prices (expressed
as percentages of principal amount), set forth below, together, in each case,
with accrued and unpaid interest to the Redemption Date, if redeemed during the
twelve month period beginning on June 15 of each year listed below:
<TABLE>
<CAPTION>
Year Redemption Price
---- ----------------
<S> <C>
2002.................................................... 105.313%
2003.................................................... 103.542%
2004.................................................... 101.771%
2005 and thereafter..................................... 100.000%
</TABLE>
Notwithstanding the foregoing, the Company may redeem in the
aggregate up to 35% of the original principal amount of Notes at any time and
from time to time on or prior to June 15, 2000 at a redemption price equal to
110.625% of the aggregate principal amount thereof, plus accrued and unpaid
interest thereon to the Redemption Date with the Net Proceeds of one or more
Public Equity Offerings; provided, that at least $75.0 million of the principal
amount of Notes originally issued remains outstanding immediately after the
occurrence of any such redemption and that any such redemption occurs within 90
days following the closing of any such Public Equity Offering.
6. Notice of Redemption. Notice of redemption will be mailed
at least 30 days but not more than 60 days before the Redemption Date to each
Holder of Notes to be redeemed at his registered address. On and after the
Redemption Date, unless the Company defaults in making the redemption payment,
interest
<PAGE> 130
ceases to accrue on Notes or portions thereof called for redemption.
7. Offers to Purchase. The Indenture provides that upon the
occurrence of a Change of Control or an Asset Sale and subject to further
limitations contained therein, the Company shall make an offer to purchase
outstanding Notes in accordance with the procedures set forth in the Indenture.
8. Registration Rights. Pursuant to a Registration Rights
Agreement among the Company, the Guarantors, and CIBC Wood Gundy Securities
Corp. and BancAmerica Securities, Inc., as Initial Purchasers of the Notes, the
Company will be obligated to consummate an exchange offer pursuant to which the
Holder of this Note shall have the right to exchange this Note for notes of a
separate series issued under the Indenture (or a trust indenture substantially
identical to the Indenture in accordance with the terms of the Registration
Rights Agreement) which have been registered under the Securities Act, in like
principal amount and having substantially identical terms as the Notes. The
Holders shall be entitled to receive certain additional interest payments in the
event such exchange offer is not consummated and upon certain other conditions,
all pursuant to and in accordance with the terms of the Registration Rights
Agreement.
9. Denominations, Transfer, Exchange. The Notes are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. A Holder may transfer or exchange Notes in accordance with
the Indenture. The Registrar may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and to pay to it any
taxes and fees required by law or permitted by the Indenture. The Registrar need
not register the transfer of or exchange any Notes or portion of a Note selected
for redemption, or register the transfer of or exchange any Notes for a period
of 15 days before a mailing of notice of redemption.
10. Persons Deemed Owners. The registered Holder of this Note may
be treated as the owner of this Note for all purposes.
11. Unclaimed Money. If money for the payment of principal or
interest remains unclaimed for two years, the Trustee will pay the money back to
the Company at its written request. After that, Holders entitled to the money
must look to the Company for payment as general creditors unless an "abandoned
property" law designates another Person.
<PAGE> 131
12. Amendment, Supplement, Waiver, Etc. The Company, the
Guarantors and the Trustee (if a party thereto) may, without the consent of the
Holders of any outstanding Notes, amend, waive or supplement the Indenture or
the Notes for certain specified purposes, including, among other things, curing
ambiguities, defects or inconsistencies, maintaining the qualification of the
Indenture under the Trust Indenture Act of 1939, as amended, and making any
change that does not materially and adversely affect the rights of any Holder.
Other amendments and modifications of the Indenture or the Notes may be made by
the Company, the Guarantors and the Trustee with the consent of the Holders of
not less than a majority of the aggregate principal amount of the outstanding
Notes, subject to certain exceptions requiring the consent of the Holders of the
particular Notes to be affected.
13. Restrictive Covenants. The Indenture imposes certain
limitations on the ability of the Company and its Restricted Subsidiaries to,
among other things, incur additional Indebtedness, make payments in respect of
their Capital Stock or certain Indebtedness, make certain Investments, create or
incur liens, enter into transactions with Affiliates, enter into agreements
restricting the ability of Restricted Subsidiaries to pay dividends and make
distributions, issue Preferred Stock of any Restricted Subsidiaries of the
Company, enter into sale and leaseback transactions and on the ability of the
Company to merge or consolidate with any other Person or transfer all or
substantially all of the Company's or any Guarantor's assets. Such limitations
are subject to a number of important qualifications and exceptions. Pursuant to
Section 4.04 of the Indenture, the Company must annually report to the Trustee
on compliance with such limitations.
14. Successor Corporation. When a successor corporation
assumes all the obligations of its predecessor under the Notes and the Indenture
and the transaction complies with the terms of Article 5 of the Indenture, the
predecessor corporation will, except as provided in Article 5, be released from
those obligations.
15. Defaults and Remedies. Events of Default are set forth in
the Indenture. Subject to certain limitations in the Indenture, if an Event of
Default (other than an Event of Default specified in Section 6.01(6) or (7) of
the Indenture with respect to the Company) occurs and is continuing, the Trustee
or the Holders of not less than 25% in aggregate principal amount of the
outstanding Notes may, by written notice to the Trustee and the Company, and the
Trustee upon the request
<PAGE> 132
of the Holders of not less than 25% in aggregate principal amount of the
outstanding Notes shall, declare all principal of and accrued interest on all
Notes to be immediately due and payable and (i) such amounts shall become
immediately due and payable or (ii) if there are any amounts outstanding under
or in respect of any Credit Facility, such amounts shall become due and payable
upon the first to occur of an acceleration of amounts outstanding under or in
respect of such Credit Facility or five Business Days after receipt by the
Company and the representative of the holders of Indebtedness under or in
respect of the Credit Facility, of notice of the acceleration of the Notes. If
an Event of Default specified in Section 6.01(6) or (7) of the Indenture occurs
with respect to the Company, the principal amount of and interest on, all Notes
shall ipso facto become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any Holder. 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 Trustee may withhold from Holders notice of
any continuing default (except a default in payment of principal or interest) if
it determines that withholding notice is in their interests.
16. Trustee Dealings with Company. The Trustee, 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.
17. No Recourse Against Others. No director, officer, employee
incorporator or stockholder, of the Company or any Guarantor shall have any
liability for any obligations of the Company or the Guarantors under the Notes,
the Indenture or the Guarantees or for a claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder of Notes 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.
18. Discharge. The Company's obligations pursuant to the
Indenture will be discharged, except for obligations pursuant to certain
sections thereof, subject to the terms of the Indenture, upon the payment of all
the Notes or upon the irrevocable deposit with the Trustee of United States
dollars or U.S. Government Obligations sufficient to pay when due prin-
<PAGE> 133
cipal of and interest on the Notes to maturity or redemption, as the case may
be.
19. Guarantees. The Note will be entitled to the benefits of
certain Guarantees made for the benefit of the Holders. Reference is hereby made
to the Indenture for a statement of the respective rights, limitations of
rights, duties and obligations thereunder of the Guarantors, the Trustee and the
Holders.
20. Authentication. This Note shall not be valid until the
Trustee signs the certificate of authentication on the other side of this Note.
21. Governing Law. THE INTERNAL LAWS OF THE STATE OF NEW YORK
SHALL GOVERN THIS NOTE WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS. The
Trustee, the Company, the Guarantor and the Holders agree to submit to the
jurisdiction of the courts of the State of New York in any action or proceeding
arising out of or relating to the Indenture or the Notes.
22. Abbreviations. Customary abbreviations may be used in the
name of a Holder or an assignee, such as: TEN COM (= tenants in common), TENANT
(= 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).
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture. Requests may be made to:
W.R. CARPENTER NORTH AMERICA, INC.
1775 Park Street
Selma, California 93662
Attention: Chief Financial Officer
<PAGE> 134
ASSIGNMENT
I or we assign and transfer this Note to:
(Insert assignee's social security or tax I.D. number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type name, address and zip code of assignee)
and irrevocably appoint:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Agent to transfer this Note on the books of the Company. The Agent may
substitute another to act for him.
<PAGE> 135
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 4.19 of the
Indenture, check the appropriate box:
[ ] Section 4.10 [ ] Section 4.19
If you want to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.19 of the Indenture, state the
amount you elect to have purchased:
$____________________________
(multiple of $1,000)
Date: _______________________
Your Signature:_________________________________
(Sign exactly as your name
appears on the face of this Note)
_____________________________
Signature Guaranteed
<PAGE> 136
EXHIBIT B
[FORM OF LEGEND FOR 144A NOTE]
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE
UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS
SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A)
IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE ACT)
OR (B) IT IS AN "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR
(7) UNDER THE ACT) (AN "ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND
IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION, (2) AGREES THAT IT WILL NOT
WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS NOTE RESELL OR OTHERWISE
TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (C) INSIDE THE
UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A
UNDER THE ACT, (D) INSIDE THE UNITED STATES TO AN ACCREDITED INVESTOR THAT,
PRIOR TO SUCH TRANSFER, FURNISHES (OR HAS FURNISHED ON ITS BEHALF BY A U.S.
BROKER-DEALER) TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS
AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS NOTE (THE FORM
OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE), (E) OUTSIDE THE UNITED STATES
IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE ACT OR (F)
PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE ACT
(IF AVAILABLE) (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS NOTE IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION
WITH ANY TRANSFER OF THIS NOTE WITHIN TWO YEARS AFTER ORIGINAL ISSUANCE OF THIS
NOTE, IF THE PROPOSED TRANSFEREE IS AN ACCREDITED INVESTOR, THE HOLDER MUST,
PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE COMPANY SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN
EXEMPTION FROM OR IN A TRANSACTION NOT SUBJECT TO THE REGISTRATION REQUIREMENTS
OF THE ACT. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES"
AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE ACT.
B-1
<PAGE> 137
[FORM OF ASSIGNMENT FOR 144A NOTE]
I or we assign and transfer this Note to:
(Insert assignee's social security or tax I.D. number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type name, address and zip code of assignee)
and irrevocably appoint:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Agent to transfer this Note on the books of the Company. The Agent may
substitute another to act for him.
[Check One]
[ ] (a) this Note is being transferred in compliance with the exemption
from registration under the Securities Act provided by Rule 144A
thereunder.
or
[ ] (b) this Note is being transferred other than in accordance with (a)
above and documents are being furnished which comply with the
conditions of transfer set forth in this Note and the Indenture.
If none of the foregoing boxes is checked, the Trustee or Registrar shall not be
obligated to register this Note in the name of any person other than the Holder
hereof unless and until the conditions to any such transfer of registration set
forth herein and in Section 2.17 of the Indenture shall have been satisfied.
Date: ________________________ Your Signature: __________________
(Sign exactly as your name
appears on the face of this Note)
Signature Guaranteed ____________________________________________________
B-2
<PAGE> 138
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing
this Note for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act
and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Company as the
undersigned has requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is relying upon the
undersigned's foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
Dated: ______________________ _________________________________
NOTICE: To be executed by
an executive officer
B-3
<PAGE> 139
EXHIBIT C
[FORM OF LEGEND FOR REGULATION S NOTE]
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, UNLESS SO
REGISTERED, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR
THE ACCOUNT OR BENEFIT OF, U.S. PERSONS UNLESS REGISTERED UNDER THE SECURITIES
ACT OR EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
C-1
<PAGE> 140
[FORM OF ASSIGNMENT FOR REGULATION S NOTE]
I or we assign and transfer this Note to:
(Insert assignee's social security or tax I.D. number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type name, address and zip code of assignee)
and irrevocably appoint:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Agent to transfer this Note on the books of the Company. The Agent may
substitute another to act for him.
[Check One]
[ ] (a) this Note is being transferred in compliance with the exemption
from registration under the Securities Act provided by Rule 144A
thereunder.
or
[ ] (b) this Note is being transferred other than in accordance with (a)
above and documents are being furnished which comply with the
conditions of transfer set forth in this Note and the Indenture.
If none of the foregoing boxes is checked, the Trustee or Registrar shall not be
obligated to register this Note in the name of any person other than the Holder
hereof unless and until the conditions to any such transfer of registration set
forth herein and in Section 2.17 of the Indenture shall have been satisfied.
Date: _________________________ Your Signature: ___________________
(Sign exactly as your name
appears on the face of this Note)
Signature Guaranteed _____________________________________________________
C-2
<PAGE> 141
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing
this Note for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act
and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Company as the
undersigned has requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is relying upon the
undersigned's foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
Dated: ________________________ _________________________________
NOTICE: To be executed by
an executive officer
C-3
<PAGE> 142
EXHIBIT D
[FORM OF LEGEND FOR GLOBAL NOTE]
Any Global Note authenticated and delivered hereunder shall bear
a legend (which would be in addition to any other legends required in the case
of a Restricted Note) in substantially the following form:
THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A
NOMINEE OF A DEPOSITORY. THIS NOTE IS NOT EXCHANGEABLE FOR NOTES REGISTERED IN
THE NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE EXCEPT IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS NOTE
(OTHER THAN A TRANSFER OF THIS NOTE AS A WHOLE 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) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES
DESCRIBED IN THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (A NEW YORK CORPORATION) ("DTC")
TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IT REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), 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.
D-1
<PAGE> 143
EXHIBIT E
Form of Certificate to Be
Delivered in Connection with
Transfers to Non-QIB Accredited Investors
-----------, ----
Attention:
Re: W.R. CARPENTER NORTH AMERICA, INC. (the "Company")
10 5/8% Senior Subordinated Notes due 2007 (the "Notes")
--------------------------------------------------------
Dear Sirs:
In connection with our proposed purchase of Notes, we confirm
that:
1. We understand that any subsequent transfer of the Notes is
subject to certain restrictions and conditions set forth in the
Indenture dated as of June 10, 1997 relating to the Notes and we agree
to be bound by, and not to resell, pledge or otherwise transfer the
Notes except in compliance with, such restrictions and conditions and
the Securities Act of 1933, as amended (the "Securities Act").
2. We understand that the Notes have not been registered under
the Securities Act, and that the Notes may not be offered, sold, pledged
or otherwise transferred except as permitted in the following sentence.
We agree, on our own behalf and on behalf of any accounts for which we
are acting as hereinafter stated, that if we should sell any Notes, we
will do so only (i) to the Company or any subsidiary thereof, (ii)
pursuant to an effective registration statement under the Securities
Act, (iii) in accordance with Rule 144A under the Securities Act to a
"qualified institutional buyer" (as defined in Rule 144A), (iv) to an
institutional "accredited investor" (as defined below) that, prior to
such transfer, furnishes (or has furnished on its behalf by a U.S.
broker-dealer) to you a
E-1
<PAGE> 144
signed letter containing certain representations and agreements relating
to the restrictions on transfer of the Notes, (v) outside the United
States to persons other than U.S. persons in offshore transactions
meeting the requirements of Rule 904 of Regulation S under the
Securities Act, or (vi) pursuant to any other exemption from
registration under the Securities Act (if available), and we further
agree to provide to any person purchasing any of the Notes from us a
notice advising such purchaser that resales of the Notes are restricted
as stated herein.
3. We understand that, on any proposed resale of any Notes, we
will be required to furnish to you and the Company such certifications,
legal opinions and other information as you and the Company may
reasonably require to confirm that the proposed sale complies with the
foregoing restrictions. We further understand that the Notes purchased
by us will bear a legend to the foregoing effect.
4. We are an institutional "accredited investor" (as defined in
Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities
Act) and have such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of our
investment in the Notes, and we and any accounts for which we are acting
each are able to bear the economic risk of our or their investment, as
the case may be.
5. We are acquiring the Notes purchased by us for our account or
for one or more accounts (each of which is an institutional "accredited
investor") as to each of which we exercise sole investment discretion.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceeding or official inquiry with respect
to the matters covered hereby.
Very truly yours,
[Name of Transferee]
By: _________________________________
Authorized Signature
E-2
<PAGE> 145
EXHIBIT F
Form of Certificate to Be Delivered
in Connection with Transfers
Pursuant to Regulation S
----------, ----
Attention:
Re: W.R. CARPENTER NORTH AMERICA, INC. the "Company")
10 5/8% Senior Subordinated Notes due 2007 (the "Notes")
--------------------------------------------------------
Dear Sirs:
In connection with our proposed sale of $__________ aggregate
principal amount of the Notes, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the U.S. Securities Act of
1933, as amended (the "Securities Act"), and, accordingly, we represent that:
(1) the offer of the Notes was not made to a U.S. person or to
a person in the United States;
(2) either (a) at the time the buy offer was originated, the
transferee was outside the United States or we and any person acting on
our behalf reasonably believed that the transferee was outside the
United States, or (b) the transaction was executed in, on or through the
facilities of a designated off-shore securities market and neither we
nor any person acting on our behalf knows that the transaction has been
pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United
States in contravention of the requirements of Rule 903(b) or Rule
904(b) of Regulation S, as applicable;
F-1
<PAGE> 146
(4) the transaction is not part of a plan or scheme to evade
the registration requirements of the Securities Act; and
(5) we have advised the transferee of the transfer
restrictions applicable to the Notes.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Transferee]
By: ________________________________
Authorized Signature
F-2
<PAGE> 147
Each of the undersigned (the "Guarantors") hereby jointly and
severally unconditionally guarantees, to the extent set forth in the Indenture
dated as of June 10, 1997 by and among W.R. CARPENTER NORTH AMERICA, INC., as
issuer, the Guarantors, as guarantors, and U.S. TRUST COMPANY OF CALIFORNIA,
N.A., as Trustee (as amended, restated or supplemented from time to time, the
"Indenture"), and subject to the provisions of the Indenture, (a) the due and
punctual payment of the principal of, and premium, if any, and interest on the
Notes, when and as the same shall become due and payable, whether at maturity,
by acceleration or otherwise, the due and punctual payment of interest on
overdue principal of, and premium and, to the extent permitted by law, interest,
and the due and punctual performance of all other obligations of the Company to
the Noteholders or the Trustee, all in accordance with the terms set forth in
Article 11 of the Indenture, and (b) in case of any extension of time of payment
or renewal of any Notes or any of such other obligations, that the same will be
promptly paid in full when due or performed in accordance with the terms of the
extension or renewal, whether at stated maturity, by acceleration or otherwise.
The obligations of the Guarantors to the Noteholders and to the
Trustee pursuant to this Guarantee and the Indenture are expressly set forth in
Article 11 of the Indenture and reference is hereby made to the Indenture for
the precise terms and limitations of this Guarantee.
[SIGNED ON THE FOLLOWING PAGE]
<PAGE> 148
IN WITNESS WHEREOF, each of the Guarantors has caused this Guarantee to be
signed by a duly authorized officer.
UPRIGHT, INC.
By:
---------------------------------
Name: David K. Sargent
Title: President
HORIZON HIGH REACH, INC.
By:
---------------------------------
Name: David K. Sargent
Title: President
UPRIGHT FOREIGN SALES CORPORATION
By:
---------------------------------
Name: David K. Sargent
Title: President
<PAGE> 1
EXHIBIT 4.2
- --------------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT
Dated as of June 10, 1997
by and among
W.R. CARPENTER NORTH AMERICA, INC.,
THE GUARANTORS
named herein
and
THE INITIAL PURCHASERS
named herein
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. Definitions............................................................................ 1
2. Exchange Offer......................................................................... 5
3. Shelf Registration..................................................................... 8
4. Additional Interest.................................................................... 10
5. Registration Procedures................................................................ 12
6. Registration Expenses.................................................................. 23
7. Indemnification........................................................................ 24
8. Rules 144 and 144A..................................................................... 28
9. Underwritten Registrations............................................................. 28
10. Miscellaneous.......................................................................... 29
a. Remedies.......................................................................... 29
b. Enforcement....................................................................... 29
c. No Inconsistent Agreements........................................................ 29
d. Adjustments Affecting Registrable Notes........................................... 30
e. Amendments and Waivers............................................................ 30
f. Notices........................................................................... 30
g. Successors and Assigns............................................................ 31
h. Counterparts...................................................................... 31
i. Headings.......................................................................... 31
j. Governing Law..................................................................... 31
k. Severability...................................................................... 31
l. Entire Agreement.................................................................. 31
m. Joint and Several Obligations..................................................... 32
n. Notes Held by the Company or Its Affiliates....................................... 32
</TABLE>
-i-
<PAGE> 3
REGISTRATION RIGHTS AGREEMENT (the "Agreement") dated as of June 10,
1997, by and among W.R. CARPENTER NORTH AMERICA, INC., a Delaware corporation
(the "Company"), the Guarantors and CIBC WOOD GUNDY SECURITIES CORP. ("CIBC")
and BANCAMERICA SECURITIES, INC., as initial purchasers (the "Initial
Purchasers").
This Agreement is entered into in connection with the Securities
Purchase Agreement, dated as of June 4, 1997 among the Company, the Guarantors
and the Initial Purchasers (the "Purchase Agreement") relating to the sale by
the Company to the Initial Purchasers of $105,000,000 aggregate principal amount
of the Company's 10 5/8% Senior Subordinated Notes due 2007 (the "Notes") and
the guarantee of the Notes by the Guarantors (the "Guarantees"). In order to
induce the Initial Purchasers to enter into the Purchase Agreement, the Company
and the Guarantors have agreed to provide the registration rights set forth in
this Agreement to the Initial Purchasers and their direct and indirect
transferees and assigns. The execution and delivery of this Agreement is a
condition to the Initial Purchasers' obligation to purchase the Notes under the
Purchase Agreement.
The parties hereby agree as follows:
1. Definitions
As used in this Agreement, the following terms shall have the following
meanings:
Additional Interest: See Section 4(a).
Advice: See Section 5.
Applicable Period: See Section 2(b).
Closing: See the Purchase Agreement.
Company: See the introductory paragraph to this Agreement.
Effectiveness Date: The 135th day after the Issue Date.
Effectiveness Period: See Section 3(a).
Event Date: See Section 4(c).
<PAGE> 4
-2-
Exchange Act: The Securities Exchange Act of 1934, as amended, and the
rules and regulations of the SEC promulgated thereunder.
Exchange Notes: See Section 2(a).
Exchange Offer: See Section 2(a).
Exchange Registration Statement: See Section 2(a).
Filing Date: The 45th day after the Issue Date.
Guarantees: See the introductory paragraph of this Agreement.
Guarantors: (i) UpRight, Inc., (ii) Horizon High Reach, Inc., (iii)
UpRight Foreign Sales Corporation and (iv) any Person who becomes a Guarantor by
the terms of the Indenture (as defined herein).
Holder: Any holder of a Registrable Note or Registrable Notes.
Indemnified Person: See Section 7(c).
Indemnifying Person: See Section 7(c).
Indenture: The Indenture, dated as of June 10, 1997, among the Company,
the Guarantors and U.S. Trust Company of California, N.A., 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 Purchasers: See the introductory paragraph to this Agreement.
Initial Shelf Registration: See Section 3(a).
Inspectors: See Section 5(o).
Issue Date: The date on which the original Notes are sold to the
Initial Purchasers pursuant to the Purchase Agreement.
Lien: See the Indenture.
<PAGE> 5
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NASD: See Section 5(t).
Notes: See the introductory paragraphs to this Agreement.
Participant: See Section 7(a).
Participating Broker-Dealer: See Section 2(b).
Person: An individual, corporation, limited liability company,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization or government (including any agency or political
subdivision thereof).
Private Exchange: See Section 2(b).
Private Exchange Notes: See Section 2(b).
Prospectus: The prospectus included in any Registration Statement
(including, without limitation, any prospectus subject to completion and a
prospectus that includes any 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 Registrable Notes 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.
Purchase Agreement: See the introductory paragraphs to this Agreement.
Records: See Section 5(o).
Registrable Notes: The Notes upon original issuance of the Notes and at
all times subsequent thereto and, if issued, the Private Exchange Notes, until
in the case of any such Notes or any such Private Exchange Notes, as the case
may be, (i) a Registration Statement covering such Notes or such Private
Exchange Notes has been declared effective by the SEC and such Notes or such
Private Exchange Notes, as the case may be, have been disposed of in accordance
with such effective Registration Statement, (ii) such Notes or such Private
Exchange Notes, as the
<PAGE> 6
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case may be, are sold in compliance with Rule 144, (iii) in the case of any
Note, such Note has been exchanged for an Exchange Note or Exchange Notes
pursuant to an Exchange Offer or (iv) such Notes or such Private Exchange Notes,
as the case may be, cease to be outstanding.
Registration Default: See Section 4(a).
Registration Statement: Any registration statement of the Company or
the Guarantors, including, but not limited to, the Exchange Registration
Statement, which covers any of the Registrable Notes 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.
Rule 144: Rule 144 promulgated 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 providing for offers and sales of
securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of an issuer of such securities being
free of the registration and prospectus delivery requirements of the Securities
Act.
Rule 144A: Rule 144A promulgated 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 providing for offers and sales of
securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of an issuer of such securities being
free of the registration and prospectus delivery requirements of the Securities
Act.
Rule 415: Rule 415 promulgated 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 Act: The Securities Act of 1933, as amended, and the rules
and regulations of the SEC promulgated thereunder.
<PAGE> 7
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Shelf Notice: See Section 2(c).
Shelf Registration: See Section 3(b).
Subsequent Shelf Registration: See Section 3(b).
TIA: The Trust Indenture Act of 1939, as amended.
Trustee: The trustee under the Indenture and, if existent, the trustee
under any indenture governing the Exchange Notes and Private Exchange Notes (if
any).
Underwritten registration or underwritten offering: A registration in
which securities of the Company are sold to an underwriter(s) for reoffering to
the public.
2. Exchange Offer
(a) Each of the Company and the Guarantors jointly and severally agrees
to use its best efforts to file with the SEC as soon as practicable after the
Closing, but in no event later than the Filing Date, an offer to exchange (the
"Exchange Offer") any and all of the Registrable Notes (other than the Private
Exchange Notes, if any) for a like aggregate principal amount of debt securities
of the Company, guaranteed by the Guarantors, which are identical to the Notes
(the "Exchange Notes") (and which are entitled to the benefits of the Indenture
or a trust indenture which is substantially identical to the Indenture (other
than such changes to the Indenture or any such identical trust indenture as are
necessary to comply with any requirements of the SEC to effect or maintain the
qualification thereof under the TIA) and which, in either case, has been
qualified under the TIA), except that the Exchange Notes (other than the Private
Exchange Notes, if any) shall have been registered pursuant to an effective
registration statement under the Securities Act and will not contain terms with
respect to transfer restrictions. The Exchange Offer will be registered under
the Securities Act on the appropriate form (the "Exchange Registration
Statement") and will comply with all applicable tender offer rules and
regulations under the Exchange Act. Each of the Company and the Guarantors
jointly and severally agrees to use its best efforts to (x) cause the Exchange
Registration Statement to become effective under the Securities Act on or before
the Effectiveness Date; (y) keep the Exchange Offer open for at least 30 days
(or longer if required by applicable law) after the date that notice
<PAGE> 8
-6-
of the Exchange Offer is mailed to Holders; and (z) consummate the Exchange
Offer on or prior to the 60th day following the date on which the Exchange
Registration Statement is declared effective. Each Holder who participates in
the Exchange Offer will be required to represent that any Exchange Notes
received by it will be acquired in the ordinary course of its business, that 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 Notes in violation of the provisions of the Securities Act, that
such Holder is not an affiliate of any of the Company or the Guarantors within
the meaning of Rule 405 promulgated under the Securities Act or if it is such an
affiliate, that it will comply with the registration and prospectus delivery
requirements of the Securities Act, to the extent applicable and that is not
acting on behalf of any Person who could not truthfully make the foregoing
representations. Upon consummation of the Exchange Offer in accordance with this
Section 2, the provisions of this Agreement shall continue to apply, mutatis
mutandis, solely with respect to Registrable Notes that are Private Exchange
Notes and Exchange Notes held by Participating Broker-Dealers, and the Company
and the Guarantors shall have no further obligation to register Registrable
Notes (other than Private Exchange Notes and Exchange Notes held by
Participating Broker-Dealers) pursuant to Section 3 of this Agreement.
(b) The Company and the Guarantors shall include within the Prospectus
contained in the Exchange Registration Statement a section entitled "Plan of
Distribution," reasonably acceptable to the Initial Purchasers, which shall
contain 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 promulgated
under the Exchange Act) of Exchange Notes received by such broker-dealer in the
Exchange Offer (a "Participating Broker-Dealer"), whether such positions or
policies have been publicly disseminated by the staff of the SEC or such
positions or policies, in the reasonable judgment of the Initial Purchasers,
represent the prevailing views of the staff of the SEC. Such "Plan of
Distribution" section shall also allow the use of the Prospectus by all Persons
subject to the prospectus delivery requirements of the Securities Act, including
all Participating Broker-Dealers, and include a statement describing the means
by which Participating Broker-Dealers may resell the Exchange Notes.
<PAGE> 9
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Each of the Company and the Guarantors shall use its best efforts to
keep the Exchange Registration Statement effective and to amend and supplement
the Prospectus contained therein, in order to permit such Prospectus to be
lawfully delivered by all Persons subject to the prospectus delivery
requirements of the Securities Act for such period of time as such Persons must
comply with such requirements in order to resell the Exchange Notes, provided
that such period shall not exceed 180 days (or such longer period if extended
pursuant to the last paragraph of Section 5) (the "Applicable Period").
If, prior to consummation of the Exchange Offer, the Initial Purchasers
holds any Notes acquired by it and having, or which are reasonably likely to be
determined to have, the status as an unsold allotment in the initial
distribution, the Company and the Guarantors upon the request of the Initial
Purchasers shall, simultaneously with the delivery of the Exchange Notes in the
Exchange Offer, issue and deliver to the Initial Purchasers, in exchange (the
"Private Exchange") for the Notes held by the Initial Purchasers, a like
principal amount of debt securities of the Company guaranteed by the Guarantors,
that are identical in all material respects to the Exchange Notes (the "Private
Exchange Notes") (and which are issued pursuant to the same indenture as the
Exchange Notes) except for the placement of a restrictive legend on the Private
Exchange Notes. If possible, the Private Exchange Notes shall bear the same
CUSIP number as the Exchange Notes. Interest on the Exchange Notes and Private
Exchange Notes 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 the Issue Date.
In connection with the Exchange Offer, the Company and the Guarantors
shall:
(i) mail to each Holder a copy of the Prospectus forming part
of the Exchange Registration Statement, together with an appropriate
letter of transmittal and related documents;
(ii) utilize the services of a depositary for the Exchange
Offer with an address in the Borough of Manhattan, The City of New
York; and
<PAGE> 10
-8-
(iii) 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.
As soon as practicable after the close of the Exchange Offer or the
Private Exchange, as the case may be, the Company and the Guarantors shall:
(i) accept for exchange all Notes tendered and not validly
withdrawn pursuant to the Exchange Offer or the Private Exchange;
(ii) deliver to the Trustee for cancellation all Notes so
accepted for exchange; and
(iii) cause the Trustee to authenticate and deliver promptly
to each Holder of Notes, Exchange Notes or Private Exchange Notes, as
the case may be, equal in principal amount to the Notes of such Holder
so accepted for exchange.
The Exchange Notes and the Private Exchange Notes may be issued under
(i) the Indenture or (ii) an indenture substantially identical to the Indenture,
which in either event will provide that (1) the Exchange Notes will not be
subject to the transfer restrictions set forth in the Indenture and (2) the
Private Exchange Notes will be subject to the transfer restrictions set forth in
the Indenture. The Indenture or such indenture shall provide that the Exchange
Notes, the Private Exchange Notes and the Notes will vote and consent together
on all matters as one class and that neither the Exchange Notes, the Private
Exchange Notes nor the Notes will have the right to vote or consent as a
separate class on any matter.
(c) If (1) prior to the consummation of the Exchange Offer, the Company
and the Guarantors or Holders of at least a majority in aggregate principal
amount of the Registrable Notes reasonably determine in good faith that (i) the
Exchange Notes would not, upon receipt, be tradeable by such Holders which are
not affiliates (within the meaning of the Securities Act) of the Company or the
Guarantors without restriction under the Securities Act and without restrictions
under applicable state securities laws, (ii) the interests of the Holders under
this Agreement would be adversely affected by the consummation of the Exchange
Offer or (iii) after conferring with counsel, the SEC is
<PAGE> 11
-9-
unlikely to permit the commencement of the Exchange Offer prior to the
Effectiveness Date, (2) subsequent to the consummation of the Private Exchange,
any holder of the Private Exchange Notes so requests or (3) the Exchange Offer
is commenced and not consummated within 60 days of the date on which the
Exchange Registration Statement is declared effective, then the Company and the
Guarantors shall promptly deliver to the Holders and the Trustee written notice
thereof (the "Shelf Notice") and shall file an Initial Shelf Registration
pursuant to Section 3. Following the delivery of a Shelf Notice to the Holders
of Registrable Notes (in the circumstances contemplated by clauses (1) and (3)
of the preceding sentence), the Company and the Guarantors shall not have any
further obligation to conduct the Exchange Offer or the Private Exchange under
this Section 2.
3. Shelf Registration
If a Shelf Notice is delivered as contemplated by Section 2(c), then:
(a) Initial Shelf Registration. The Company and the Guarantors 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
Notes (the "Initial Shelf Registration"). If the Company and the Guarantors
shall have not yet filed an Exchange Registration Statement, each of the Company
and the Guarantors shall use its best efforts to file with the SEC the Initial
Shelf Registration on or prior to the Filing Date. In any other instance, each
of the Company and the Guarantors shall use its best efforts to file with the
SEC the Initial Shelf Registration within 30 days of the delivery of the Shelf
Notice. The Initial Shelf Registration shall be on Form S-1 or another
appropriate form permitting registration of such Registrable Notes for resale by
such Holders in the manner or manners designated by them (including, without
limitation, one or more underwritten offerings). The Company and the Guarantors
shall not permit any securities other than the Registrable Notes to be included
in the Initial Shelf Registration or any Subsequent Shelf Registration. Each of
the Company and the Guarantors shall use its best efforts to cause the Initial
Shelf Registration to be declared effective under the Securities Act, if an
Exchange Registration Statement has not yet been declared effective, on or prior
to the Effectiveness Date, or, in any other instance, as soon as practicable
thereafter and in no event later than 45 days after filing of the Initial Shelf
<PAGE> 12
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Registration, and to keep the Initial Shelf Registration continuously effective
under the Securities Act until the date which is 24 months from the date on
which such Initial Shelf Registration is declared effective (subject to
extension pursuant to the last paragraph of Section 5 hereof), or such shorter
period ending when (i) all Registrable Notes covered by the Initial Shelf
Registration have been sold in the manner set forth and as contemplated in the
Initial Shelf Registration or (ii) a Subsequent Shelf Registration covering all
of the Registrable Notes has been declared effective under the Securities Act
(the "Effectiveness Period").
(b) Subsequent Shelf Registrations. If the Initial Shelf Registration
or any Subsequent Shelf Registration ceases to be effective for any reason at
any time during the Effectiveness Period, each of the Company and the Guarantors
shall use its best efforts to obtain the prompt withdrawal of any order
suspending the effectiveness thereof, and in any event shall within 45 days of
such cessation of effectiveness amend the Shelf Registration in a manner
reasonably expected to obtain the withdrawal of the order suspending the
effectiveness thereof, or file an additional "shelf" Registration Statement
pursuant to Rule 415 covering all of the Registrable Notes (a "Subsequent Shelf
Registration"). If a Subsequent Shelf Registration is filed, each of the Company
and the Guarantors 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 Registration Statement 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 or any Subsequent
Shelf Registration was previously continuously effective. As used herein the
term "Shelf Registration" means the Initial Shelf Registration and any
Subsequent Shelf Registration.
(c) Supplements and Amendments. The Company and the Guarantors shall
promptly supplement and amend the Shelf Registration if required by the rules,
regulations or instructions applicable to the registration form used for such
Shelf Registration, if required by the Securities Act, or if requested by the
Holders of a majority in aggregate principal amount of the Registrable Notes
covered by such Registration Statement or by any underwriter(s) of such
Registrable Notes.
<PAGE> 13
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4. Additional Interest
(a) The Company and the Initial Purchasers agree that the Holders of
Registrable Notes will suffer damages if the Company fails to fulfill its
obligations under Section 2 or Section 3 hereof and that it would not be
feasible to ascertain the extent of such damages with precision. Accordingly,
the Company agrees to pay additional interest on the Notes ("Additional
Interest") under the circumstances and to the extent set forth below:
(i) if neither the Exchange Registration Statement nor the
Initial Shelf Registration has been filed on or prior to the Filing
Date;
(ii) if neither the Exchange Registration Statement nor the
Initial Shelf Registration has been declared effective on or prior to
the Effectiveness Date;
(iii) if an Initial Shelf Registration required by Section
2(c)(2) has not been filed on or prior to the date required by Section
3(a);
(iv) if an Initial Shelf Registration required by Section
2(c)(2) has not been declared effective on or prior to the date
required by Section 3(a); and/or
(v) if (A) the Company has not exchanged the Exchange Notes
for all Notes validly tendered in accordance with the terms of the
Exchange Offer on or prior to 60 days after the Exchange Registration
Statement was declared effective or (B) the Exchange Registration
Statement ceases to be effective at any time prior to the time that the
Exchange Offer is consummated or (C) if applicable, the Shelf
Registration has been declared effective and such Shelf Registration
ceases to be effective at any time during the Effectiveness Period;
(each such event referred to in clauses (i) through (v) above is a "Registration
Default"), the sole remedy available to Holders of the Notes will be the
immediate accrual of Additional Interest as follows: the per annum interest rate
on the Notes will increase by .50% during the first 90-day period following the
occurrence of a Registration Default and until it is waived or cured; and the
per annum interest rate will increase by an
<PAGE> 14
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additional .25% for each subsequent 90-day period during which the Registration
Default remains uncured, up to a maximum additional interest rate of 2.0% per
annum, provided, however, that only Holders of Private Exchange Notes shall be
entitled to receive Additional Interest as a result of a Registration Default
pursuant to clause (iii) or (iv), provided, further, that (1) upon the filing of
the Exchange Registration Statement or the Initial Shelf Registration (in the
case of (i) above), (2) upon the effectiveness of the Exchange Registration
Statement or a Shelf Registration (in the case of (ii) above), (3) upon the
filing of the Shelf Registration (in the case of (iii) above), (4) upon the
effectiveness of the Shelf Registration (in the case of (iv) above), or (5) upon
the exchange of Exchange Notes for all Notes tendered (in the case of (v)(A)
above), or upon the effectiveness of the Exchange Registration Statement which
had ceased to remain effective (in the case of (v)(B) above), or upon the
effectiveness of the Shelf Registration which had ceased to remain effective (in
the case of (v)(C) above), Additional Interest on the Notes as a result of such
clause (i), (ii), (iii), (iv) or (v) (or the relevant subclause thereof), as the
case may be, shall cease to accrue and the interest rate on the Notes will
revert to the interest rate originally borne by the Notes.
(b) Notwithstanding the foregoing, no Additional Interest will be
payable with respect to a Registration Default described in clause (v)(C) above,
if pending a material corporate transaction, the Company issues a notice that
the registration statement, or the prospectus contained therein, is unusable, or
such notice is required under applicable securities laws to be issued by the
Company, and the aggregate number of days in any consecutive twelve month period
for which all such notices have been issued or required to be issued has not
exceeded 30 days in the aggregate.
(c) The Company and the Guarantors shall notify the Trustee within one
business day after each and every date on which an event occurs in respect of
which Additional Interest is required to be paid (an "Event Date"). Any amounts
of Additional Interest due pursuant to (a)(i), (a)(ii) or (a)(iii) of this
Section 4 will be payable in cash semi-annually on each June 15 and December 15
(to the Holders of record on the June 1 and December 1 immediately preceding
such dates), commencing with the first such date occurring after any such
Additional Interest commences to accrue and until such Registration Default is
cured,
<PAGE> 15
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by depositing with the Trustee, in trust for the benefit of such Holders,
immediately available funds in sums sufficient to pay such Additional Interest.
The amount of Additional Interest will be determined by multiplying the
applicable Additional Interest rate by the principal amount of the Registrable
Notes, multiplied by a fraction, the numerator of which is the number of days
such Additional Interest rate was applicable during such period (determined on
the basis of a 360-day year comprised of twelve 30-day months and, in the case
of a partial month, the actual number of days elapsed), and the denominator of
which is 360.
5. Registration Procedures
In connection with the filing of any Registration Statement pursuant to
Section 2 or 3 hereof, the Company and the Guarantors shall effect such
registrations to permit the sale of the securities covered thereby in accordance
with the intended method or methods of disposition thereof, and pursuant thereto
the Company and the Guarantors shall:
(a) Prepare and file with the SEC, prior to the Filing Date, a
Registration Statement or Registration Statements as prescribed by
Section 2 or 3, and use their respective best efforts to cause each
such Registration Statement to become effective and remain effective as
provided herein, provided that, if (1) such filing is pursuant to
Section 3, or (2) a Prospectus contained in an Exchange 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 Notes during the Applicable Period, before filing any
Registration Statement or Prospectus or any amendments or supplements
thereto, the Company and the Guarantors shall, if requested, furnish to
and afford the Holders of the Registrable Notes covered by such
Registration Statement and each such Participating Broker-Dealer, as
the case may be, their counsel and the managing underwriter(s), if any,
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 (at least 5
business days prior to such filing). The Company and the Guarantors
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
<PAGE> 16
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in aggregate principal amount of the Registrable Notes covered by such
Registration Statement, or such Participating Broker-Dealer, as the
case may be, their counsel, or the managing underwriter(s), if any,
shall reasonably object.
(b) Prepare and file with the SEC such amendments and
post-effective amendments to each Shelf Registration or Exchange
Registration Statement, as the case may be, as may be necessary to keep
such Registration Statement continuously effective for the
Effectiveness Period or the Applicable Period, as the case may be;
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 with the provisions of the
Securities Act and the Exchange Act applicable to them with respect to
the disposition of all securities covered by such Registration
Statement as so amended or in such Prospectus as so supplemented and
with respect to the subsequent resale of any securities being sold by a
Participating Broker-Dealer covered by any such Prospectus; the Company
and the Guarantors shall be deemed not to have used their best efforts
to keep a Registration Statement effective during the Applicable Period
if any of them voluntarily takes any action that would result in
selling Holders of the Registrable Notes covered thereby or
Participating Broker-Dealers seeking to sell Exchange Notes not being
able to sell such Registrable Notes or such Exchange Notes during that
period unless such action is required by applicable law or unless the
Company and the Guarantors comply with this Agreement, including
without limitation, the provisions of clause 5(c)(v) below.
(c) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange 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 Notes during the Applicable Period, notify the selling Holders
of Registrable Notes, or each such Participating Broker-Dealer, as the
case may be, their counsel and the managing underwriter(s), if any,
promptly (but in any event within two business days), and confirm such
notice in writing, (i) when a Prospectus or any prospectus supplement
or post-effective
<PAGE> 17
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amendment thereto has been filed, and, with respect to a Registration
Statement or any post-effective amendment thereto, when the same has
become effective under the Securities Act (including in such notice a
written statement that any Holder may, upon request, obtain, without
charge, one conformed copy of such Registration Statement or
post-effective amendment thereto including financial statements and
schedules, documents incorporated or deemed to be incorporated by
reference and exhibits), (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 preliminary
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 the Registrable Notes or
resales of Exchange Notes by Participating Broker-Dealers the
representations and warranties of the Company contained in any
agreement (including any underwriting agreement) contemplated by
Section 5(n) below cease to be true and correct, (iv) of the receipt by
any of the Company or the Guarantors of any notification with respect
to the suspension of the qualification or exemption from qualification
of a Registration Statement or any of the Registrable Notes or the
Exchange Notes to be sold by any Participating Broker-Dealer for offer
or sale in any jurisdiction, or the initiation or threatening of any
proceeding for such purpose, (v) of the happening of any event or any
information becoming known 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,
or amendments or supplements to, such Registration Statement,
Prospectus or documents so that, in the case of the Registration
Statement, 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 not misleading, and that in
the case of the Prospectus, 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 or any Guarantor's reasonable determination that a
post-effective amendment to a Registration Statement would be
appropriate.
<PAGE> 18
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(d) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange 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 Notes during the Applicable Period, use their 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 Notes or the Exchange Notes to
be sold by any Participating Broker-Dealer, for sale in any
jurisdiction, and, if any such order is issued, to use their best
efforts to obtain the withdrawal of any such order at the earliest
possible moment.
(e) If a Shelf Registration is filed pursuant to Section 3 and
if requested by the managing underwriter(s), if any, or the Holders of
a majority in aggregate principal amount of the Registrable Notes being
sold in connection with an underwritten offering, (i) promptly
incorporate in a Prospectus supplement or post-effective amendment such
information as the managing underwriter(s), if any, or such Holders
reasonably request to be included therein and (ii) make all required
filings of such Prospectus supplement or such post-effective amendment
as soon as practicable after the Company has received notification of
the matters to be incorporated in such Prospectus supplement or
post-effective amendment.
(f) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange 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 Notes during the Applicable Period, furnish to each selling
Holder of Registrable Notes who so requests and to each such
Participating Broker-Dealer who so requests and to counsel and the
managing underwriter(s), if any, without charge, one conformed copy of
the Registration Statement or Registration Statements and each
post-effective amendment thereto, including financial statements and
schedules, and, if requested, all documents incorporated or deemed to
be incorporated therein by reference and all exhibits.
<PAGE> 19
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(g) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange 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 Notes during the Applicable Period, deliver to each selling
Holder of Registrable Notes, or each such Participating Broker-Dealer,
as the case may be, their counsel, and the managing underwriter or
underwriters, if any, without charge, as many copies of the Prospectus
or Prospectuses (including each form of preliminary Prospectus) and
each amendment or supplement thereto and any documents incorporated by
reference therein as such Persons may reasonably request; and, subject
to the last paragraph of this Section 5, each of the Company and the
Guarantors hereby consents to the use of such Prospectus and each
amendment or supplement thereto by each of the selling Holders of
Registrable Notes or each such Participating Broker-Dealer, as the case
may be, and the managing underwriter or underwriters or agents, if any,
and dealers (if any), in connection with the offering and sale of the
Registrable Notes covered by, or the sale by Participating
Broker-Dealers of the Exchange Notes pursuant to, such Prospectus and
any amendment or supplement thereto.
(h) Prior to any public offering of Registrable Notes or any
delivery of a Prospectus contained in the Exchange Registration
Statement by any Participating Broker-Dealer who seeks to sell Exchange
Notes during the Applicable Period, to use their best efforts to
register or qualify, and to cooperate with the selling Holders of
Registrable Notes or each such Participating Broker-Dealer, as the case
may be, the managing underwriter or underwriters, if any, and their
respective counsel in connection with the registration or qualification
of (or exemption from such registration or qualification), such
Registrable Notes for offer and sale under the securities or Blue Sky
laws of such jurisdictions within the United States as any selling
Holder, Participating Broker-Dealer, or the managing underwriter or
underwriters, if any, reasonably request in writing, provided that
where Exchange Notes held by Participating Broker-Dealers or
Registrable Notes are offered other than through an underwritten
offering, the Company and the Guarantors agree to cause their counsel
to perform Blue Sky investigations and file registrations and
qualifications required to be filed pursuant to this Section
<PAGE> 20
-18-
5(h); 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 Exchange Notes held by Participating
Broker-Dealers or the Registrable Notes covered by the applicable
Registration Statement; provided that none of the Company or the
Guarantors shall be required to (A) qualify generally to do business in
any jurisdiction where it is not then so qualified, (B) take any action
that would subject it to general service of process in any such
jurisdiction where it is not then so subject or (C) subject itself to
taxation in excess of a nominal dollar amount in any such jurisdiction.
(i) If a Shelf Registration is filed pursuant to Section 3,
cooperate with the selling Holders of Registrable Notes and the
managing underwriter or underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Registrable Notes
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; and enable such Registrable Notes to be in such denominations
and registered in such names as the managing underwriter or
underwriters, if any, or Holders may reasonably request.
(j) Use their best efforts to cause the Registrable Notes
covered by the Registration Statement to be registered with or approved
by such other governmental agencies or authorities as may be necessary
to enable the seller or sellers thereof or the managing underwriter or
underwriters, if any, to consummate the disposition of such Registrable
Notes, except as may be required solely as a consequence of the nature
of such selling Holder's business, in which case each of the Company
and the Guarantors will cooperate in all reasonable respects with the
filing of such Registration Statement and the granting of such
approvals.
(k) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange 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 Notes during the Applicable Period, upon the occurrence of any
<PAGE> 21
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event contemplated by paragraph 5(c)(v) or 5(c)(vi), as promptly as
reasonably practicable prepare and (subject to Section 5(a)) file with
the SEC, at the joint and several expense of each of the Company and
the Guarantors, 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 Notes being sold
thereunder or to the purchasers of the Exchange Notes to whom such
Prospectus will be delivered by a Participating Broker-Dealer, any 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.
(l) Use their best efforts to cause the Registrable Notes
covered by a Registration Statement or the Exchange Notes, as the case
may be, to be rated with the appropriate rating agencies, if so
requested by the Holders of a majority in aggregate principal amount of
Registrable Notes covered by such Registration Statement or the
Exchange Notes, as the case may be, or the managing underwriter or
underwriters, if any.
(m) Prior to the effective date of the first Registration
Statement relating to the Registrable Notes, (i) provide the Trustee
with certificates for the Registrable Notes or Exchange Notes, as the
case may be, in a form eligible for deposit with The Depository Trust
Company and (ii) provide a CUSIP number for the Registrable Notes or
Exchange Notes, as the case may be.
(n) In connection with an underwritten offering of Registrable
Notes pursuant to a Shelf Registration, enter into an underwriting
agreement as is customary in underwritten offerings of debt securities
similar to the Notes and take all such other actions as are reasonably
requested by the managing underwriter(s), if any, in order to expedite
or facilitate the registration or the disposition of such Registrable
Notes, and in such connection, (i) make such representations and
warranties to the managing underwriter or underwriters on behalf of any
underwriters, with respect to the business of the Company and its
subsidiaries and the
<PAGE> 22
-20-
Registration Statement, Prospectus and documents, if any, incorporated
or deemed to be incorporated by reference therein, in each case, as are
customarily made by issuers to underwriters in underwritten offerings
of debt securities similar to the Notes, and confirm the same if and
when requested; (ii) obtain opinions of counsel to the Company and the
Guarantors and updates thereof in form and substance reasonably
satisfactory to the managing underwriter or underwriters, addressed to
the managing underwriter or underwriters covering the matters
customarily covered in opinions requested in underwritten offerings of
debt securities similar to the Notes and such other matters as may be
reasonably requested by the managing underwriter(s); (iii) obtain "cold
comfort" letters and updates thereof in form and substance reasonably
satisfactory to the managing underwriter or underwriters from the
independent certified public accountants of the Company and the
Guarantors (and, if necessary, any other independent certified public
accountants of any subsidiary of any of the Company or of any business
acquired by any of the Company or the Guarantors for which financial
statements and financial data are, or are required to be, included in
the Registration Statement), addressed to the managing underwriter or
underwriters on behalf of any underwriters, such letters to be in
customary form and covering matters of the type customarily covered in
"cold comfort" letters in connection with underwritten offerings of
debt securities similar to the Notes and such other matters as may be
reasonably requested by the managing underwriter or underwriters; and
(iv) if an underwriting agreement is entered into, the same shall
contain indemnification provisions and procedures no less favorable
than those set forth in Section 7 hereof (or such other provisions and
procedures acceptable to Holders of a majority in aggregate principal
amount of Registrable Notes covered by such Registration Statement and
the managing underwriter or underwriters or agents) with respect to all
parties to be indemnified pursuant to said Section. The above shall be
done at each closing under such underwriting agreement, or as and to
the extent required thereunder.
(o) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange 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 Notes
<PAGE> 23
-21-
during the Applicable Period, make available for inspection by any
selling Holder of such Registrable Notes being sold, or each such
Participating Broker-Dealer, as the case may be, the managing
underwriter or underwriters participating in any such disposition of
Registrable Notes, if any, and any attorney, accountant or other agent
retained by any such selling Holder or each such Participating
Broker-Dealer, as the case may be (collectively, the "Inspectors"), at
the offices where normally kept, during reasonable business hours, all
financial and other records, pertinent corporate documents and
properties of the Company and the Guarantors and their respective
subsidiaries (collectively, the "Records") as shall be reasonably
necessary to enable them to exercise any applicable due diligence
responsibilities, and cause the officers, directors and employees of
the Company and the Guarantors and their respective subsidiaries to
supply all information in each case reasonably requested by any such
Inspector in connection with such Registration Statement. Records which
the Company and the Guarantors determine, in good faith, to be
confidential and any Records which they notify the Inspectors are
confidential shall not be disclosed by the Inspectors unless (i) the
disclosure of such Records is necessary to avoid or correct a material
misstatement or material omission in such Registration Statement, (ii)
the release of such Records is ordered pursuant to a subpoena or other
order from a court of competent jurisdiction or (iii) the information
in such Records has been made generally available to the public. Each
selling Holder of such Registrable Notes and each such Participating
Broker-Dealer or underwriter will be required to agree that information
obtained by it as a result of such inspections shall be deemed
confidential and shall not be used by it as the basis for any market
transactions in the securities of the Company or for any purpose other
than in connection with such Registration Statement unless and until
such is made generally available to the public. Each selling Holder of
such Registrable Notes and each such Participating Broker-Dealer will
be required to further agree that it will, upon learning that
disclosure of such Records is sought in a court of competent
jurisdiction, give prompt notice to the Company and allow the Company
to undertake appropriate action to prevent disclosure of the Records
deemed confidential at their expense.
<PAGE> 24
-22-
(p) Provide an indenture trustee for the Registrable Notes or
the Exchange Notes, as the case may be, and cause the Indenture or the
trust indenture provided for in Section 2(a), as the case may be, to be
qualified under the TIA not later than the effective date of the
Exchange Registration Statement or the first Registration Statement
relating to the Registrable Notes; and in connection therewith,
cooperate with the trustee under any such indenture and the Holders of
the Registrable Notes, 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.
(q) Comply 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 at the end of any fiscal quarter in
which Registrable Notes 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.
(r) Upon consummation of an Exchange Offer or a Private
Exchange, obtain an opinion of counsel to the Company and the
Guarantors, in a form customary for underwritten offerings of debt
securities similar to the Notes, addressed to the Trustee for the
benefit of all Holders of Registrable Notes participating in the
Exchange Offer or the Private Exchange, as the case may be, and which
includes an opinion that (i) each of the Company and the Guarantors has
duly authorized, executed and delivered the Exchange Notes and Private
Exchange Notes and the related indenture and (ii) each of the Exchange
Notes or the Private Exchange Notes, as the case may be, and related
indenture constitute
<PAGE> 25
-23-
a legal, valid and binding obligation of each of the Company and the
Guarantors, enforceable against each of the Company and the Guarantors
in accordance with its respective terms (with customary exceptions).
(s) If an Exchange Offer or a Private Exchange is to be
consummated, upon delivery of the Registrable Notes by Holders to the
Company and the Guarantors (or to such other Person as directed by the
Company and the Guarantors) in exchange for the Exchange Notes or the
Private Exchange Notes, as the case may be, the Company and the
Guarantors shall mark, or cause to be marked, on such Registrable Notes
that such Registrable Notes are being canceled in exchange for the
Exchange Notes or the Private Exchange Notes, as the case may be; and,
in no event shall such Registrable Notes be marked as paid or otherwise
satisfied.
(t) Cooperate with each seller of Registrable Notes covered by
any Registration Statement and the managing underwriter(s), if any,
participating in the disposition of such Registrable Notes and their
respective counsel in connection with any filings required to be made
with the National Association of Securities Dealers, Inc. (the "NASD").
(u) Use their respective best efforts to take all other
reasonable steps necessary to effect the registration of the
Registrable Notes covered by a Registration Statement contemplated
hereby.
The Company and the Guarantors may require each seller of Registrable
Notes or Participating Broker-Dealer as to which any registration is being
effected to furnish to the Company and the Guarantors such information regarding
such seller or Participating Broker-Dealer and the distribution of such
Registrable Notes or Exchange Notes to be sold by such Participating
Broker-Dealer, as the case may be, as the Company and the Guarantors may, from
time to time, reasonably request. The Company may exclude from such registration
the Registrable Notes of any seller or Participating Broker-Dealer who
unreasonably fails to furnish such information within a reasonable time after
receiving such request. Each seller as to which any Shelf Registration is being
effected agrees to furnish promptly to the Company all information required to
be disclosed
<PAGE> 26
-24-
in order to make the information previously furnished to the Company by such
seller not materially misleading.
Each Holder of Registrable Notes and each Participating Broker-Dealer
agrees by acquisition of such Registrable Notes or Exchange Notes to be sold by
such Participating Broker-Dealer, as the case may be, that, upon receipt of any
notice from the Company of the happening of any event of the kind described in
Section 5(c)(ii), 5(c)(iv), 5(c)(v), or 5(c)(vi) hereof, such Holder will
forthwith discontinue disposition of such Registrable Notes covered by such
Registration Statement or Prospectus or Exchange Notes to be sold by such Holder
or Participating Broker-Dealer, as the case may be, until such Holder's or
Participating Broker-Dealer's receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 5(k), or until it is advised in
writing (the "Advice") by the Company that the use of the applicable Prospectus
may be resumed, and has received copies of any amendments or supplements
thereto. In the event the Company shall give any 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 Registrable Notes covered
by such Registration Statement or Exchange Notes to be sold by such Holder or
Participating Broker-Dealer, as the case may be, shall have received (x) the
copies of the supplemented or amended Prospectus contemplated by Section 5(k) or
(y) the Advice.
6. Registration Expenses
(a) All fees and expenses incident to the performance of or compliance
with this Agreement by the Company and the Guarantors shall be borne by the
Company and the Guarantors, jointly and severally, 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 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 Notes or Exchange Notes and determination of the eligibility of the
Registrable Notes or Exchange Notes for investment under the laws of such
jurisdictions in the United States (x) where the Holders
<PAGE> 27
-25-
of Registrable Notes are located, in the case of the Exchange Notes, or (y) as
provided in Section 5(h), in the case of Registrable Notes or Exchange Notes to
be sold by a Participating Broker-Dealer during the Applicable Period)), (ii)
printing expenses (including, without limitation, expenses of printing
certificates for Registrable Notes or Exchange Notes in a form eligible for
deposit with The Depository Trust Company and of printing Prospectuses if the
printing of Prospectuses is reasonably requested by the managing underwriter or
underwriters, if any, or, in respect of Registrable Notes or Exchange Notes to
be sold by any Participating Broker-Dealer during the Applicable Period, by the
Holders of a majority in aggregate principal amount of the Registrable Notes
included in any Registration Statement or of such Exchange Notes, as the case
may be), (iii) messenger, telephone and delivery expenses, (iv) fees and
disbursements of counsel for the Company and fees and disbursements of special
counsel for the sellers of Registrable Notes (subject to the provisions of
Section 6(b)), (v) fees and disbursements of all independent certified public
accountants referred to in Section 5(n)(iii) (including, without limitation, the
expenses of any special audit and "cold comfort" letters required by or incident
to such performance), (vi) rating agency fees, (vii) Securities Act liability
insurance, if the Company desire such insurance, (viii) fees and expenses of the
Trustee, (ix) fees and expenses of all other Persons retained by the Company,
(x) internal expenses of the Company and the Guarantors (including, without
limitation, all salaries and expenses of officers and employees of the Company
and the Guarantors performing legal or accounting duties), (xi) the expense of
any annual audit, (xii) the fees and expenses incurred in connection with any
listing of the securities to be registered on any securities exchange and (xiii)
the expenses relating to printing, word processing and distributing all
Registration Statements, underwriting agreements, securities sales agreements,
indentures and any other documents necessary in order to comply with this
Agreement.
(b) In connection with any Shelf Registration hereunder, the Company
and the Guarantors, jointly and severally, shall reimburse the Holders of the
Registrable Notes being registered in such registration for the reasonable fees
and disbursements of not more than one counsel (in addition to appropriate local
counsel) chosen by the Holders of a majority in aggregate principal amount of
the Registrable Notes to be included in such Registration Statement and other
reasonable out-of-pocket expens-
<PAGE> 28
-26-
es of the Holders of Registrable Notes incurred in connection with the
registration of the Registrable Notes. The Company and the Guarantors shall not
have any obligation to pay any underwriting fees, discounts or commissions
attributable to the sale of Registrable Securities.
7. Indemnification
(a) Each of the Company and the Guarantors, jointly and severally,
agrees to indemnify and hold harmless each Holder of Registrable Notes and each
Participating Broker-Dealer selling Exchange Notes during the Applicable Period,
the officers and directors of each such Person, and each Person, if any, who
controls any such Person within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act (each, a "Participant"), from
and against any and all losses, claims, damages and liabilities (including,
without limitation, the reasonable legal fees and other expenses actually
incurred in connection with any suit, action or proceeding or any claim
asserted) caused by, arising out of or based upon any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement or Prospectus (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) or any preliminary Prospectus,
or caused by, arising out of or based upon any omission or alleged omission to
state therein 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, except insofar as such losses, claims, damages or
liabilities are caused by any untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity with information
relating to any Participant furnished to the Company in writing by such
Participant expressly for use therein; provided that the foregoing indemnity
with respect to any preliminary Prospectus shall not inure to the benefit of any
Participant (or to the benefit of an officer or director of such Participant or
any Person controlling such Participant) from whom the Person asserting any such
losses, claims, damages or liabilities purchased Registrable Notes or Exchange
Notes if such untrue statement or omission or alleged untrue statement or
omission made in such preliminary Prospectus is eliminated or remedied in the
related Prospectus (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) and a copy of the related
Prospectus (as so amended or supplemented) shall have been furnished to such
Participant at or
<PAGE> 29
-27-
prior to the sale of such Registrable or Exchange Notes, as the case may be, to
such Person.
(b) Each Participant will be required to agree, severally and not
jointly, to indemnify and hold harmless the Company and the Guarantors, their
respective directors and officers and each Person who controls any of the
Company or the Guarantors within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act to the same extent as the foregoing indemnity
from the Company and the Guarantors to each Participant and shall have the
rights and duties given to the Company and the Guarantors in paragraph (c) of
this Section 7 (except that if the Company and the Guarantors shall have assumed
the defense thereof, such Participant shall not be required to do so, but may
employ separate counsel therein and participate in the defense thereof but the
fees and expenses of such counsel shall be at the expense of such holder), but
only with reference to information relating to such Participant furnished to the
Company and the Guarantors in writing by such Participant expressly for use in
any Registration Statement or Prospectus, any amendment or supplement thereto,
or any preliminary Prospectus. The liability of any Participant under this
paragraph (b) shall in no event exceed the proceeds received by such Participant
from sales of Registrable Notes or Exchange Notes giving rise to such
obligations.
(c) If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any Person in respect of which indemnity may be sought pursuant to either
paragraph (a) or (b) of this Section 7, such Person (the "Indemnified Person")
shall promptly notify the Person against whom such indemnity may be sought (the
"Indemnifying Person") in writing, and the Indemnifying Person, upon request of
the Indemnified Person, shall retain one counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Person may reasonably designate in such proceeding and shall pay
the reasonable fees and expenses incurred by such counsel related to such
proceeding. In any such proceeding, any Indemnified Person shall have the right
to retain its own counsel, but the fees and expenses of such counsel shall be at
the expense of such Indemnified Person unless (i) the Indemnifying Person and
the Indemnified Person shall have mutually agreed in writing to the contrary,
(ii) the Indemnifying Person has failed within a reasonable time to retain
counsel reasonably satisfactory to the
<PAGE> 30
-28-
Indemnified Person or (iii) the named parties in any such proceeding (including
any impleaded parties) include both the Indemnifying Person and the Indemnified
Person and such Indemnified Person shall have been advised by counsel that there
may be one or more legal defenses available to it which are different from or
additional to those available to any such Indemnifying Person. It is understood
that the Indemnifying Person shall not, in connection with any proceeding or
related proceeding in the same jurisdiction, be liable for the fees and expenses
of more than one separate law firm (in addition to any local counsel) for all
Indemnified Persons, and that all such fees and expenses shall be reimbursed as
they are incurred. Any such separate firm for the Participants and such control
Persons of Participants shall be designated in writing by Participants who sold
a majority in interest of Registrable Notes and Exchange Notes sold by all such
Participants and any such separate firm for the Company and the Guarantors,
their directors, their officers and such control Persons of the Company and the
Guarantors shall be designated in writing by the Company. The Indemnifying
Person shall not be liable for any settlement of any proceeding effected without
its prior written consent, but if settled with such consent or if there be a
final judgment for the plaintiff for which the Indemnified Person is entitled to
indemnification pursuant to this Agreement, the Indemnifying Person agrees to
indemnify any Indemnified Person from and against any loss or liability by
reason of such settlement or judgment. Notwithstanding the foregoing sentence,
if at any time an Indemnified Person shall have requested an Indemnifying Person
to reimburse the Indemnified Person for reasonable fees and expenses incurred by
counsel as contemplated by the third sentence of this paragraph, the
Indemnifying Person agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by such Indemnifying Person of the
aforesaid request and (ii) such Indemnifying Person shall not have reimbursed
the Indemnified Person in accordance with such request prior to the date of such
settlement; provided, however, that the Indemnifying Person shall not be liable
for any settlement effected without its consent pursuant to this sentence if the
Indemnifying Party is contesting, in good faith, the request for reimbursement.
No Indemnifying Person shall, without the prior written consent of the
Indemnified Person, effect any settlement of any pending or threatened
proceeding in respect of which any Indemnified Person is or could have been a
party and indemnity could have been sought hereunder by such Indemnified
<PAGE> 31
-29-
Person, unless such settlement includes an unconditional release of such
Indemnified Person from all liability on claims that are the subject matter of
such proceeding.
(d) If the indemnification provided for in paragraphs (a) and (b) of
this Section 7 is unavailable to an Indemnified Person in respect of any losses,
claims, damages or liabilities referred to therein, then each Indemnifying
Person under such paragraphs, in lieu of indemnifying such Indemnified Person
thereunder, shall contribute to the amount paid or payable by such Indemnified
Person as a result of such losses, claims, damages or liabilities in such
proportion as is appropriate to reflect the relative fault of the Company and
the Guarantors on the one hand and the Participants on the other in connection
with the statements or omissions that resulted in such losses, claims, damages
or liabilities, as well as any other relevant equitable considerations. The
relative fault of the Company and the Guarantors on the one hand and the
Participants on the other shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company and the Guarantors or by the Participants and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
(e) The parties agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by pro rata allocation
(even if the Participants were treated as one entity for such purpose) or by any
other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an Indemnified Person as a result of the losses, claims,
damages and liabilities referred to in the immediately preceding paragraph shall
be deemed to include, subject to the limitations set forth above, any reasonable
legal or other expenses actually incurred by such Indemnified Person in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, in no event shall a
Participant be required to contribute any amount in excess of the amount by
which proceeds received by such Participant from sales of Registrable Notes or
Exchange Notes exceeds the amount of any damages that such Participant has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No Person guilty of
<PAGE> 32
-30-
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.
(f) The indemnity and contribution agreements contained in this Section
7 will be in addition to any liability which the Indemnifying Persons may
otherwise have to the Indemnified Persons referred to above.
8. Rules 144 and 144A
Each of the Company and the Guarantors covenants that it will file the
reports required to be filed by it under the Securities Act and the Exchange Act
and the rules and regulations adopted by the SEC thereunder 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 of Registrable Notes, make publicly available
other information of a like nature so long as necessary to permit sales pursuant
to Rule 144 or Rule 144A. Each of the Company and the Guarantors further
covenants that so long as any Registrable Notes remain outstanding to make
available to any Holder of Registrable Notes in connection with any sale
thereof, the information required by Rule 144A(d)(4) under the Securities Act in
order to permit resales of such Registrable Notes pursuant to (a) such Rule
144A, or (b) any similar rule or regulation hereafter adopted by the SEC.
9. Underwritten Registrations
If any of the Registrable Notes 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
Notes included in such offering and shall be reasonably acceptable to the
Company and the Guarantors.
No Holder of Registrable Notes may participate in any underwritten
registration hereunder unless such Holder (a) agrees to sell such Holder's
Registrable Notes 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.
<PAGE> 33
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10. Miscellaneous
(a) Remedies. In the event of a breach by the Company or any Guarantor
of any of its obligations under this Agreement, other than the occurrence of an
event which requires payment of Additional Interest, each Holder of Registrable
Notes, in addition to being entitled to exercise all rights provided herein, in
the Indenture or, in the case of the Initial Purchaser, in the Purchase
Agreement or granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement. Each of the Company and
the Guarantors jointly and severally agree 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, jointly and
severally, 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.
(b) Enforcement. The Trustee shall be authorized to enforce the
provisions of this Agreement for the ratable benefit of the Holders.
(c) No Inconsistent Agreements. None of the Company or the Guarantors
has, as of the date hereof, and the Company and the Guarantors shall not, after
the date of this Agreement, enter into any agreement with respect to any of
their securities that is inconsistent with the rights granted to the Holders of
Registrable Notes in this Agreement or otherwise conflicts with the provisions
hereof. None of the Company or the Guarantors has entered or will enter into any
agreement with respect to any of its securities which will grant to any Person
piggy-back rights with respect to a Registration Statement required to be filed
under this Agreement.
(d) Adjustments Affecting Registrable Notes. Neither the Company nor
the Guarantors shall, directly or indirectly, take any action with respect to
the Registrable Notes as a class that would adversely affect the ability of the
Holders of Registrable Notes to include such Registrable Notes in a
registration undertaken pursuant to this Agreement.
(e) 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
<PAGE> 34
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departures from the provisions hereof may not be given, unless the Company and
the Guarantors have obtained the written consent of Holders of at least a
majority of the then outstanding aggregate principal amount of Registrable
Notes. 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 of Registrable Notes whose securities are being sold pursuant
to a Registration Statement and that does not directly or indirectly affect,
impair, limit or compromise the rights of other Holders of Registrable Notes may
be given by Holders of at least a majority in aggregate principal amount of the
Registrable Notes 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.
(f) 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, registered
first-class mail, next-day air courier or telecopier:
(i) if to a Holder of Registrable Notes or any Participating
Broker-Dealer, at the most current address given by the Trustee to the
Company; and
(ii) if to the Company or the Guarantors, to Devereaux
Holdings Pty. Ltd., The Lakes Business Park, Unit 2G, 12 Lord Street,
Botany NSW 2019, Sydney, Australia, Attention: Graham Croot
All such notices and communications shall be deemed to have been duly
given: (i) when delivered by hand, if personally delivered; (ii) five business
days after being deposited in the mail, postage prepaid, if mailed; (iii) one
business day after being timely delivered to a next-day air courier; and (iv)
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.
<PAGE> 35
-33-
(g) 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 of Registrable Notes.
(h) 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.
(i) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(j) 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 WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(k) 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 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.
(l) Entire Agreement. This Agreement, together with the Purchase
Agreement and the Indenture, 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 and therein.
(m) Joint and Several Obligations. Unless otherwise stated herein, each
of the obligations of the Company and the
<PAGE> 36
-34-
Guarantors under this Agreement shall be joint and several obligations of each
of them.
(n) Notes Held by the Company or their Affiliates. Whenever the consent
or approval of Holders of a specified percentage of Registrable Notes is
required hereunder, Registrable Notes held by the Company or their affiliates
(as such term is defined in Rule 405 under the Securities Act) shall not be
counted in determining whether such consent or approval was given by the Holders
of such required percentage.
<PAGE> 37
-35-
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
W.R. CARPENTER NORTH AMERICA, INC.
(a Delaware corporation)
By: /s/ David K. Sargent
-------------------------------
Name: David K. Sargent
Title: President
Guarantors:
UPRIGHT, INC.
(a California corporation)
By: /s/ David K. Sargent
--------------------------------
Name: David K. Sargent
Title: President
UPRIGHT FOREIGN SALES CORPORATION
(a United States Virgin Islands
corporation)
By: /s/ David K. Sargent
---------------------------------
Name: David K. Sargent
Title: President
HORIZON HIGH REACH, INC.
(a California corporation)
By: /s/ David K. Sargent
----------------------------------
Name: David K. Sargent
Title: President
<PAGE> 38
-36-
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
CIBC WOOD GUNDY SECURITIES CORP.
By: /s/ Heinz Noeding
-----------------------------
Name: Heinz Noeding
Title: Managing Director
BANCAMERICA SECURITIES, INC.
By: /s/ Mark S. Dawley
-----------------------------
Name: Mark S. Dawley
Title: Senior Managing Director
<PAGE> 1
EXHIBIT 4.3
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE
UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS
SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A)
IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE ACT)
OR (B) IT IS AN "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3)
OR (7) UNDER THE ACT) (AN "ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON
AND IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION, (2) AGREES THAT IT WILL
NOT WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS NOTE RESELL OR
OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY
THEREOF, (B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (C)
INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH
RULE 144A UNDER THE ACT, (D) INSIDE THE UNITED STATES TO AN ACCREDITED INVESTOR
THAT, PRIOR TO SUCH TRANSFER, FURNISHES (OR HAS FURNISHED ON ITS BEHALF BY A
U.S. BROKER-DEALER) TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS
NOTE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE), (E) OUTSIDE
THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER
THE ACT OR (F) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144
UNDER THE ACT (IF AVAILABLE) (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO
WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS NOTE WITHIN TWO YEARS AFTER
ORIGINAL ISSUANCE OF THIS NOTE, IF THE PROPOSED TRANSFEREE IS AN ACCREDITED
INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND
THE COMPANY SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER
OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE
PURSUANT TO AN EXEMPTION FROM OR IN A TRANSACTION NOT SUBJECT TO THE
REGISTRATION REQUIREMENTS OF THE ACT. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM
BY REGULATION S UNDER THE ACT.
THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A
NOMINEE OF A DEPOSITORY. THIS NOTE IS NOT EXCHANGEABLE FOR NOTES REGISTERED IN
THE NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE EXCEPT IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS NOTE
(OTHER THAN A TRANSFER OF THIS NOTE AS A WHOLE 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) MAY BE REGISTERED EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (A NEW YORK CORPORATION) ("DTC")
TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IT REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), 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.
<PAGE> 2
CUSIP 144269 AA5
W.R. CARPENTER NORTH AMERICA, INC.
No. 0001 $105,000,000.00
10 5/8% SENIOR SUBORDINATED NOTE DUE 2007
W.R. CARPENTER NORTH AMERICA, INC., a Delaware corporation
(the "Company"), for value received, promises to pay to CEDE & CO. or
registered assigns the principal sum of $105,000,000.00
dollars on June 15, 2007.
Interest Payment Dates: June 15 and December 15
Record Dates: June 1 and December 1
Reference is made to the further provisions of this Note
contained herein, which will for all purposes have the same effect as if set
forth at this place.
<PAGE> 3
IN WITNESS WHEREOF, the Company has caused this Note to be
signed manually or by facsimile by its duly authorized officers.
W.R. CARPENTER NORTH AMERICA, INC.
By:____________________________________
By:____________________________________
[SEAL]
Dated: _____________________
Certificate of Authentication
This is one of the 10 5/8% Senior Subordinated Notes due 2007
referred to in the within-mentioned Indenture.
U.S. TRUST COMPANY OF
CALIFORNIA, N.A.,
as Trustee
By:____________________________________
Authorized Signatory
<PAGE> 4
[REVERSE OF NOTE]
W.R. CARPENTER NORTH AMERICA, INC.
10 5/8% SENIOR SUBORDINATED NOTE DUE 2007
1. Interest. W.R. CARPENTER NORTH AMERICA, INC., a
Delaware corporation (the "Company"), promises to pay, until the principal
hereof is paid or made available for payment, interest on the principal amount
set forth on the face hereof at a rate of 10 5/8% per annum. Interest hereon
will accrue from and including the most recent date to which interest has been
paid or, if no interest has been paid, from and including June 10, 1997 to but
excluding the date on which interest is paid. Interest shall be payable in
arrears on each June 15 and December 15 commencing December 15, 1997. Interest
will be computed on the basis of a 360-day year of twelve 30-day months. The
Company shall pay interest on overdue principal and on overdue interest (to the
full extent permitted by law) at a rate of 10 5/8% per annum.
2. Method of Payment. The Company will pay interest
hereon (except defaulted interest) to the Persons who are registered Holders at
the close of business on June 1 or December 1 next preceding the interest
payment date (whether or not a Business Day). Holders must surrender Notes to
a Paying Agent to collect principal payments. The Company will pay principal
and interest in money of the United States of America that at the time of
payment is legal tender for payment of public and private debts. Interest may
be paid by check mailed to the Holder entitled thereto at the address indicated
on the register maintained by the Registrar for the Notes.
3. Paying Agent and Registrar. Initially, U.S. TRUST
COMPANY OF CALIFORNIA, N.A. (the "Trustee") will act as a Paying Agent and
Registrar. The Company may change any Paying Agent or Registrar without
notice. Neither the Company nor any of its Affiliates may act as Paying Agent
or Registrar.
4. Indenture. The Company issued the Notes under an
Indenture dated as of June 10, 1997 (the "Indenture") among the Company, the
Guarantors (as defined in the Indenture) and the Trustee. This is one of an
issue of Notes of the Company issued, or to be issued, under the Indenture.
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 (15 U.S.
Code Section Section 77aaa-77bbbb), as amended from time to
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<PAGE> 5
time. The Notes are subject to all such terms, and Holders are referred to the
Indenture and such Act for a statement of them. Capitalized and certain other
terms used herein and not otherwise defined have the meanings set forth in the
Indenture. The Notes are obligations of the Company limited in aggregate
principal amount to $150.0 million.
5. Optional Redemption. The Company, at its option, may redeem
the Notes, in whole or in part, at any time on or after June 15, 2002 upon not
less than 30 nor more than 60 days' notice, at the redemption prices (expressed
as percentages of principal amount), set forth below, together, in each case,
with accrued and unpaid interest to the Redemption Date, if redeemed during the
twelve month period beginning on June 15 of each year listed below:
<TABLE>
<CAPTION>
Year Redemption Price
---- ----------------
<S> <C>
2002 . . . . . . . . . . . . . . . . . . . . . 105.313%
2003 . . . . . . . . . . . . . . . . . . . . . 103.542%
2004 . . . . . . . . . . . . . . . . . . . . . 101.771%
2005 and thereafter . . . . . . . . . . . . . 100.000%
</TABLE>
Notwithstanding the foregoing, the Company may redeem in the
aggregate up to 35% of the original principal amount of Notes at any time and
from time to time on or prior to June 15, 2000 at a redemption price equal to
110.625% of the aggregate principal amount thereof, plus accrued and unpaid
interest thereon to the Redemption Date with the Net Proceeds of one or more
Public Equity Offerings; provided, that at least $75.0 million of the principal
amount of Notes originally issued remains outstanding immediately after the
occurrence of any such redemption and that any such redemption occurs within 90
days following the closing of any such Public Equity Offering.
6. Notice of Redemption. Notice of redemption will be mailed
at least 30 days but not more than 60 days before the Redemption Date to each
Holder of Notes to be redeemed at his registered address. On and after the
Redemption Date, unless the Company defaults in making the redemption payment,
interest ceases to accrue on Notes or portions thereof called for redemption.
7. Offers to Purchase. The Indenture provides that upon the
occurrence of a Change of Control or an Asset Sale and subject to further
limitations contained therein, the Company shall make an offer to purchase
outstanding Notes in accordance with the procedures set forth in the Indenture.
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<PAGE> 6
8. Registration Rights. Pursuant to a Registration Rights
Agreement among the Company, the Guarantors, and CIBC Wood Gundy Securities
Corp. and BancAmerica Securities, Inc., as Initial Purchasers of the Notes, the
Company will be obligated to consummate an exchange offer pursuant to which the
Holder of this Note shall have the right to exchange this Note for notes of a
separate series issued under the Indenture (or a trust indenture substantially
identical to the Indenture in accordance with the terms of the Registration
Rights Agreement) which have been registered under the Securities Act, in like
principal amount and having substantially identical terms as the Notes. The
Holders shall be entitled to receive certain additional interest payments in
the event such exchange offer is not consummated and upon certain other
conditions, all pursuant to and in accordance with the terms of the
Registration Rights Agreement.
9. Denominations, Transfer, Exchange. The Notes are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. A Holder may transfer or exchange Notes in accordance
with the Indenture. The Registrar may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and to pay to it any
taxes and fees required by law or permitted by the Indenture. The Registrar
need not register the transfer of or exchange any Notes or portion of a Note
selected for redemption, or register the transfer of or exchange any Notes for
a period of 15 days before a mailing of notice of redemption.
10. Persons Deemed Owners. The registered Holder of this Note
may be treated as the owner of this Note for all purposes.
11. Unclaimed Money. If money for the payment of principal or
interest remains unclaimed for two years, the Trustee will pay the money back
to the Company at its written request. After that, Holders entitled to the
money must look to the Company for payment as general creditors unless an
"abandoned property" law designates another Person.
12. Amendment, Supplement, Waiver, Etc. The Company, the
Guarantors and the Trustee (if a party thereto) may, without the consent of the
Holders of any outstanding Notes, amend, waive or supplement the Indenture or
the Notes for certain specified purposes, including, among other things, curing
ambiguities, defects or inconsistencies, maintaining the qualification of the
Indenture under the Trust Indenture Act of 1939, as amended, and making any
change that does not materi-
R - 3
<PAGE> 7
ally and adversely affect the rights of any Holder. Other amendments and
modifications of the Indenture or the Notes may be made by the Company, the
Guarantors and the Trustee with the consent of the Holders of not less than a
majority of the aggregate principal amount of the outstanding Notes, subject to
certain exceptions requiring the consent of the Holders of the particular Notes
to be affected.
13. Restrictive Covenants. The Indenture imposes certain
limitations on the ability of the Company and its Restricted Subsidiaries to,
among other things, incur additional Indebtedness, make payments in respect of
their Capital Stock or certain Indebtedness, make certain Investments, create
or incur liens, enter into transactions with Affiliates, enter into agreements
restricting the ability of Restricted Subsidiaries to pay dividends and make
distributions, issue Preferred Stock of any Restricted Subsidiaries of the
Company, enter into sale and leaseback transactions and on the ability of the
Company to merge or consolidate with any other Person or transfer all or
substantially all of the Company's or any Guarantor's assets. Such limitations
are subject to a number of important qualifications and exceptions. Pursuant
to Section 4.04 of the Indenture, the Company must annually report to the
Trustee on compliance with such limitations.
14. Successor Corporation. When a successor corporation assumes
all the obligations of its predecessor under the Notes and the Indenture and
the transaction complies with the terms of Article 5 of the Indenture, the
predecessor corporation will, except as provided in Article 5, be released from
those obligations.
15. Defaults and Remedies. Events of Default are set forth in
the Indenture. Subject to certain limitations in the Indenture, if an Event of
Default (other than an Event of Default specified in Section 6.01(6) or (7) of
the Indenture with respect to the Company) occurs and is continuing, the
Trustee or the Holders of not less than 25% in aggregate principal amount of
the outstanding Notes may, by written notice to the Trustee and the Company,
and the Trustee upon the request of the Holders of not less than 25% in
aggregate principal amount of the outstanding Notes shall, declare all
principal of and accrued interest on all Notes to be immediately due and
payable and (i) such amounts shall become immediately due and payable or (ii)
if there are any amounts outstanding under or in respect of any Credit
Facility, such amounts shall become due and payable upon the first to occur of
an acceleration of amounts outstanding under or in respect of such Credit
Facility
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<PAGE> 8
or five Business Days after receipt by the Company and the representative of
the holders of Indebtedness under or in respect of the Credit Facility, of
notice of the acceleration of the Notes. If an Event of Default specified in
Section 6.01(6) or (7) of the Indenture occurs with respect to the Company, the
principal amount of and interest on, all Notes shall ipso facto become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or any Holder. 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 Trustee may withhold from Holders notice of any continuing default (except
a default in payment of principal or interest) if it determines that
withholding notice is in their interests.
16. Trustee Dealings with Company. The Trustee, 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.
17. No Recourse Against Others. No director, officer, employee
incorporator or stockholder, of the Company or any Guarantor shall have any
liability for any obligations of the Company or the Guarantors under the Notes,
the Indenture or the Guarantees or for a claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder of Notes 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.
18. Discharge. The Company's obligations pursuant to the
Indenture will be discharged, except for obligations pursuant to certain
sections thereof, subject to the terms of the Indenture, upon the payment of
all the Notes or upon the irrevocable deposit with the Trustee of United States
dollars or U.S. Government Obligations sufficient to pay when due principal of
and interest on the Notes to maturity or redemption, as the case may be.
19. Guarantees. The Note will be entitled to the benefits of
certain Guarantees made for the benefit of the Holders. Reference is hereby
made to the Indenture for a statement of the respective rights, limitations of
rights, du-
R - 5
<PAGE> 9
ties and obligations thereunder of the Guarantors, the Trustee and the Holders.
20. Authentication. This Note shall not be valid until the
Trustee signs the certificate of authentication on the other side of this Note.
21. Governing Law. THE INTERNAL LAWS OF THE STATE OF NEW YORK
SHALL GOVERN THIS NOTE WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS. The
Trustee, the Company, the Guarantor and the Holders agree to submit to the
jurisdiction of the courts of the State of New York in any action or proceeding
arising out of or relating to the Indenture or the Notes.
22. Abbreviations. Customary abbreviations may be used in the
name of a Holder or an assignee, such as: TEN COM (= tenants in common),
TENANT (= 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).
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture. Requests may be made to:
W.R. CARPENTER NORTH AMERICA, INC.
1775 Park Street
Selma, California 93662
Attention: Chief Financial Officer
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<PAGE> 10
ASSIGNMENT
I or we assign and transfer this Note to:
(Insert assignee's social security or tax I.D. number)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type name, address and zip code of assignee)
and irrevocably appoint:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Agent to transfer this Note on the books of the Company. The Agent may
substitute another to act for him.
[Check One]
[ ] (a) this Note is being transferred in compliance with
the exemption from registration under the
Securities Act provided by Rule 144A thereunder.
or
[ ] (b) this Note is being transferred other than in
accordance with (a) above and documents are being
furnished which comply with the conditions of
transfer set forth in this Note and the Indenture.
If none of the foregoing boxes is checked, the Trustee or Registrar shall not
be obligated to register this Note in the name of any person other than the
Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.17 of the Indenture shall have
been satisfied.
Date:_____________________ Your Signature:________________________
(Sign exactly as your name
appears on the face of this Note)
Signature Guaranteed___________________________________________________________
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<PAGE> 11
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing this
Note for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act
and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Company as the
undersigned has requested pursuant to Rule 144A or has determined not to
request such information and that it is aware that the transferor is relying
upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated:_______________________ __________________________________
NOTICE: To be executed by
an executive officer
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<PAGE> 12
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 4.19 of the Indenture, check
the appropriate box:
/ / Section 4.10 / / Section 4.19
If you want to have only part of the Note purchased by the Company
pursuant to Section 4.10 or Section 4.19 of the Indenture, state the amount you
elect to have purchased.
$__________________________
(multiple of $1,000)
Date:______________________
Your Signature:_____________________________________
(Sign exactly as your name appears
on the face of this Note)
_____________________________
Signature Guaranteed
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<PAGE> 13
GUARANTEE
Each of the undersigned (the "Guarantors") hereby jointly and
severally unconditionally guarantees, to the extent set forth in the Indenture
dated as of June 10, 1997 by and among W.R. CARPENTER NORTH AMERICA, INC., as
issuer, the Guarantors, as guarantors, and U.S. TRUST COMPANY OF CALIFORNIA,
N.A., as Trustee (as amended, restated or supplemented from time to time, the
"Indenture"), and subject to the provisions of the Indenture, (a) the due and
punctual payment of the principal of, and premium, if any, and interest on the
Notes, when and as the same shall become due and payable, whether at maturity,
by acceleration or otherwise, the due and punctual payment of interest on
overdue principal of, and premium and, to the extent permitted by law,
interest, and the due and punctual performance of all other obligations of the
Company to the Noteholders or the Trustees, all in accordance with the terms
set forth in Article 11 of the Indenture, and (b) in case of any extension of
time of payment or renewal of any Notes or any of such other obligations, that
the same will be promptly paid in full when due or performed in accordance with
the terms of the extension or renewal, whether at stated maturity, by
acceleration or otherwise.
The obligations of the Guarantors to the Noteholders and to the
Trustee pursuant to this Guarantee and the Indenture are expressly set forth in
Article 11 of the Indenture and reference is hereby made to the Indenture for
the precise terms and limitations of this Guarantee.
[SIGNED ON THE FOLLOWING PAGE]
G - 1
<PAGE> 14
IN WITNESS WHEREOF, each of the Guarantors has caused this Guarantee to be
signed by a duly authorized officer.
UPRIGHT, INC.
By:____________________________________
HORIZON HIGH REACH, INC.
By:____________________________________
UPRIGHT FOREIGN SALES CORPORATION
By:____________________________________
G - 2
<PAGE> 1
Exhibit 4.4
THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER
REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A NOMINEE OF A
DEPOSITORY. THIS NOTE IS NOT EXCHANGEABLE FOR NOTES REGISTERED IN THE NAME OF A
PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS NOTE (OTHER
THAN A TRANSFER OF THIS NOTE AS A WHOLE 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) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES
DESCRIBED IN THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY (A NEW YORK CORPORATION) ("DTC") TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC), 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-
<PAGE> 2
R-_____ CUSIP Number ______________
W.R. CARPENTER NORTH AMERICA, INC.
10 5/8% SENIOR SUBORDINATED NOTE DUE 2007
W.R. CARPENTER NORTH AMERICA, INC., a Delaware corporation (the
"Company", which term includes any successor corporation), for value received,
promises to pay to __________________ or registered assigns the principal sum of
$________________ dollars, on June 15, 2007.
Interest Payment Dates: June 15 and December 15, commencing
December 15, 1997.
Record Dates: June 1 and December 1.
Reference is made to the further provisions of this Note contained
herein, which will 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.
W.R. CARPENTER NORTH AMERICA, INC.
By:__________________________________
By:__________________________________
[SEAL]
Certificate of Authentication:
This is one of the 10 5/8% Senior
Subordinated Notes due 2007 referred to in
the within-mentioned Indenture
Dated:
U.S. TRUST COMPANY OF CALIFORNIA, N.A.,
as Trustee
By:_____________________________________
Authorized Signatory
-2-
<PAGE> 3
W.R. CARPENTER NORTH AMERICA, INC.
10 5/8% SENIOR SUBORDINATED NOTE DUE 2007
1. Interest. W.R. CARPENTER NORTH AMERICA, INC., a Delaware
corporation (the "Company"), promises to pay, until the principal hereof is paid
or made available for payment, interest on the principal amount set forth on the
face hereof at a rate of 10 5/8% per annum. Interest hereon will accrue from and
including the most recent date to which interest has been paid or, if no
interest has been paid, from and including June 10, 1997 to but excluding the
date on which interest is paid. Interest shall be payable in arrears on each
June 15 and December 15 commencing December 15, 1997. Interest will be computed
on the basis of a 360-day year of twelve 30-day months. The Company shall pay
interest on overdue principal and on overdue interest (to the full extent
permitted by law) at a rate of 10 5/8% per annum.
2. Method of Payment. The Company will pay interest hereon
(except defaulted interest) to the Persons who are registered Holders at the
close of business on June 1 or December 1 next preceding the interest payment
date (whether or not a Business Day). Holders must surrender Notes to a Paying
Agent to collect principal payments. The Company will pay principal and interest
in money of the United States of America that at the time of payment is legal
tender for payment of public and private debts. Interest may be paid by check
mailed to the Holder entitled thereto at the address indicated on the register
maintained by the Registrar for the Notes.
3. Paying Agent and Registrar. Initially, U.S. TRUST COMPANY OF
CALIFORNIA, N.A. (the "Trustee") will act as a Paying Agent and Registrar. The
Company may change any Paying Agent or Registrar without notice. Neither the
Company nor any of its Affiliates may act as Paying Agent or Registrar.
4. Indenture. The Company issued the Notes under an Indenture
dated as of June 10, 1997 (the "Indenture") among the Company, the Guarantors
(as defined in the Indenture) and the Trustee. This is one of an issue of Notes
of the Company issued, or to be issued, under the Indenture. 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 (15 U.S. Code Section
77aaa-77bbbb), as amended from time to time. The Notes are subject to all such
terms, and Holders are referred to the Indenture and such Act for a statement of
them. Capitalized and certain other terms used herein and not otherwise defined
have the meanings set forth in the Indenture. The Notes are obligations of the
Company limited in aggregate principal amount to $150.0 million.
5. Optional Redemption. The Company, at its option, may redeem
the Notes, in whole or in part, at any time on or after June 15, 2002 upon not
less than 30 nor more than 60 days' notice, at the redemption prices (expressed
as percentages of principal amount), set forth below, together, in each case,
with accrued and unpaid interest
-3-
<PAGE> 4
to the Redemption Date, if redeemed during the twelve month period beginning on
June 15 of each year listed below:
<TABLE>
<CAPTION>
Year Redemption Price
---- ----------------
<S> <C>
2002........................................... 105.313%
2003........................................... 103.542%
2004........................................... 101.771%
2005 and thereafter............................ 100.000%
</TABLE>
Notwithstanding the foregoing, the Company may redeem in the aggregate
up to 35% of the original principal amount of Notes at any time and from time to
time on or prior to June 15, 2000 at a redemption price equal to 110.625% of the
aggregate principal amount thereof, plus accrued and unpaid interest thereon to
the Redemption Date with the Net Proceeds of one or more Public Equity
Offerings; provided, that at least $75.0 million of the principal amount of
Notes originally issued remains outstanding immediately after the occurrence of
any such redemption and that any such redemption occurs within 90 days following
the closing of any such Public Equity Offering.
6. Notice of Redemption. Notice of redemption will be mailed at
least 30 days but not more than 60 days before the Redemption Date to each
Holder of Notes to be redeemed at his registered address. On and after the
Redemption Date, unless the Company defaults in making the redemption payment,
interest ceases to accrue on Notes or portions thereof called for redemption.
7. Offers to Purchase. The Indenture provides that upon the
occurrence of a Change of Control or an Asset Sale and subject to further
limitations contained therein, the Company shall make an offer to purchase
outstanding Notes in accordance with the procedures set forth in the Indenture.
8. Denominations, Transfer, Exchange. The Notes are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. A Holder may transfer or exchange Notes in accordance with the
Indenture. The Registrar may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and to pay to it any taxes and
fees required by law or permitted by the Indenture. The Registrar need not
register the transfer of or exchange any Notes or portion of a Note selected for
redemption, or register the transfer of or exchange any Notes for a period of 15
days before a mailing of notice of redemption.
9. Persons Deemed Owners. The registered Holder of this Note may
be treated as the owner of this Note for all purposes.
10. Unclaimed Money. If money for the payment of principal or
interest remains unclaimed for two years, the Trustee will pay the money back to
the Company at its written request. After that, Holders entitled to the money
must look to the Company for payment as
-4-
<PAGE> 5
general creditors unless an "abandoned property" law designates another Person.
11. Amendment, Supplement, Waiver, Etc. The Company, the
Guarantors and the Trustee (if a party thereto) may, without the consent of the
Holders of any outstanding Notes, amend, waive or supplement the Indenture or
the Notes for certain specified purposes, including, among other things, curing
ambiguities, defects or inconsistencies, maintaining the qualification of the
Indenture under the Trust Indenture Act of 1939, as amended, and making any
change that does not materially and adversely affect the rights of any Holder.
Other amendments and modifications of the Indenture or the Notes may be made by
the Company, the Guarantors and the Trustee with the consent of the Holders of
not less than a majority of the aggregate principal amount of the outstanding
Notes, subject to certain exceptions requiring the consent of the Holders of the
particular Notes to be affected.
12. Restrictive Covenants. The Indenture imposes certain
limitations on the ability of the Company and its Restricted Subsidiaries to,
among other things, incur additional Indebtedness, make payments in respect of
their Capital Stock or certain Indebtedness, make certain Investments, create or
incur liens, enter into transactions with Affiliates, enter into agreements
restricting the ability of Restricted Subsidiaries to pay dividends and make
distributions, issue Preferred Stock of any Restricted Subsidiaries of the
Company, enter into sale and leaseback transactions and on the ability of the
Company to merge or consolidate with any other Person or transfer all or
substantially all of the Company's or any Guarantor's assets. Such limitations
are subject to a number of important qualifications and exceptions. Pursuant to
Section 4.04 of the Indenture, the Company must annually report to the Trustee
on compliance with such limitations.
13. Successor Corporation. When a successor corporation assumes
all the obligations of its predecessor under the Notes and the Indenture and the
transaction complies with the terms of Article 5 of the Indenture, the
predecessor corporation will, except as provided in Article 5, be released from
those obligations.
14. Defaults and Remedies. Events of Default are set forth in the
Indenture. Subject to certain limitations in the Indenture, if an Event of
Default (other than an Event of Default specified in Section 6.01(6) or (7) of
the Indenture with respect to the Company) occurs and is continuing, the Trustee
or the Holders of not less than 25% in aggregate principal amount of the
outstanding Notes may, by written notice to the Trustee and the Company, and the
Trustee upon the request of the Holders of not less than 25% in aggregate
principal amount of the outstanding Notes shall, declare all principal of and
accrued interest on all Notes to be immediately due and payable and (i) such
amounts shall become immediately due and payable or (ii) if there are any
amounts outstanding under or in respect of any Credit Facility, such amounts
shall become due and payable upon the first to occur of an acceleration of
amounts
-5-
<PAGE> 6
outstanding under or in respect of such Credit Facility or five Business Days
after receipt by the Company and the representative of the holders of
Indebtedness under or in respect of the Credit Facility, of notice of the
acceleration of the Notes. If an Event of Default specified in Section 6.01(6)
or (7) of the Indenture occurs with respect to the Company, the principal amount
of and interest on, all Notes shall ipso facto become and be immediately due and
payable without any declaration or other act on the part of the Trustee or any
Holder. 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 Trustee may withhold from
Holders notice of any continuing default (except a default in payment of
principal or interest) if it determines that withholding notice is in their
interests.
15. Trustee Dealings with Company. The Trustee, 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.
16. No Recourse Against Others. No director, officer, employee,
incorporator or stockholder of the Company or any Guarantor shall have any
liability for any obligations of the Company or the Guarantors under the Notes,
the Indenture or the Guarantees or for a claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder of Notes 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.
17. Discharge. The Company's obligations pursuant to the Indenture
will be discharged, except for obligations pursuant to certain sections thereof,
subject to the terms of the Indenture, upon the payment of all the Notes or upon
the irrevocable deposit with the Trustee of United States dollars or U.S.
Government Obligations sufficient to pay when due principal of and interest on
the Notes to maturity or redemption, as the case may be.
18. Guarantees. The Note will be entitled to the benefits of
certain Guarantees made for the benefit of the Holders. Reference is hereby made
to the Indenture for a statement of the respective rights, limitations of
rights, duties and obligations thereunder of the Guarantors, the Trustee and the
Holders.
19. Authentication. This Note shall not be valid until the Trustee
signs the certificate of authentication on the other side of this Note.
20. Governing Law. THE INTERNAL LAWS OF THE STATE OF NEW YORK
SHALL GOVERN THIS NOTE WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS. The
Trustee, the Company, the Guarantor and the Holders agree
-6-
<PAGE> 7
to submit to the jurisdiction of the courts of the State of New York in any
action or proceeding arising out of or relating to the Indenture or the Notes.
21. Abbreviations. Customary abbreviations may be used in the name
of a Holder or an assignee, such as: TEN COM (= tenants in common), TENANT (=
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).
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture. Requests may be made to:
W.R. CARPENTER NORTH AMERICA, INC.
1775 Park Street
Selma, California 93662
Attention: Chief Financial Officer
-7-
<PAGE> 8
ASSIGNMENT
I or we assign and transfer this Note to:
(Insert assignee's social security or tax I.D. number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type name, address and zip code of assignee)
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 Guaranteed
-8-
<PAGE> 9
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 4.19 of the
Indenture, check the appropriate box:
[_] Section 4.10 [_] Section 4.19
If you want to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.19 of the Indenture, state the
amount you elect to have purchased:
$_______________________________
(multiple of $1,000)
Date:___________________________
Your Signature:_____________________________________
(Sign exactly as your name appears
on the face of this Note)
_________________________________
Signature Guaranteed
-9-
<PAGE> 1
Exhibit 5.1
July 11, 1997
W.R. Carpenter North America, Inc.
1775 Park Street
Selma, California 93662
Re: Registration Statement on Form S-4
Ladies and Gentlemen:
We are acting as counsel for W.R. Carpenter North America, Inc., a
Delaware corporation (the "Company"), in connection with the registration under
the Securities Act of 1933, as amended, of up to $105,000,000 aggregate
principal amount of the Company's 10 5/8% Senior Subordinated Notes due 2007
(the "Exchange Notes"). The Exchange Notes are being issued pursuant to that
certain Indenture dated as of June 10, 1997 among the Company, the Guarantors
named therein and U.S. Trust Company of California, N.A., and that certain
Registration Rights Agreement, dated as of June 10, 1997, among the Company,
UpRight, Inc., Horizon High Reach Inc., and UpRight Foreign Sales Corporation,
and CIBC Wood Gundy Securities Corp. and BancAmerica Securities, Inc. In this
regard, we have participated in the preparation of a Registration Statement on
Form S-4 (Registration No. 33-______) relating to such Exchange Notes. (Such
Registration Statement, as amended, is herein referred to as the "Registration
Statement.")
We are of the opinion that the Exchange Notes to be offered and sold by
the Company have been duly authorized and, when issued and sold by the Company
in the manner described in the Registration Statement and in accordance with
the resolutions adopted by the Board of Directors of the Company, will
constitute binding obligations of the Company.
The opinion expressed above is subject to the exceptions that
enforceability of the Notes may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other similar laws affecting
the enforcement of creditors' rights generally, (ii) the rules governing the
availability of specific performance, injunctive relief or other equitable
remedies and general principles of equity, including, without limitation,
concepts of materiality, reasonableness, good faith and fair dealing,
regardless of whether considered in a proceeding in equity or at law, and (iii)
the effectiveness, on public policy grounds of indemnities under federal and
state securities laws.
<PAGE> 2
W.R. Carpenter North America, Inc.
July 11, 1997
Page 2
We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement and to the use of our name under the caption "Legal
Matters" in the Registration Statement and in the Prospectus included therein.
Very truly yours,
/s/ Pillsbury Madison & Sutro LLP
[E-06503]
<PAGE> 1
EXHIBIT 10.1
================================================================================
SECURITIES PURCHASE AGREEMENT
by and among
W.R. CARPENTER NORTH AMERICA, INC.,
THE GUARANTORS NAMED HEREIN
and
THE INITIAL PURCHASERS NAMED HEREIN
--------------------------------
Dated as of June 4, 1997
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions........................................................... 1
SECTION 1.2. Accounting Terms; Financial Statements................................ 5
ARTICLE II
ISSUE OF SECURITIES; PURCHASE AND SALE OF
SECURITIES; RIGHTS OF HOLDERS OF SECURITIES;
OFFERING BY INITIAL PURCHASERS
SECTION 2.1. Issue of Securities................................................... 6
SECTION 2.2. Purchase, Sale and Delivery of Securities............................. 6
SECTION 2.3. Registration Rights of Holders of Securities.......................... 7
SECTION 2.4. Offering by the Initial Purchasers.................................... 7
ARTICLE III
REPRESENTATIONS AND WARRANTIES; RESALE OF SECURITIES
SECTION 3.1. Representations and Warranties of the Company and the Guarantors...... 7
SECTION 3.2. Resale of Securities.................................................. 19
ARTICLE IV
CONDITIONS PRECEDENT TO CLOSING
SECTION 4.1. Conditions Precedent to Obligations of the Initial Purchasers......... 20
</TABLE>
-i-
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE V
COVENANTS
SECTION 5.1. Covenants of the Company and the Guarantors........................... 24
ARTICLE VI
FEES
SECTION 6.1. Costs, Expenses and Taxes............................................. 26
ARTICLE VII
INDEMNITY
SECTION 7.1. Indemnity by the Company and the Guarantors........................... 27
SECTION 7.2. Contribution.......................................................... 30
SECTION 7.3. Registration Rights Agreement......................................... 32
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1. Survival of Provisions................................................ 32
SECTION 8.2. Termination........................................................... 32
SECTION 8.3. No Waiver; Modifications in Writing................................... 33
SECTION 8.4. Information Supplied by the Initial Purchasers........................ 34
SECTION 8.5. Communications........................................................ 34
SECTION 8.6. Execution in Counterparts............................................. 34
SECTION 8.7. Successors............................................................ 35
SECTION 8.8. Governing Law......................................................... 35
SECTION 8.9. Severability of Provisions............................................ 35
SECTION 8.10. Headings ............................................................ 35
SIGNATURES ....................................................................... 36
</TABLE>
EXHIBITS
Exhibit 1 Form of Opinion of Pillsbury Madison & Sutro LLP
Exhibit 2 Form of Opinion of Cahill Gordon & Reindel
-ii-
<PAGE> 4
SECURITIES PURCHASE AGREEMENT, dated as of June 4, 1997 (the
"Agreement"), by and among (i) W.R. Carpenter North America, Inc., a Delaware
corporation (the "Company"), (ii) UpRight, Inc., a California corporation
("UpRight"), UpRight Foreign Sales Corporation, a United States Virgin Islands
corporation ("UpRight FSC"), and Horizon High Reach, Inc., a Delaware
corporation ("Horizon," and together with UpRight and UpRight FSC, the
"Guarantors"), and (iii) CIBC Wood Gundy Securities Corp. and BancAmerica
Securities, Inc. (the "Initial Purchasers").
In consideration of the mutual covenants and agreements set forth
herein and for good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. As used in this Agreement, and unless
the context requires a different meaning, the following terms have the meanings
indicated.
"Accredited Investor" has the meaning provided therefor in
Section 3.2 of this Agreement.
"Act" means the Securities Act of 1933, as amended, and the rules
and regulations of the Commission thereunder.
"Affiliate" means, with respect to any Person, any other Person
which directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, the Person in question. 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, means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by agreement or
otherwise; provided, however, that beneficial ownership of at least 10% of the
voting securities of a Person shall be deemed to be control.
<PAGE> 5
-2-
"Agreement" means this Agreement, as the same may be amended,
supplemented or modified in accordance with the terms hereof.
"Basic Documents" means, collectively, the Indenture, the
Securities, the Registration Rights Agreement, this Agreement and each other
agreement entered into in connection with any of the foregoing.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday
and Friday which is not a day on which banking institutions in the City of New
York are authorized or obligated by law to close.
"Closing" has the meaning provided therefor in Section 2.2(b) of
this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission or any
similar agency then having jurisdiction to enforce the Act.
"Commonly Controlled Entity" has the meaning provided therefor in
Section 3.1(t) of this Agreement.
"Company" has the meaning provided therefor in the introductory
paragraph of this Agreement.
"Default" has the meaning provided therefor in the Indenture.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Event of Default" means any event defined as an Event of Default
in the Indenture.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder.
"Exchange Notes" has the meaning provided therefor in the
Registration Rights Agreement.
"Final Memorandum" has the meaning provided therefor in Section
2.1 of this Agreement.
<PAGE> 6
-3-
"Foreign Plans" has the meaning provided therefor in Section
3.1(t) of this Agreement.
"Guarantees" has the meaning provided therefor in Section 2.1 of
this Agreement.
"Guarantors" has the meaning provided therefor in the
introductory paragraph of this Agreement.
"Indemnified Party" has the meaning provided therefor in Section
7.1(c) of this Agreement.
"Indemnifying Party" has the meaning provided therefor in Section
7.1(c) of this Agreement.
"Indenture" means the indenture to be dated as of June 10, 1997
by and among the Company, the Guarantors and the Trustee under which the
Securities will be issued.
"Initial Purchasers" has the meaning provided therefor in the
introductory paragraph of this Agreement.
"Lien" means, with respect to any property or assets of any
Person, any mortgage or deed of trust, pledge, hypothecation, assignment,
deposit arrangement, security interest, lien, charge, easement, encumbrance,
preference, priority or other security agreement or preferential arrangement of
any kind or nature whatsoever on or with respect to such property or assets
(including without limitation, any Capitalized Lease Obligation (as defined in
the Indenture), conditional sales, or other title retention agreement having
substantially the same economic effect as any of the foregoing).
"Material Adverse Effect" means, with respect to the Company and
each of its Subsidiaries, a material adverse effect on the business, condition
(financial or otherwise), results of operations or properties of the Company and
each of its Subsidiaries, taken as a whole; provided that, with respect to the
Company and the Guarantors, "Material Adverse Effect" shall also mean a material
adverse effect on the ability of the Company and the Guarantors to perform their
respective obligations under this Agreement or the other Basic Documents.
"Memorandum" has the meaning provided therefor in Section 2.1 of
this Agreement.
<PAGE> 7
-4-
"Notes" means $105,000,000 aggregate principal amount of 10-5/8%
Senior Subordinated Notes due 2007 of the Company to be issued pursuant to the
Indenture.
"Offering Materials" has the meaning provided therefor in Section
7.1 of this Agreement.
"Permits" has the meaning provided therefor in Section 3.1(cc) of
this Agreement.
"Permitted Liens" has the meaning provided therefor in the
Indenture.
"Person" means any individual, corporation, partnership, trust,
incorporated or unincorporated association, joint venture, joint-stock company,
government (or an agency or political subdivision thereof) or other entity of
any kind.
"PORTAL" means the Private Offerings, Resales and Trading through
Automated Linkages market.
"Preliminary Memorandum" has the meaning provided therefor in
Section 2.1 of this Agreement.
"Private Exchange Notes" has the meaning provided therefor in the
Registration Rights Agreement.
"Proceeding" has the meaning provided therefor in Section 7.1(c)
of this Agreement.
"QIB" has the meaning provided therefor in Section 3.2 of this
Agreement.
"Registration Rights Agreement" means the registration rights
agreement by and among the Company, the Guarantors and the Initial Purchasers
relating to the Securities.
"Regulation S" has the meaning provided therefor in Section
3.1(ii) of this Agreement.
"Securities" has the meaning provided therefor in Section 2.1 of
this Agreement.
"State" means each of the states of the United States, the
District of Columbia and the Commonwealth of Puerto Rico.
<PAGE> 8
-5-
"State Commission" means any agency of any State having
jurisdiction to enforce such State's securities laws.
"Subsidiaries" means, with respect to any Person, any
corporation, partnership, joint venture, association or other business entity,
whether now existing or hereafter organized or acquired, (i) in the case of a
corporation, of which more than 50% of the total voting power of the capital
stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, officers or trustees thereof is held by such
first-named Person or any of its Subsidiaries; or (ii) in the case of a
partnership, joint venture, association or other business entity, with respect
to which such first-named Person or any of its Subsidiaries has the power to
direct or cause the direction of the management and policies of such entity by
contract or otherwise or if in accordance with generally accepted accounting
principles such entity is consolidated with the first-named Person for financial
statement purposes.
"Taxes" has the meaning provided therefor in Section 3.1(w) of
this Agreement.
"Time of Purchase" has the meaning provided therefor in Section
2.2(b) of this Agreement.
"Trustee" means United States Trust Company of California, as
trustee under the Indenture.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended, and the rules and regulations of the Commission thereunder.
SECTION 1.2. Accounting Terms; Financial Statements. All
accounting terms used herein not expressly defined in this Agreement shall have
the respective meanings given to them in accordance with generally accepted
accounting principles in the United States as the same may be in effect from
time to time.
<PAGE> 9
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ARTICLE II
ISSUE OF SECURITIES; PURCHASE AND SALE
OF SECURITIES; RIGHTS OF HOLDERS OF
SECURITIES; OFFERING BY INITIAL PURCHASERS
SECTION 2.1. Issue of Securities. The Company has authorized the
issuance of $105,000,000 aggregate principal amount of the Notes which are to be
issued pursuant to the Indenture. Each Note will be substantially in the form of
the Note set forth as Exhibit A to the Indenture.
The Notes will be unconditionally guaranteed (the "Guarantees"),
on a joint and several basis, by the Guarantors. Each Guarantee will be
substantially in the form of Exhibit G to the Indenture. The Notes and the
Guarantees together are hereinafter referred to as the "Securities."
The Securities will be offered and sold to the Initial Purchasers
without being registered under the Act, in reliance on exemptions therefrom.
In connection with the issuance and sale of the Securities, the
Company and the Guarantors have prepared a preliminary offering memorandum dated
May 16, 1997 (the "Preliminary Memorandum") and prepared a final offering
memorandum dated June 4, 1997 (the "Final Memorandum" and, together with the
Preliminary Memorandum, the "Memorandum") setting forth or including a
description of the terms of the Securities, the terms of the offering, a
description of the Company, the Guarantors and the Transactions and any material
developments relating to the Company and the Guarantors occurring after the date
of the most recent financial statements included therein.
SECTION 2.2. Purchase, Sale and Delivery of Securities. (a) On
the basis of the representations, warranties, agreements and covenants herein
contained and subject to the terms and conditions herein set forth, the Company
agrees that it will sell to the Initial Purchasers, and each Initial Purchaser
agrees that it will purchase, severally and not jointly, from the Company at the
Time of Purchase, the principal amount of the Notes set forth opposite the name
of such Initial Purchaser on Schedule I hereto at a price equal to 96.542% of
such principal amount.
(b) The purchase, sale and delivery of the Securities will take
place at a closing (the "Closing") at the of-
<PAGE> 10
-7-
fices of Cahill Gordon & Reindel, 80 Pine Street, New York, New York, at 9:00
A.M., New York time, on June 10, 1997, or such later date and time, if any, as
the Initial Purchasers and the Company shall agree. The time at which such
Closing is concluded is herein called the "Time of Purchase."
(c) One or more certificates in definitive form for the
Securities that the Initial Purchasers have agreed to purchase hereunder, and in
such denomination or denominations and registered in such name or names as the
Initial Purchasers request upon notice to the Company at least 48 hours prior to
the Closing, shall be delivered by or on behalf of the Company to the Initial
Purchasers, against payment by or on behalf of the Initial Purchasers of the
purchase price therefor by wire transfer of immediately available funds wired in
accordance with the written instructions of the Company. The Company will make
such certificate or certificates for the Securities available for checking and
packaging by the Initial Purchasers at the offices of one of the Initial
Purchasers, or such other place as the Initial Purchasers may designate, at
least 24 hours prior to the Closing.
SECTION 2.3. Registration Rights of Holders of Securities. The
Initial Purchasers and their direct and indirect transferees of the Securities
will have such rights with respect to the registration thereof under the Act and
qualification of the Indenture under the Trust Indenture Act as are set forth in
the Registration Rights Agreement.
SECTION 2.4. Offering by the Initial Purchasers. The Initial
Purchasers propose to make an offering of the Securities at the price and upon
the terms set forth in the Final Memorandum, as soon as practicable after this
Agreement is entered into and as in the judgment of the Initial Purchasers is
advisable.
ARTICLE III
REPRESENTATIONS AND
WARRANTIES; RESALE OF SECURITIES
SECTION 3.1. Representations and Warranties of the Company and
the Guarantors. The Company and the Guarantors, jointly and severally, represent
and warrant to and agree with each of the Initial Purchasers as follows:
<PAGE> 11
-8-
(a) Neither the Preliminary Memorandum, as of its date, nor the
Final Memorandum, as of its date and at the Time of Purchase, will contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, except that the representations and warranties
set forth in this Section 3.1(a) do not apply to statements or omissions made in
reliance upon and in conformity with information relating to the Initial
Purchasers furnished to the Company in writing by the Initial Purchasers
expressly for use in the Final Memorandum or any amendment or supplement
thereto.
(b) The audited consolidated financial statements of the Company
and its Subsidiaries included in the Final Memorandum present fairly the
financial position, results of operations and cash flows of the Company and its
Subsidiaries at the dates and for the periods to which they relate and have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis. The audited and unaudited summary and selected financial
data and the unaudited interim financial data in the Final Memorandum present
fairly in all material respects the financial information shown therein and have
been prepared and compiled on a basis consistent with the audited financial
statements included therein. Pannell Kerr Forster, which has reported on the
audited financial statements included in the Final Memorandum, are independent
public accountants within the meaning of the Act.
(c) The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware and has
filed all reports with the Secretary of the State of Delaware required to obtain
a certificate with respect to continued subsistence in good standing from that
office. Each Subsidiary of the Company is, and at and as of the Time of Purchase
will be, a corporation duly incorporated, validly existing and in good standing
under the laws of the state or other jurisdiction of its incorporation or
organization. The Company has no Subsidiaries other than the Subsidiaries listed
on Schedule II hereto and all of the Subsidiaries of the Company are Guarantors.
Each of the Company and its Subsidiaries is, and at and as of the Time of
Purchase will be, duly qualified and in good standing as a foreign corporation,
and authorized to do business, in each jurisdiction in which the ownership or
leasing of any property or the character of its operations makes such
qualification necessary and in which the failure to so qualify would have a
Material Adverse Effect. Such jurisdictions are listed on Schedule III hereto.
<PAGE> 12
-9-
(d) As of the Time of Purchase, the Company will have the
authorized, issued and outstanding capitalization as set forth in the Final
Memorandum. All of the issued and outstanding shares of capital stock of the
Company and its Subsidiaries are, and at and as of the Time of Purchase will be,
validly issued, fully paid and nonassessable and none of such shares were or
will have been issued in violation of any preemptive or similar rights. Except
as set forth in the Final Memorandum, (i) all of the capital stock of the
Company's Subsidiaries is directly or indirectly owned by the Company, free and
clear of any Liens; (ii) there are no outstanding subscriptions, options,
warrants, rights, convertible securities or other binding agreements or
commitments of any character obligating the Company or its Subsidiaries to issue
any securities, and (iii) there is no agreement, understanding or arrangement
among the Company and any of its stockholders or any other Person relating to
the ownership or disposition of any capital stock in the Company or any of its
Subsidiaries, the election of directors of the Company or any of its
Subsidiaries, or the governance of the Company's or any of its Subsidiaries'
affairs.
(e) This Agreement has been duly, and validly authorized,
executed and delivered by the Company and each of the Guarantors and (assuming
the due authorization, execution and delivery by the Initial Purchasers) is a
legal, valid and binding agreement of the Company and each of the Guarantors,
enforceable against each of the Company and the Guarantors in accordance with
its terms except (i) that the enforcement hereof may be subject to bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights generally, and to
general principles of equity and the discretion of the court before which any
proceeding therefor may be brought and (ii) as any rights to indemnity or
contribution hereunder may be limited by federal and state securities laws and
public policy considerations.
(f) The Indenture has been duly and validly authorized by the
Company and each of the Guarantors and, when executed and delivered by the
Company and each of the Guarantors (assuming the due authorization, execution
and delivery by the Trustee), will constitute a legal, valid and binding
agreement of the Company and each of the Guarantors, enforceable against each of
the Company and the Guarantors in accordance with its terms except that the
enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws now or
hereafter in effect re-
<PAGE> 13
-10-
lating to creditors' rights generally, and (ii) general principles of equity and
the discretion of the court before which any proceeding therefor may be brought.
The Indenture meets the requirements for qualification under the Trust Indenture
Act.
(g) The Registration Rights Agreement has been duly and validly
authorized by the Company and each of the Guarantors and, when executed and
delivered by the Company and each of the Guarantors (assuming the due
authorization, execution and delivery by the Initial Purchasers), will
constitute a legal, valid and binding agreement of the Company and each of the
Guarantors, enforceable against each of the Company and the Guarantors in
accordance with its terms except (i) that the enforcement thereof may be subject
to bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or
other similar laws now or hereafter in effect relating to creditors' rights
generally, and general principles of equity and the discretion of the court
before which any proceeding therefor may be brought and (ii) as any rights to
indemnity or contribution thereunder may be limited by federal and state
securities laws and public policy considerations.
(h) The Notes are in the form contemplated by the Indenture. The
Notes, the Exchange Notes and the Private Exchange Notes have each been duly and
validly authorized by the Company and, when executed by the Company and
authenticated by the Trustee in accordance with the provisions of the Indenture
and, in the case of the Notes, delivered to and paid for by the Initial
Purchasers in accordance with the terms of this Agreement, or, in the case of
the Exchange Notes and the Private Exchange Notes, exchanged for the Notes in
accordance with the terms of the Registration Rights Agreement, will be entitled
to the benefits of the Indenture and will constitute legal, valid and binding
obligations of the Company enforceable in accordance with their terms, except
that the enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally, and (ii) general
principles of equity and the discretion of the court before which any proceeding
therefor may be brought.
(i) The Guarantees are in the form contemplated by the Indenture.
The Guarantees endorsed on the Notes and the guarantees to be endorsed on the
Exchange Notes and the Private Exchange Notes have each been duly and validly
authorized by each of the Guarantors and, when the Notes are executed by the
Company and authenticated by the Trustee in accordance with the provisions of
the Indenture and delivered to and paid for by
<PAGE> 14
-11-
the Initial Purchasers in accordance with the terms of this Agreement, the
Guarantees will be entitled to the benefits of the Indenture and will constitute
legal, valid and binding obligations of the Guarantors enforceable in accordance
with their terms, except that the enforcement thereof may be subject to (i)
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or
other similar laws now or hereafter in effect relating to creditors' rights
generally, and (ii) general principles of equity and the discretion of the court
before which any proceeding therefor may be brought.
(j) Immediately after the consummation of the transactions
contemplated by this Agreement (including the use of proceeds from the sale of
Notes at the Time of Purchase), to the best of the Company's knowledge, the fair
value and present fair salable value of the assets of the Company (on a
consolidated basis) will exceed the sum of its stated liabilities and identified
contingent liabilities; the Company (on a consolidated basis) will not be, after
giving effect to the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby (including the use of
proceeds from the sale of Notes at the Time of Purchase), (i) left with
unreasonably small capital with which to carry on its business as it is proposed
to be conducted, (ii) unable to pay its debts (contingent or otherwise) as they
mature or (iii) otherwise insolvent.
(k) Each of the Company and the Guarantors has all requisite
corporate power and authority to (i) execute, deliver and perform its
obligations under each of the Basic Documents to the extent a party thereto
(whether or not by operation of law), (ii) execute, deliver and perform its
obligations under all other agreements and instruments to be executed and
delivered by it pursuant to or in connection with each of the Basic Documents
and (iii) issue the Securities in the manner and for the purpose contemplated by
this Agreement.
(l) Subsequent to the date as of which information is given in
the Final Memorandum to the date hereof, except as contemplated in the Final
Memorandum, there has not been (i) any event or condition that has had or that
could reasonably be expected to have a Material Adverse Effect, (ii) any
transaction entered into by the Company or any of its Subsidiaries, other than
in the ordinary course of business, that is material to the Company and its
Subsidiaries, taken as a whole, or (iii) any dividend or distribution of any
kind declared, paid or made by the Company on its Capital Stock.
<PAGE> 15
-12-
(m) There is no action, suit, investigation or proceeding before
or by any court or governmental agency or body, domestic or foreign, now pending
or, to the best knowledge of the Company and its Subsidiaries, threatened
against or affecting the Company or any of its Subsidiaries, which would, singly
or in the aggregate, have a Material Adverse Effect; all pending legal or
governmental proceedings to which the Company or any of its Subsidiaries is a
party or of which any of their respective properties or assets is the subject
which are not specifically described in the Final Memorandum, including ordinary
routine litigation incidental to their respective businesses, are considered in
the aggregate not material to the business, condition (financial or otherwise),
results of operations, properties or prospects of the Company and its
Subsidiaries taken as a whole; there have been no developments with respect to
any action, suit, investigation or proceeding, whether or not such action, suit
or proceeding is described in the Final Memorandum, which would, singly or in
the aggregate, have a Material Adverse Effect; there is no action, suit,
investigation or proceeding, governmental or otherwise, pending or, to the best
knowledge of the Company and its Subsidiaries, threatened to which the Company
or any of its Subsidiaries is or would be a party or of which the properties or
assets of the Company or any of its Subsidiaries are or may be the subject that
(i) seeks to restrain, enjoin, prevent the consummation of or otherwise
challenge any of the transactions contemplated hereby, including the issuance
and sale of the Securities by the Company and the Guarantors, or (ii) questions
the legality or validity of any such transactions.
(n) The execution, delivery and performance by the Company and
the Guarantors (to the extent a party thereto) of the Basic Documents, the
issuance and sale by the Company and the Guarantors of the Securities, and the
execution, delivery and performance of all other agreements and instruments to
be executed and delivered by the Company and the Guarantors (to the extent a
party thereto) pursuant hereto or thereto or in connection herewith or
therewith, and compliance by the Company and the Guarantors (to the extent a
party thereto) with the terms and provisions hereof and thereof, do not and will
not (i) violate any provision of any statute, law, rule or regulation
(including, without limitation, Regulation G, T, U or X of the Board of
Governors of the Federal Reserve System), order, writ, judgment, decree,
determination or award presently in effect or in effect at the Time of Purchase
having applicability to the Company or any of its Subsidiaries, (ii) conflict
with or result in a breach of or constitute a default under the certificate of
incorporation or by-laws of the Company or any of
<PAGE> 16
-13-
its Subsidiaries, or any indenture or loan or credit agreement, or any other
material agreement or instrument, to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries or
any of their respective properties or assets may be bound or affected, or (iii)
except as contemplated by the Basic Documents, result in, or require the
creation or imposition of, any Lien upon or with respect to any of the
properties or assets now owned or hereafter acquired by the Company or any of
its Subsidiaries, except, in each case, where such violation, conflict, default
or creation or imposition of any Lien would not have a Material Adverse Effect.
(o) There exists as of the date hereof (after giving effect to
the transactions contemplated by each of the Basic Documents) no event or
condition that would constitute a default or an event of default (in each case
as defined in each of the Basic Documents) under any of the Basic Documents that
would result in a Material Adverse Effect.
(p) None of the Company or any of its Subsidiaries is (i) in
violation of its respective certificate of incorporation or by-laws, (ii) in
default (nor will an event occur which with notice or passage of time or both
would constitute such a default) under or in violation of any indenture or loan
or credit agreement or any other material agreement or instrument to which it is
a party or by which it or any of its properties or assets may be bound or
affected, (iii) in violation of any order of any court, arbitrator or
governmental body, or (iv) in violation of or will have violated any statute,
rule or regulation of any governmental authority, except in each case, which
default or violation would not (y) affect the legality, validity or
enforceability of any of the Basic Documents in any material respect or (z) have
a Material Adverse Effect.
(q) No authorization, consent, approval, license, qualification
or formal exemption from, nor any filing, declaration or registration with, any
court, governmental agency or regulatory authority, securities exchange or any
third party is required in connection with the execution, delivery or
performance by the Company or any of its Subsidiaries (to the extent they are a
party thereto) of any of the Basic Documents, except (i) as may be required
under state securities or "blue sky" laws or the laws of any foreign
jurisdiction in connection with the offer and sale of the Securities or (ii) as
would not have a Material Adverse Effect. All such authorizations, consents,
approvals, licenses, qualifications, exemptions, filings, declarations and
registrations set forth in the Final Memorandum
<PAGE> 17
-14-
(other than as disclosed therein) which are required to have been obtained by
the date hereof have been obtained or made, as the case may be, and are in full
force and effect and not the subject of any pending or, to the best knowledge of
the Company, threatened attack by appeal or direct proceeding or otherwise.
(r) None of the Company or its Subsidiaries is, or immediately
after the Time of Purchase will be, an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
(s) The execution and delivery of this Agreement and the other
Basic Documents and the sale of the Securities to the Initial Purchasers will
not involve any non-exempt prohibited transaction within the meaning of Section
406 of ERISA or Section 4975 of the Code on the part of the Company or any of
its Subsidiaries. No Reportable Event (as defined in Section 4043 of ERISA) has
occurred during the five-year period prior to the date on which this
representation is made or deemed made with respect to any Employee Benefit Plan
(as defined in Section 3(3) of ERISA), and the Company and its Subsidiaries have
complied in all material respects with the applicable provisions of ERISA and
the Code in connection with each Employee Benefit Plan. The present value of all
benefits vested under each Employee Benefit Plan maintained by the Company or
any person or entity treated with the Company as a single employer under Section
414 of ERISA (a "Commonly Controlled Entity") (based on the current liability,
interest rate and other assumptions used in preparation of the plan's Form 5500
Annual Report) did not, as of the last annual valuation date prior to the date
on which this representation is made or deemed made, exceed the value of the
assets of such plan allocable to such accrued benefits. None of the Company or
any Commonly Controlled Entity of the Company has had a complete or partial
withdrawal from any Multiemployer Plan (as defined in ERISA), and none of the
Company or any Commonly Controlled Entity of the Company would become subject to
any liability under ERISA if the Company or any such Commonly Controlled Entity
were to withdraw completely from all Multiemployer Plans as of the valuation
date most closely preceding the date on which such representation is made or
deemed made. No such Multiemployer Plan is in reorganization or insolvent. There
are no material liabilities of the Company or any Commonly Controlled Entity for
post-retirement benefits to be provided to their current and former employees
under Plans which are welfare benefit plans (as described in Section 3(1) of
ERISA). The Company and its Subsidiaries are in compliance
<PAGE> 18
-15-
with all applicable laws with respect to all employee benefit plans maintained
or contributed to in respect of employees other than those employed in the
United States ("Foreign Plans"). There are no material unfunded liabilities in
respect of the Foreign Plans.
(t) The Company and each of its Subsidiaries have good and valid
title to, or valid and enforceable leasehold interests in, all properties and
assets identified in the Final Memorandum as owned or leased, respectively, by
each of them which are material to the business of the Company and its
Subsidiaries, taken as a whole, free and clear of all Liens, except (i) such
Liens as are described in the Final Memorandum or (ii) Liens created in the
ordinary course of business which are Permitted Liens (as defined in the
Indenture). All of the leases material to the business of the Company or any of
its Subsidiaries and under which the Company or any of its Subsidiaries holds
properties described in the Final Memorandum, are valid and binding as leased by
them, with such exceptions as are not material and do not interfere with the use
made and proposed to be made of such properties by the Company or any of its
Subsidiaries.
(u) No form of general solicitation or general advertising was
used by the Company, any of its Subsidiaries or any of their respective
representatives (other than the Initial Purchasers and their respective
representatives, as to whom no representation is made) in connection with the
offer and sale of the Securities. Neither the Company, any of its Subsidiaries
nor any Person authorized to act for any of them has, either directly or
indirectly, sold or offered for sale any of the Securities or any other similar
security of the Company to, or solicited any offers to buy any thereof from, or
has otherwise approached or negotiated in respect thereof with, any Person or
Persons other than with or through the Initial Purchasers; and the Company
agrees that neither it, any of its Subsidiaries nor any Person acting on its or
their behalf will sell or offer for sale any Securities to, or solicit any
offers to buy any Securities from, or otherwise approach or negotiate in respect
thereof with, any Person or Persons so as thereby to bring the issuance or sale
of any of the Securities within the provisions of Section 5 of the Act.
(v) All tax returns required to be filed by the Company or any of
its Subsidiaries in any jurisdiction (including foreign jurisdictions) have been
duly filed and all taxes, assessments, fees and other charges including, without
limitation, withholding taxes, penalties, and interest ("Taxes") due
<PAGE> 19
-16-
or claimed to be due have been paid, other than those Taxes being contested in
good faith and for which adequate reserves or accruals have been established in
accordance with generally accepted accounting principles, except where the
failure to file such returns or to pay such Taxes will not have a Material
Adverse Effect. The Company knows of no actual or proposed additional tax
assessments for any fiscal period against the Company or any of its Subsidiaries
that would have a Material Adverse Effect.
(w) The Company and its Subsidiaries are the owners or licensees
of all trade names, unregistered trademarks and service marks, brand names,
patents, registered and unregistered copyrights, registered trademarks and
service marks, and all applications for any of the foregoing, and all permits,
grants and licenses or other rights with respect thereto, the absence of which
would have a Material Adverse Effect. None of the Company or any of its
Subsidiaries has been charged with any material infringement of any intangible
property of the character described above or been notified or advised of any
material claim of any other Person relating to any of the intangible property,
which infringements or claims would have a Material Adverse Effect.
(x) Each of the Basic Documents conforms in all material respects
to the descriptions thereof in the Final Memorandum.
(y) Assuming the accuracy of the Initial Purchasers'
representations and warranties set forth in Section 3.2 hereof, and the due
performance by the Initial Purchasers of the covenants and agreements set forth
in Section 3.2 hereof, the offer and sale of the Securities to the Initial
Purchasers in the manner contemplated by this Agreement and the Memorandum does
not require registration under the Act and the Indenture does not require
qualification under the Trust Indenture Act of 1939, as amended.
(z) Each of the Company and its Subsidiaries is in compliance
with the common law and all federal, state, local and foreign laws, and any
rules, regulations, orders, decrees, judgments or injunctions issued or
promulgated thereunder relating to pollution and protection of public and
employee health and the environment ("Environmental Law") and with the terms and
conditions of any permit, license or approval required thereunder in connection
with the ownership, operation or use of its business, property and assets where
the failure to be in such compliance could have, individually or in the
ag-
<PAGE> 20
-17-
gregate, a Material Adverse Effect; none of the Company or any of its
Subsidiaries is subject to any liability, absolute or contingent, under any
Environmental Law which liability would, individually or in the aggregate,
result in a Material Adverse Effect; there is no civil, criminal or
administrative action, suit, demand, hearing, notice of violation or deficiency,
investigation, proceeding or notice of potential responsibility or liability or
demand letter or request for information pending or, to the best knowledge of
the Company, and its subsidiaries threatened against the Company or any of its
Subsidiaries under any Environmental Law which, if determined adversely to the
Company or any such Subsidiary, would result in a Material Adverse Effect.
(aa) Except as disclosed under the caption "Risk Factors - Labor
Matters" in the Final Memorandum, there is no strike, labor dispute, slowdown or
work stoppage with the employees of the Company or any of its Subsidiaries which
is pending or, to the best knowledge of the Company or any of its Subsidiaries,
threatened.
(bb) Each of the Company and its Subsidiaries possesses all
licenses, permits, certificates, consents, orders, approvals and other
authorizations from, and has made all declarations and filings with, all
federal, state, local and other governmental authorities, all self-regulatory
organizations and all courts and other tribunals, presently required or
necessary to own or lease, as the case may be, and to operate its respective
properties and to carry on its respective businesses as now or proposed to be
conducted as set forth in the Final Memorandum ("Permits"), except where the
failure to obtain such Permits would not have a Material Adverse Effect; each of
the Company and its Subsidiaries has fulfilled and performed all of its
obligations with respect to such Permits and no event has occurred which allows,
or after notice or lapse of time would allow, revocation or termination thereof
or results in any other material impairment of the rights of the holder of any
such Permit; and none of the Company or its Subsidiaries has received any notice
of any proceeding relating to revocation or modification of any such Permit,
except as described in the Final Memorandum and except where such revocation or
modification would not have a Material Adverse Effect.
(cc) Each of the Company and its Subsidiaries carries insurance
(including self insurance) in such amounts and covering such risks as in its
reasonable determination is adequate for the conduct of its business and the
value of its properties. In the ordinary course of their respective busi-
<PAGE> 21
-18-
nesses, the Company and its Subsidiaries conduct reviews of the effect of
product liability and other litigation on the business, operations and
properties of the Company and its Subsidiaries, in the course of which they
identify and evaluate associated costs and liabilities (including, without
limitation, any potential liabilities to third parties); on the basis of such
reviews, the Company and its Subsidiaries have reasonably concluded that such
associated costs and liabilities would not, singly or in the aggregate, have a
Material Adverse Effect. There has not been, or become known, any adverse
development with respect to pending or threatened claims involving product
liability against the Company or any of its Subsidiaries or involving related
insurance coverages, except, in each case, as would not have, singly or in the
aggregate, a Material Adverse Effect. The reserves of the Company with respect
to product liability and related bodily injury claims, both before and after
giving effect to net estimated recoveries from products liability insurers, are
reasonable and represent the best judgment of the Company, after consultation
with its advisors and counsel, with respect to such matters.
(dd) Each of the Company and its Subsidiaries (i) makes and keeps
accurate books and records and (ii) maintains internal accounting controls which
provide reasonable assurance that (A) transactions are executed in accordance
with management's authorization, (B) transactions are recorded as necessary to
permit preparation of its financial statements and to maintain accountability
for its assets, (C) access to its assets is permitted only in accordance with
management's authorization and (D) the reported accountability for its assets is
compared with existing assets at reasonable intervals.
(ee) Other than holders of the Securities, no holder of
securities of the Company or any Subsidiary of the Company will be entitled to
have such securities registered under the registration statements required to be
filed by the Company pursuant to the Registration Rights Agreement.
(ff) No securities of the Company or any of its Subsidiaries are
of the same class (within the meaning of Rule 144A under the Act) as the
Securities and listed on a national securities exchange registered under Section
6 of the Exchange Act, or quoted in a U.S. automated inter-dealer quotation
system.
(gg) Neither the Company nor any of its Subsidiaries has taken,
nor will any of them take, directly or indirectly, any action designed to, or
that might be reasonably expected
<PAGE> 22
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to, cause or result in stabilization or manipulation of the price of the Notes.
(hh) None of the Company, its Subsidiaries, any of their
respective Affiliates or any Person acting on its or their behalf (other than
the Initial Purchasers) has engaged in any directed selling efforts (as that
term is defined in Regulation S under the Act ("Regulation S") with respect to
the Securities and the Company, its Subsidiaries and their respective Affiliates
and any person acting on its or their behalf (other than the Initial Purchasers)
have acted in accordance with the offering restrictions requirement of
Regulation S.
(ii) All of the statistical and market and industry-related data
included in the Final Memorandum are based on or derived from sources which the
Company and the Guarantors believe to be reliable and accurate or represent the
Company's good faith estimates that are made on the basis of data derived from
such sources.
(jj) None of the Company or any of the Guarantors knows of any
claims for services, either in the nature of a finder's fee or financial
advisory fee, with respect to the offering of the Securities and the
transactions contemplated by the Final Memorandum.
SECTION 3.2. Resale of Securities. Each of the Initial Purchasers
represents and warrants as to itself only that it is a "qualified institutional
buyer" as defined in Rule 144A under the Act ("QIB"). Each of The Initial
Purchasers agrees with the Company as to itself only that (a) it has not and
will not, directly or indirectly, solicit offers for, or offer or sell, the
Securities by any form of general solicitation or general advertising (as those
terms are used in Regulation D under the Act) or in any manner involving a
public offering within the meaning of Section 4(2) of the Act; (b) it has not
and will not, directly or indirectly, engage in any "directed selling efforts"
(as defined in Regulation S under the Act); and (c) it has and will solicit
offers for the Securities only from, and will offer the Securities only to (A)
in the case of offers inside the United States, (i) Persons whom the Initial
Purchasers reasonably believe to be QIBs or, if any such Person is buying for
one or more institutional accounts for which such Person is acting as fiduciary
or agent, only when such Person has represented to the Initial Purchasers that
each such account is a QIB, to whom notice has been given that such sale or
delivery is being made in reliance on Rule 144A, and, in each case, in
transactions under Rule 144A or (ii) a limited number
<PAGE> 23
-20-
of other institutional investors reasonably believed by the Initial Purchasers
to be "Accredited Investors" (as defined in Rule 501(a)(1), (2), (3) or (7) of
the Act) that, prior to their purchase of the Securities, deliver to the Initial
Purchasers a letter containing the representations and agreements set forth in
Annex A to the Final Memorandum and (B) in the case of offers outside the United
States, to Persons other than U.S. Persons ("foreign purchasers," which term
shall include dealers or other professional fiduciaries in the United States
acting on a discretionary basis for foreign beneficial owners (other than an
estate or trust)); provided, however, that, in the case of this clause (B), in
purchasing such Securities such Persons are deemed to have represented and
agreed as provided under the caption "Notice to Investors" contained in the
Final Memorandum.
ARTICLE IV
CONDITIONS PRECEDENT TO CLOSING
SECTION 4.1. Conditions Precedent to Obligations of the Initial
Purchasers. The obligation of each of the Initial Purchasers to purchase the
Securities to be purchased by it hereunder is subject, at the Time of Purchase,
to the satisfaction of the following conditions:
(a) The Initial Purchasers shall have received an opinion,
addressed to the Initial Purchasers in form and substance reasonably
satisfactory to counsel to the Initial Purchasers and dated the Time of
Purchase, from Pillsbury Madison & Sutro LLP, counsel to the Company and the
Guarantors, substantially in the form of Exhibit 1 hereto.
(b) The Initial Purchasers shall have received an opinion,
addressed to the Initial Purchasers in form and substance reasonably
satisfactory to the Initial Purchasers and dated the Time of Purchase, of Cahill
Gordon & Reindel, counsel to the Initial Purchasers, substantially in the form
of Exhibit 2 hereto.
In rendering such opinions in accordance with Sections 4.1(a) and
(b), each such counsel may rely as to factual matters upon certificates or other
documents furnished by officers and directors of the Company and the Guarantors
and representations of the Initial Purchasers and by government officials, and
upon such other documents as such counsel deem ap-
<PAGE> 24
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propriate as a basis for their opinion. Each such counsel may specify the
jurisdictions in which it is admitted to practice and that it is not admitted to
practice in any other jurisdiction or an expert in the law of any other
jurisdiction. To the extent such opinion concerns the laws of any other such
jurisdiction such counsel may rely upon the opinion of counsel (satisfactory to
the Initial Purchasers) admitted to practice in such jurisdiction. Any opinion
relied upon by such counsel as aforesaid shall be delivered to the Initial
Purchasers together with the opinion of such counsel, which opinion shall state
that such counsel believes that their and the Initial Purchasers' reliance
thereon is justified.
(c) The Initial Purchasers shall have received from Pannell Kerr
Forster a comfort letter or letters dated the date hereof and the Time of
Purchase in form and substance reasonably satisfactory to counsel to the Initial
Purchasers.
(d) The representations and warranties made by each of the
Company and the Guarantors herein shall be true and correct in all respects
(except for changes expressly provided for in this Agreement) at and as of the
Time of Purchase with the same effect as though such representations and
warranties had been made and as of the Time of Purchase, and the Company and
each Guarantor shall have complied in all material respects with all agreements
as set forth in or contemplated hereunder and in the other Basic Documents
required to be performed by it at or prior to the Time of Purchase.
(e) Subsequent to the date of the Final Memorandum, (i) there
shall not have been any change, or any development involving a prospective
change, which has had or could have a Material Adverse Effect or any event or
development relating to or involving the Company or any of its Subsidiaries or
any of the respective officers or directors of the Company or any of its
Subsidiaries that makes any statement made in the Memorandum untrue or that, in
the opinion of the Company and its counsel or the Initial Purchasers and their
counsel, requires the making of any addition to or change in the Memorandum in
order to state a material fact required by the Act or any other law to be stated
therein or necessary in order to make the statements made therein not
misleading, and (ii) the Company and its Subsidiaries shall have conducted their
respective businesses only in the ordinary course.
(f) At the Time of Purchase and after giving effect to the
consummation of the transactions contemplated by this
<PAGE> 25
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Agreement and the other Basic Documents, there shall exist no Default or Event
of Default (as defined in the Indenture).
(g) The purchase of and payment for the Securities by the Initial
Purchasers hereunder shall not be prohibited or enjoined (temporarily or
permanently) by any applicable law or governmental regulation (including,
without limitation, Regulation G, T, U or X of the Board of Governors of the
Federal Reserve System).
(h) At the Time of Purchase, the Initial Purchasers shall have
received certificates, dated the Time of Purchase, from the Company and each
Guarantor stating that the conditions specified in Sections 4.1(d), (e), (f) and
(k) have been satisfied or duly waived at the Time of Purchase.
(i) Each of the Basic Documents and each other agreement or
instrument executed in connection therewith shall be reasonably satisfactory in
form and substance to the Initial Purchasers and shall have been executed and
delivered by all the respective parties thereto and shall be in full force and
effect, and there shall have been no material amendments, alterations,
modifications or waivers of any provision thereof since the date of this
Agreement.
(j) All proceedings taken in connection with the issuance of the
Securities and the transactions contemplated by this Agreement, the other Basic
Documents and all documents and papers relating thereto shall be reasonably
satisfactory to the Initial Purchasers and counsel to the Initial Purchasers.
The Initial Purchasers and counsel to the Initial Purchasers shall have received
copies of such papers and documents as they may reasonably request in connection
therewith, all in form and substance reasonably satisfactory to them.
(k) None of the sale of the Securities hereunder or any of the
transactions contemplated by the Basic Documents shall have been enjoined
(temporarily or permanently) at the Time of Purchase; and there shall not have
been any legal action, order, decree or other administrative proceeding
instituted or threatened against the Company or any of its Subsidiaries or
against any of the Initial Purchasers relating to the issuance of the Securities
or the Initial Purchasers' activities in connection therewith or any other
transaction contemplated by any of the Basic Documents or the Memorandum.
(l) There shall not have been any change in the capital stock of
the Company nor any material increase in the
<PAGE> 26
-23-
consolidated short-term or long-term debt of the Company from that set forth or
contemplated in the Memorandum (or any amendment or supplement thereto) or
contemplated by the Basic Documents and (b) the Company shall not have any
liabilities or obligations, contingent or otherwise (whether or not in the
ordinary course of business), that are material to the Company other than those
reflected in the Memorandum (or any amendment or supplement thereto) or
contemplated by the Basic Documents.
(m) The Company shall apply the proceeds from the issuance and
sale of the Notes as described under "Use of Proceeds" in the Memorandum.
(n) At the Time of Purchase, the Initial Purchasers shall have
received a letter, dated the Time of Purchase, from the chief financial officer
of the Company with respect to the solvency of the Company and its Subsidiaries
in form, scope and substance reasonably satisfactory to the Initial Purchasers.
(o) There shall not have been any announcement by any "nationally
recognized statistical rating organization," as defined for purposes of Rule
436(g) under the Act, that (A) it is downgrading its rating assigned to any debt
securities of the Company, or (B) it is reviewing its rating assigned to any
debt securities of the Company with a view to possible downgrading, or with
negative implications, or direction not determined.
(p) On or before the Closing, the Initial Purchasers shall have
received the Registration Rights Agreement executed by the Company and such
agreement shall be in full force and effect at all times from and after the Time
of Purchase.
(q) On or before the Closing, the Initial Purchasers and counsel
to the Initial Purchasers shall have received such further documents, opinions,
certificates and schedules or other instruments relating to the business,
corporate, legal and financial affairs of the Company and its Subsidiaries as
they may reasonably request.
<PAGE> 27
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ARTICLE V
COVENANTS
SECTION 5.1. Covenants of the Company and the Guarantors. The
Company and the Guarantors covenant and agree with the Initial Purchasers that:
(a) Neither the Company nor any Guarantor will amend or
supplement the Final Memorandum or any amendment or supplement thereto of which
the Initial Purchasers shall not previously have been advised and furnished a
copy for a reasonable period of time prior to the proposed amendment or
supplement and as to which the Initial Purchasers shall not have given its
consent, which consent shall not be unreasonably withheld. The Company will
promptly, upon the reasonable request of the Initial Purchasers or counsel to
the Initial Purchasers, make any amendments or supplements to the Preliminary
Memorandum or the Final Memorandum that may be necessary or advisable in the
opinion of the Initial Purchasers or counsel to the Initial Purchasers in
connection with the resale of the Securities by the Initial Purchasers.
(b) The Company and the Guarantors will cooperate with the
Initial Purchasers in arranging for the qualification of the Securities for
offering and sale under the securities or "Blue Sky" laws of such jurisdictions
as the Initial Purchasers may designate and will continue such qualifications in
effect for as long as may be reasonably necessary to complete the resale of the
Securities; provided, however, that in connection therewith, none of the Company
and the Guarantors shall be required to qualify as a foreign corporation or to
execute a general consent to service of process in any jurisdiction or subject
itself to taxation in excess of a nominal dollar amount in any such jurisdiction
where it is not then so subject.
(c) If, at any time prior to the completion of the distribution
by the Initial Purchasers of the Securities, the Exchange Notes or the Private
Exchange Notes, any event occurs or information becomes known as a result of
which the Final Memorandum as then amended or supplemented would include any
untrue statement of a material fact, or omit to state a material fact necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, or if for any other reason it is necessary at
any time to amend or supplement the Final Memorandum to comply with applicable
law, the Company and the Guarantors will promptly no-
<PAGE> 28
-25-
tify the Initial Purchasers thereof (who thereafter will not use such Final
Memorandum until appropriately amended or supplemented) and will prepare, at the
expense (subject to Section 6.1 of this Agreement) of the Company and the
Guarantors, an amendment or supplement to the Final Memorandum that corrects
such statement or omission or effects such compliance; provided, however, that
the obligations of the Company and the Guarantors hereunder shall not be
applicable to the extent resale by the Initial Purchasers may be accomplished
pursuant to a Registration Statement (as defined in the Registration Rights
Agreement).
(d) The Company will, without charge, provide to the Initial
Purchasers and to counsel to the Initial Purchasers as many copies of the
Preliminary Memorandum and the Final Memorandum or any amendment or supplement
thereto as the Initial Purchasers may reasonably request.
(e) The Company will apply the net proceeds from the sale of the
Securities as set forth under "Use of Proceeds" in the Final Memorandum.
(f) For and during the period ending on the date no Securities
are outstanding, the Company will furnish to the Initial Purchasers copies of
all reports and other communications (financial or otherwise) furnished by the
Company or any Guarantor to the Trustee or the holders of the Securities and,
promptly after available, copies of any reports or financial statements
furnished to or filed by the Company or any of its Subsidiaries with the
Commission or any national securities exchange on which any class of securities
of the Company or any of its Subsidiaries may be listed.
(g) Prior to the Time of Purchase, the Company will furnish to
the Initial Purchasers, as soon as they have been prepared, a copy of any
unaudited interim financial statements of the Company and its Subsidiaries for
any period subsequent to the period covered by the most recent financial
statements appearing in the Final Memorandum.
(h) None of the Company or any of its Affiliates will sell, offer
for sale or solicit offers to buy or otherwise negotiate in respect of any
"security" (as defined in the Act) which could be integrated with the sale of
the Securities in a manner which would require the registration under the Act of
the Securities.
<PAGE> 29
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(i) The Company will not, and will not permit any of its
Subsidiaries to, solicit any offer to buy or offer to sell the Securities by
means of any form of general solicitation or general advertising (as those terms
are used in Regulation D under the Act) or in any manner involving a public
offering within the meaning of Section 4(2) of the Act.
(j) For so long as any of the Securities remain outstanding, the
Company will make available, upon request, to any seller of such Securities the
information specified in Rule 144A(d)(4) under the Act, unless the Company is
then subject to Section 13 or 15(d) of the Exchange Act.
(k) The Company and the Guarantors will use their best efforts to
(i) permit the Notes to be included for quotation on PORTAL and (ii) permit the
Notes to be eligible for clearance and settlement through The Depository Trust
Company.
(l) The Company and the Guarantors will use their best efforts to
do and perform all things required to be done and performed by them under this
Agreement and the other Basic Documents prior to or after the Closing and to
satisfy all conditions precedent on its part to the obligations of the Initial
Purchasers to purchase and accept delivery of the Securities.
ARTICLE VI
FEES
SECTION 6.1. Costs, Expenses and Taxes. The Company and the
Guarantors jointly and severally agree to pay, except as otherwise specified,
all costs and expenses incident to the performance of their obligations under
this Agreement, whether or not the transactions contemplated herein are
consummated or this Agreement is terminated pursuant to Section 8.2 hereof,
including, but not limited to, all costs and expenses incident to (i) its
negotiation, preparation, printing, typing, reproduction, execution and delivery
of this Agreement and each of the other Basic Documents, any amendment or
supplement to or modification of any of the foregoing and any and all other
documents furnished pursuant hereto or thereto or in connection herewith or
therewith, (ii) any costs of printing the Preliminary Memorandum and the Final
Memorandum and any amendment or supplement thereto, any other marketing related
materials and any "Blue Sky" memoranda (which shall include the reasonable
disbursements of counsel to the Initial Purchasers in respect
<PAGE> 30
-27
thereof), to the extent provided in the engagement letter dated May 16, 1997,
between the Company and CIBC Wood Gundy Securities Corp. (the "Engagement
Letter"), (iii) all arrangements relating to the delivery to the Initial
Purchasers of copies of the foregoing documents, (iv) the fees and disbursements
of the counsel, the accountants and any other experts or advisors retained by
the Company, (v) the fees and disbursements of counsel to the Initial
Purchasers, to the extent provided in the Engagement Letter, (vi) preparation
(including printing), issuance and delivery to the Initial Purchasers of the
Securities, (vii) the qualification of the Securities under state securities and
"Blue Sky" laws, including filing fees and reasonable fees and disbursements of
counsel to the Initial Purchasers relating thereto, (viii) its expenses and the
cost of any meetings with prospective investors in the Securities, to the extent
provided in the Engagement Letter, (ix) fees and expenses of the Trustee
including fees and expenses of counsel to the Trustee, (x) all expenses and
listing fees incurred in connection with the application for quotation of the
Securities on PORTAL, (xi) any fees charged by investment rating agencies for
the rating of the Securities and (xii) except as limited by Article VII, all
costs and expenses (including, without limitation, reasonable attorneys' fees
and expenses), if any, in connection with the enforcement of this Agreement, the
Securities or any other agreement furnished pursuant hereto or thereto or in
connection herewith or therewith. In addition, the Company and the Guarantors
shall pay any and all stamp, transfer and other similar taxes (but excluding any
income, franchise, personal property, ad valorem or gross receipts taxes)
payable or determined to be payable in connection with the execution and
delivery of this Agreement, any of the other Basic Documents or the issuance of
the Securities, and shall save and hold each of the Initial Purchasers harmless
from and against any and all liabilities with respect to or resulting from any
delay in paying, or omission to pay, such taxes (other than if such delay is
caused by the Initial Purchasers).
ARTICLE VII
INDEMNITY
SECTION 7.1. Indemnity by the Company and the Guarantors.
(a) Indemnification by the Company and the Guarantors. The
Company and the Guarantors, jointly and severally,
<PAGE> 31
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agree and covenant to hold harmless and indemnify the Initial Purchasers and
their Affiliates (including any director, officer, employee, agent or
controlling Person of any of the foregoing) from and against any losses, claims,
damages, liabilities and expenses (including expenses of investigation) to which
the Initial Purchasers and their Affiliates may become subject arising out of or
based upon any untrue statement or alleged untrue statement of any material fact
contained in the Memorandum and any amendments or supplements thereto or arising
out of or based upon the omission or alleged omission to state in the Memorandum
a material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that the Company and the
Guarantors shall not be liable under this paragraph (a) to the extent that such
losses, claims, damages or liabilities arose out of or are based upon an untrue
statement or omission made in any of the documents referred to in this paragraph
(a) in reliance upon and in conformity with the information relating to the
Initial Purchasers furnished in writing by the Initial Purchasers for inclusion
therein (or for a breach by the Initial Purchasers of any representation or
warranty contained in this Agreement); provided, further, that the Company and
the Guarantors shall not be liable under this paragraph (a) to the extent that
such losses, claims, damages or liabilities arose out of or are based upon an
untrue statement or omission made in any Memorandum that is corrected in the
Final Memorandum (or any amendment or supplement thereto) if the person
asserting such loss, claim, damage or liability purchased Securities from the
Initial Purchasers in reliance on such Memorandum but was not given the Final
Memorandum (or any amendment or supplement thereto) on or prior to the
confirmation of the sale of such Securities. The Company and the Guarantors
further agree to reimburse the Initial Purchasers for any reasonable legal and
other expenses as they are incurred by them in connection with investigating,
preparing to defend or defending any lawsuits, claims or other proceedings or
investigations arising in any manner out of or in connection with such Person
being an Initial Purchaser; provided that if the Company or a Guarantor
reimburses the Initial Purchasers hereunder for any expenses incurred in
connection with a lawsuit, claim or other proceeding for which indemnification
is sought, the Initial Purchasers hereby agree to refund such reimbursement of
expenses to the extent that the losses, claims, damages or liabilities arise out
of or are based upon an untrue statement or omission made in any of the
documents referred to in this paragraph (a) in reliance upon and in conformity
with the information relating to the Initial Purchasers furnished in writing by
the Initial Purchasers for inclusion therein (or for a breach by the Ini-
<PAGE> 32
-29-
tial Purchasers of any representation or warranty contained in this Agreement).
The Company further agrees that the indemnification, contribution and
reimbursement commitments set forth in this Article VII shall apply whether or
not any Initial Purchaser is a formal party to any such lawsuits, claims or
other proceedings. The indemnity, contribution and expense reimbursement
obligations of the Company and each Guarantor under this Article VII shall be in
addition to any liability the Company or Guarantor may otherwise have.
(b) Indemnification by the Initial Purchasers. The Initial
Purchasers severally agree and covenant to hold harmless and indemnify the
Company and any Affiliates thereof (including any director, officer, employee,
agent or controlling Person of any of the foregoing) from and against any
losses, claims, damages, liabilities and expenses insofar as such losses,
claims, damages, liabilities or expenses arise out of or are based upon any
untrue statement of any material fact contained in the Memorandum, or any
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or omission was made
in reliance upon and in conformity with the information relating to the Initial
Purchasers furnished in writing by the Initial Purchasers for inclusion therein.
The indemnity, contribution and expense reimbursement obligations of the Initial
Purchasers under this Article VII shall be in addition to any liability the
Initial Purchasers may otherwise have.
(c) Procedure. If any Person shall be entitled to indemnity
hereunder (each an "Indemnified Party"), such Indemnified Party shall give
prompt written notice to the party or parties from which such indemnity is
sought (each an "Indemnifying Party") of the commencement of any action, suit,
investigation or proceeding, governmental or otherwise (a "Proceeding"), with
respect to which such Indemnified Party seeks indemnification or contribution
pursuant hereto; provided, however, that the failure so to notify the
Indemnifying Parties shall not relieve the Indemnifying Parties from any
obligation or liability except to the extent that the Indemnifying Parties have
been prejudiced materially by such failure. The Indemnifying Parties shall have
the right, exercisable by giving written notice to an Indemnified Party promptly
after the receipt of written notice from such Indemnified Party of such
Proceeding, to assume, at the Indemnifying Parties' expense, the defense of any
such Proceeding, with counsel reasonably satisfactory to such Indemnified Party;
provided, how-
<PAGE> 33
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ever, that an Indemnified Party or parties (if more than one such Indemnified
Party is named in any Proceeding) 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 Parties agree to pay
such fees and expenses; or (2) the Indemnifying Parties fail promptly to assume
the defense of such Proceeding or fail to employ counsel reasonably satisfactory
to such Indemnified Party or parties; or (3) the named parties to any such
Proceeding (including any impleaded parties) include both such Indemnified Party
or parties and the Indemnifying Party or an Affiliate of the Indemnifying Party
and such Indemnified Parties, and the Indemnified Parties shall have been
advised in writing by counsel that there may be one or more legal defenses
available to such Indemnified Party or parties that are different from or
additional to those available to the Indemnifying Parties, in which case, if
such Indemnified Party or parties 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 with respect to the Indemnified Parties and such counsel shall be at the
expense of the Indemnifying Parties, it being understood, however, that the
Indemnifying Parties 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
or parties, or for fees and expenses that are not reasonable. No Indemnified
Party or Parties will settle any Proceeding without the consent of the
Indemnifying Party or parties (but such consent shall not be unreasonably
withheld). No Indemnifying Party shall, without the prior written consent of the
Indemnified Party, effect any settlement of any pending or threatened Proceeding
in respect of which any Indemnified Party is or could have been a party and
indemnity could have been sought hereunder by such Indemnified Party, unless
such settlement includes an unconditional release of such Indemnified Party from
all liability or claims that are the subject of such Proceeding.
SECTION 7.2. Contribution. If for any reason the indemnification
provided for in Section 7.1 of this Agreement is unavailable to an Indemnified
Party, or insufficient to hold it harmless, in respect of any losses, claims,
damages, liabilities or expenses referred to therein, then each applicable
<PAGE> 34
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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, claims, damages or liabilities in such proportion as is
appropriate to reflect (i) the relative benefits received by the Indemnifying
Party on the one hand and the Indemnified Party on the other or (ii) if the
allocation provided by the foregoing clause (i) is not permitted by applicable
law, not only the relative benefits received by the Indemnifying Party on the
one hand and the Indemnified Party on the other, but also the relative fault of
the Indemnifying and Indemnified Parties in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The relative benefits received
by the Indemnifying and Indemnified Parties shall be deemed to be in the same
proportion as the total proceeds from the offering of the Securities (before
deducting expenses, but after giving effect to the Initial Purchasers' discount)
received by the Company bear to the total discounts and commissions received by
the Initial Purchasers. The relative fault of the Indemnifying and Indemnified
Parties shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Indemnifying or Indemnified Parties 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 a party as a result of the losses,
claims, damages and liabilities referred to above shall be deemed to include any
legal or other fees or expenses incurred by such party in connection with
investigating or defending any such claim.
The Company, each of the Guarantors and the Initial Purchasers
agree that it would not be just and equitable if contribution pursuant to the
immediately preceding paragraph were determined pro rata or per capita or by any
other method of allocation which does not take into account the equitable
considerations referred to in such paragraph. Notwithstanding any other
provision of this Section 7.2, the Initial Purchasers shall not be obligated to
make contributions hereunder that in the aggregate exceed the total discounts,
commissions and other compensation received by the Initial Purchasers under this
Agreement, less the aggregate amount of any damages that the Initial Purchasers
have otherwise been required to pay by reason of the untrue or alleged untrue
statements or a breach of a representation or warranty or the omissions or
alleged omissions to state a material fact. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
<PAGE> 35
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Act) shall be entitled to contribution from any Person who was not guilty of
such fraudulent misrepresentation.
SECTION 7.3. Registration Rights Agreement. Notwithstanding
anything to the contrary in this Article VII, the indemnification and
contribution provisions of the Registration Rights Agreement shall govern any
claim with respect thereto.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1. Survival of Provisions. The representations,
warranties and covenants of the Company, its officers and the Initial Purchasers
made herein, the indemnity and contribution agreements contained herein and each
of the provisions of Articles VI, VII and VIII shall remain operative and in
full force and effect regardless of (a) the investigation made by or on behalf
of the Company, the Guarantors, the Initial Purchasers or any Indemnified Party,
(b) acceptance of any of the Securities and payment therefor, (c) any
termination of this Agreement or (d) disposition of the Securities by the
Initial Purchasers whether by redemption, exchange, sale or otherwise.
SECTION 8.2. Termination. (a) This Agreement may be terminated in
the sole discretion of the Initial Purchasers by notice to the Company given
prior to the Time of Purchase in the event that the Company or any Guarantor
shall have failed, refused or been unable to perform all obligations and satisfy
all conditions on its part to be performed or satisfied hereunder at or prior
thereto or, if at or prior to the Closing:
(i) the Company or any of its Subsidiaries shall have sustained
any loss or interference with respect to its businesses or properties from fire,
flood, hurricane, accident or other calamity, whether or not covered by
insurance, or from any strike, labor dispute, slow down or work stoppage or any
legal or governmental proceeding, which loss or interference, in the sole
judgment of the Initial Purchasers, has had or has a Material Adverse Effect, or
there shall have been, in the sole judgment of the Initial Purchaser, any event
or development that, individually or in the aggregate, has or could have a
Material Adverse Effect (including without limitation a change in control of the
Company or any of its Subsidiaries),
<PAGE> 36
-33-
except in each case as described in the Final Memorandum (exclusive of any
amendment or supplement thereto);
(ii) trading in securities of the Company or in securities
generally on the New York Stock Exchange, American Stock Exchange or the NASDAQ
National Market shall have been suspended or minimum or maximum prices shall
have been established on any such exchange or market;
(iii) a banking moratorium shall have been declared by New York
or United States authorities;
(iv) there shall have been (A) an outbreak or escalation of
hostilities between the United States and any foreign power, or (B) an outbreak
or escalation of any other insurrection or armed conflict involving the United
States or any other national or international calamity or emergency, or (C) any
material change in the financial markets of the United States which, in the case
of (A), (B) or (C) above and in the sole judgment of the Initial Purchasers,
makes it impracticable or inadvisable to proceed with the offering or the
delivery of the Securities as contemplated by the Final Memorandum; or
(v) any securities of the Company or any of its Subsidiaries
shall have been downgraded or placed on any "watch list" for possible
downgrading by any nationally recognized statistical rating organization.
(b) Termination of this Agreement pursuant to this Section 8.2
shall be without liability of any party to any other party except as provided in
Section 8.1 hereof.
SECTION 8.3. No Waiver; Modifications in Writing. No failure or
delay on the part of the Company, a Guarantor or the Initial Purchasers in
exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. The remedies provided for herein are cumulative
and are not exclusive of any remedies that may be available to the Company, a
Guarantor or the Initial Purchasers at law or in equity or otherwise. No waiver
of or consent to any departure by the Company, a Guarantor or the Initial
Purchasers from any provision of this Agreement shall be effective unless signed
in writing by the party entitled to the benefit thereof, provided that notice of
any such waiver shall be given to each party hereto as set forth below. Except
as otherwise provided herein, no amendment, modification or
<PAGE> 37
-34-
termination of any provision of this Agreement shall be effective unless signed
in writing by or on behalf of each of the Company, the Guarantors and the
Initial Purchasers. Any amendment, supplement or modification of or to any
provision of this Agreement, any waiver of any provision of this Agreement, and
any consent to any departure by the Company, a Guarantor or the Initial
Purchasers from the terms of any provision of this Agreement, shall be effective
only in the specific instance and for the specific purpose for which made or
given. Except where notice is specifically required by this Agreement, no notice
to or demand on the Company or any Guarantor in any case shall entitle the
Company or any Guarantor to any other or further notice or demand in similar or
other circumstances.
SECTION 8.4. Information Supplied by the Initial Purchasers. The
statements set forth in the legend in the first paragraph on page i of the Final
Memorandum and in the seventh paragraph under the heading "Plan of Distribution"
in the Final Memorandum (to the extent such statements relate to the Initial
Purchasers) constitute the only information furnished by the Initial Purchasers
to the Company and the Guarantors for the purposes of Sections 3.1(a) and 7.1(a)
and (b) hereof.
SECTION 8.5. Communications. All notices, demands and other
communications provided for hereunder shall be in writing, and, (a) if to the
Initial Purchasers, shall be given by registered or certified mail, return
receipt requested, telex, telegram, telecopy, courier service or personal
delivery, addressed to CIBC Wood Gundy Securities Corp., 425 Lexington Avenue,
3rd Floor, New York, New York 10017, Attention: Edward Levy, with a copy to
Cahill Gordon & Reindel, 80 Pine Street, New York, New York 10005, Attention:
Roger Meltzer, Esq., and (b) if to the Company, shall be given by similar means
to Devereaux Holdings Pty. Ltd, The Lakes Business Park, Unit 2G, 12 Lord
Street, Botany NSW 2019, Sydney, Australia, Attention: Graham Croot, with a copy
to Pillsbury Madison & Sutro LLP, 235 Montgomery Street, San Francisco,
California 94104, Attention: James Olson, Esq.. In each case notices, demands
and other communications shall be deemed given when received.
SECTION 8.6. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto on
separate counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original and all of which counterparts,
taken together, shall constitute but one and the same agreement.
<PAGE> 38
-35-
SECTION 8.7. Successors. This Agreement shall inure to the
benefit of and be binding upon the Initial Purchasers, the Company, the
Guarantors and their respective successors and legal representatives, and
nothing expressed or mentioned in this Agreement is intended or shall be
construed to give any other Person any legal or equitable right, remedy or claim
under or in respect of this Agreement, or any provisions herein contained; this
Agreement and all conditions and provisions hereof being intended to be and
being for the sole and exclusive benefit of such Persons and for the benefit of
no other Person except that (i) the indemnities of the Company and the
Guarantors contained in Section 7.1(a) of this Agreement shall also be for the
benefit of the directors, officers, employees and agents of the Initial
Purchasers and any Person or Persons who control any of the Initial Purchasers
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act
and (ii) the indemnities of the Initial Purchasers contained in Section 7.1(b)
of this Agreement shall also be for the benefit of the directors of the Company
and the Guarantors, their respective officers, employees and agents and any
Person or Persons who control the Company or a Guarantor within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act. No purchaser of
Securities from the Initial Purchasers will be deemed a successor because of
such purchase.
SECTION 8.8. Governing Law. THIS AGREEMENT SHALL BE DEEMED TO BE
A CONTRACT MADE UNDER THE LAWS OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES
SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF SAID STATE, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW.
SECTION 8.9. Severability of Provisions. 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 or
affecting the validity or enforceability of such provision in any other
jurisdiction.
SECTION 8.10. Headings. The Article and Section headings and
Table of Contents used or contained in this Agreement are for convenience of
reference only and shall not affect the construction of this Agreement.
<PAGE> 39
-36-
IN WITNESS WHEREOF, the parties hereto have executed this
Securities Purchase Agreement as of the date first written above.
W.R. CARPENTER NORTH AMERICA, INC.
(a Delaware corporation)
By: /s/ David K. Sargent
---------------------------------
Name: David K. Sargent
Title: President
UPRIGHT, INC.
(a California corporation)
By: /s/ David K. Sargent
---------------------------------
Name: David K. Sargent
Title: President
UPRIGHT FOREIGN SALES CORPORATION
(a United States Virgin Islands
corporation)
By: /s/ David K. Sargent
---------------------------------
Name: David K. Sargent
Title: President
HORIZON HIGH REACH, INC.
(a Delaware corporation)
By: /s/ David K. Sargent
---------------------------------
Name: David K. Sargent
Title: President
<PAGE> 40
-37-
CIBC WOOD GUNDY SECURITIES CORP.
By: /s/ Heinz Noeding
----------------------------------
Name: Heinz Noeding
Title: Managing Director
BANCAMERICA SECURITIES, INC.
By: /s/ Mark S. Dawley
---------------------------------
Name: Mark S. Dawley
Title: Senior Managing Director
<PAGE> 41
SCHEDULE I
<TABLE>
<CAPTION>
Principal Amount
Initial Purchaser of Notes
- ----------------- ----------------
<S> <C>
CIBC Wood Gundy Securities Corp.............................. $73,500,000
BancAmerica Securities, Inc.................................. 31,500,000
------------
$105,000,000
============
</TABLE>
<PAGE> 1
Exhibit 10.2
UNION
BANK OF
CALIFORNIA
PROMISSORY NOTE
(BASE RATE)
Borrower Name Up-Right, Inc.
Borrower Address Office 409 Loan Number 7371992185
1775 Park Street
Selma, CA 93662 Maturity Date December 31, 1998 Amount
$4,000,000.00
$4,000,000.00 Date October 16,1996
FOR VALUE RECEIVED, on December 31, 1998, the undersigned ("Debtor") promises to
pay to the order of UNION BANK OF CALIFORNIA, N.A. ("Bank"), as indicated below,
the principal sum of Four Million and No/100 Dollars ($4,000,000.00), or so much
thereof as is disbursed, together with interest on the balance of such principal
from time to time outstanding, at the per annum rates and at the times set forth
below; provided, however, Debtor shall pay total interest over the term of this
note of not less than $500.
1. INTEREST PAYMENTS. Debtor shall pay interest on the last day of each month
(commencing October 31, 1996). Should interest not be paid when due, it shall
become part of the principal and bear interest as herein provided. All
computations of interest under this note shall be made on the basis of a year of
360 days, for actual days elapsed.
a. BASE INTEREST RATE. At Debtor's option, amounts outstanding
hereunder in increments of at least $10,000 shall bear interest at a
rate to be selected by Debtor which is 2.250% per annum in excess of
Bank's Adjusted LIBOR-Rate for the Interest Period so selected by
Debtor.
Any Base Interest Rate selected by Debtor may not be changed, altered
or otherwise modified until the expiration of the Interest Period for
which it was selected. The exercise of interest options by Debtor shall
be as recorded in Bank s records, which records shall be prima facie
evidence of the amount borrowed under either interest option and the
interest rate; provided, however, that failure of Bank to make any such
notation in its records shall not discharge Debtor from its obligations
to repay in full with interest all amounts borrowed. In no event shall
any Interest Period extend beyond the maturity date of this note.
To select a Base Interest Rate, Debtor may, from time to time with
respect to principal outstanding on which a Base Interest Rate has not
been selected and on the expiration of any Interest Period with respect
to principal outstanding on which a Base Interest Rate has been
selected, select a Base Interest Rate by telephoning an authorized
lending officer of Bank located at the banking office identified below
prior to 10:00 a.m., California time, on any Business Day and advising
that officer of the Base Interest Rate, the Interest Period and the
Origination Date selected (which Origination Date, for a Base Interest
Rate Loan based on the Adjusted LIBOR-Rate, shall follow the date of
such election by no more than two (2) Business Days).
Bank will confirm the terms of the election in writing by mail to
Debtor promptly after the election is made. Failure to send such
confirmation shall not affect Bank's rights to collect interest at the
rate selected. If, on the date of the election, the Base Interest Rate
selected is unavailable for any reason, the
Page 1
<PAGE> 2
selection shall be void. Bank reserves the right to fund the principal
from any source of funds notwithstanding any Base Interest Rate
selected by Debtor.
b. VARIABLE INTEREST RATE. All principal outstanding hereunder which is
not bearing interest at a Base Interest Rate shall bear interest at a
rate per annum of 0% in excess of the Reference Rate, which rate shall
vary as and when the Reference Rate changes.
At any time prior to the maturity of this note, subject to the
provisions of paragraph 4, below, of this note, Debtor may borrow,
repay and reborrow hereon so long as the total outstanding at any one
time does not exceed the principal amount of this note. Debtor shall
pay all amounts due under this note in lawful money of the United
States at Bank's Oakland Regional Office, or such other office as may
be designated by Bank, from time to time.
2. LATE PAYMENTS. If any payment required by the terms of this note shall remain
unpaid ten days after same is due, at the option of Bank, Debtor shall pay a fee
of $100 to Bank.
3. INTEREST DATE FOLLOWING DEFAULT. In the event of default, at the option of
Bank, and, to the extent permitted by law, interest shall be payable on the
outstanding principal under this note at a per annum rate equal to five percent
(5%) in excess of the interest rate specified in paragraph 1.b, above, of this
note, calculated from the date of default until all amounts payable under this
note are paid in full.
4. PREPAYMENT.
a. Amounts outstanding under this note bearing interest at a rate based
on the Reference Rate may be prepaid in whole or in part at any time
without penalty or premium. Amounts outstanding at a Base Interest Rate
under this note may only be prepaid, in whole or in part provided Bank
has received not less than five (5) Business Days prior written notice
of an intention to make such prepayment and Debtor pays a prepayment
fee to Bank in an amount equal to: (i) the difference between (a) the
Base Interest Rate applicable to the principal amount which Debtor
intends to prepay, and (b) the return which Bank could obtain if it
used the amount of such prepayment of principal to purchase at bid
price regularly quoted securities issued by the United States having a
maturity date most closely coinciding with the relevant Base Rate
Maturity Date and such securities were held by Bank until the relevant
Base Rate Maturity Date ("Yield Rate"); (ii) the above difference, if
greater than zero, is multiplied by a fraction, the numerator of which
is the number of days in the period between the date of prepayment and
the relevant Base Rate Maturity Date and the denominator of which is
360 days; (iii) the above product is multiplied by the amount of the
principal so prepaid (except in the event that principal payments are
required and have been made as scheduled under the terms of the Base
Interest Rate Loan being prepaid, then the amount multiplied in this
section shall be the lesser of the amount prepaid or 50% of the total
of the amount prepaid and the amount of principal scheduled under the
terms of the Base Interest Rate Loan being prepaid to be outstanding at
the relevant Base Rate Maturity Date); and (iv) the above product is
then discounted to present value using the Yield Rate as the annual
discount factor.
b. In no event shall Bank be obligated to make any payment or refund to
Debtor, nor shall Debtor be entitled to any setoff or other claim
against Bank, should the return which Bank could obtain under the above
prepayment formula exceed the interest that Bank would have received if
no prepayment had occurred. All prepayments shall include payment of
accrued interest on the principal amount so prepaid and shall be
applied to payment of interest before application to principal. A
determination by Bank as to the prepayment fee amount, if any, shall be
conclusive. In the event of partial prepayment, such prepayments shall
be applied to principal payments in the inverse order of their
maturity.
c. Such prepayment fee, if any, shall also be payable if prepayment
occurs as the result of the acceleration of the principal of this note
by Bank because of any default hereunder. If, following such
acceleration, all or any portion of a Base Interest Rate Loan is
satisfied, whether through sale of property encumbered by a security
agreement or other agreement securing this note, if any, at a
foreclosure sale
Page 2
<PAGE> 3
held thereunder or through the tender of payment any time following
such acceleration, but prior to such a foreclosure sale, then such
satisfaction shall be deemed an evasion of the prepayment conditions
set forth above, and Bank shall, automatically and without notice or
demand, be entitled to receive, concurrently with such satisfaction the
prepayment fee set forth above, and the obligation to pay such
prepayment fee shall be added to the principal. DEBTOR HEREBY
ACKNOWLEDGES AND AGREES THAT BANK WOULD NOT LEND TO DEBTOR THE LOAN
EVIDENCED BY THIS NOTE WITHOUT DEBTOR'S AGREEMENT, AS SET FORTH ABOVE,
TO PAY BANK A PREPAYMENT FEE UPON THE SATISFACTION OF ALL OR ANY
PORTION OF THE PRINCIPAL BEARING INTEREST AT A BASE INTEREST RATE
FOLLOWING THE ACCELERATION OF THE MATURITY DATE HEREOF BY REASON OF A
DEFAULT. DEBTOR HAS CAUSED THOSE PERSONS SIGNING THIS NOTE ON ITS
BEHALF TO SEPARATELY INITIAL THE AGREEMENT CONTAINED IN THIS PARAGRAPH
BY PLACING THEIR INITIALS BELOW:
INITIALS: __________ __________
5. DEFAULT AND ACCELERATION OF TIME FOR PAYMENT. Default shall include, but not
be limited to, any of the following: (a) the failure of Debtor to make any
payment required under this note when due; (b) any breach, misrepresentation or
other default by Debtor, any guarantor, co-maker, endorser, or any person or
entity other than Debtor providing security for this note (hereinafter
individually and collectively referred to as the "Obligor") under any security
agreement, guaranty or other agreement between Bank and any Obligor; (c) the
insolvency of any Obligor or the failure of any Obligor generally to pay such
Obligor's debts as such debts become due; (d) the commencement as to any Obligor
of any voluntary or involuntary proceeding under any laws relating to
bankruptcy, insolvency, reorganization, arrangement, debt adjustment or debtor
relief; (e) the assignment by any Obligor for the benefit of such Obligor's
creditors; (f) the appointment, or commencement of any proceeding for the
appointment of a receiver, trustee, custodian or similar official for all or
substantially all of any Obligor's property; (g) the commencement of any
proceeding for the dissolution or liquidation of any Obligor; (h) the
termination of existence or death of any Obligor; (i) the revocation of any
guaranty or subordination agreement given in connection with this note; (j) the
failure of any Obligor to comply with any order, judgment, injunction, decree,
writ or demand of any court or other public authority; (k) the filing or
recording against any Obligor, or the property of any Obligor, of any notice of
levy, notice to withhold, or other legal process for taxes other than property
taxes; (l) the default by any Obligor personally liable for amounts owed
hereunder on any obligation concerning the borrowing of money; (m) the issuance
against any Obligor, or the property of any Obligor, of any writ of attachment,
execution, or other judicial lien; or (n) the deterioration of the financial
condition of any Obligor which results in Bank deeming itself, in good faith,
insecure. Upon the occurrence of any such default, Bank, in its discretion, may
cease to advance funds hereunder and may declare all obligations under this note
immediately due and payable; however, upon the occurrence of an event of default
under d, e, f, or g, all principal and interest shall automatically become
immediately due and payable.
6. ADDITIONAL AGREEMENTS OF DEBTOR. If any amounts owing under this note are not
paid when due, Debtor promises to pay all costs and expenses, including
reasonable attorney's fees, incurred by Bank in the collection or enforcement of
this note. Debtor and any endorsers of this note, for the maximum period of time
and the full extent permitted by law, (a) waive diligence, presentment, demand,
notice of nonpayment, protest, notice of protest, and notice of every kind; (b)
waive the right to assert the defense of any statute of limitations to any debt
or obligation hereunder; and (c) consent to renewals and extensions of time for
the payment of any amounts due under this note. If this note is signed by more
than one party, the term "Debtor" includes each of the undersigned and any
successors in interest thereof; all of whose liability shall be joint and
several. Any married person who signs this note agrees that recourse may be had
against the separate property of that person for any obligations hereunder. The
receipt of any check or other item of payment by Bank, at its option, shall not
be considered a payment on account until such check or other item of payment is
honored when presented for payment at the drawee bank. Bank may delay the credit
of such payment based upon Bank's schedule of funds availability, and interest
under this note shall accrue until the funds are deemed collected. In any action
brought under or arising out of this note, Debtor and any Obligor, including
their successors or assigns, hereby consent to the jurisdiction of any competent
court within the State of California, except as provided in any alternative
dispute resolution agreement executed between Debtor and Bank, and consent to
service of process by any means
Page 3
<PAGE> 4
authorized by said state law. The term "Bank" includes, without limitation, any
holder of this note. This note shall be construed in accordance with and
governed by the laws of the State of California. This note hereby incorporates
any alternative dispute resolution agreement previously, concurrently or
hereafter executed between Debtor and Bank.
7. DEFINITIONS. As used herein, the following terms shall have the meanings
respectively set forth below: "ADJUSTED LIBOR-RATE" shall mean the LIBOR Base
Rate as adjusted for reserve requirements imposed on Bank from time to time.
"BASE INTEREST RATE" shall mean a rate of interest based on the Adjusted
LIBOR-Rate. "BASE INTEREST RATE LOAN" shall mean amounts outstanding under this
note that bear interest at a Base Interest Rate. "BASE RATE MATURITY DATE" shall
mean the last day of the Interest Period with respect to principal outstanding
on which a Base Interest Rate has been selected by Debtor. "BUSINESS DAY" shall
mean a day which is not a Saturday or Sunday on which Bank is open for business
in California and on which dealings in U.S. dollar deposits outside of the
United States may be carried on by Bank. "INTEREST PERIOD" shall mean any
calendar period of one, three, six, nine or twelve months. In determining an
Interest Period, a month means a period that starts on one Business Day in a
month and ends on and includes the day preceding the numerically corresponding
day in the next month. For any month in which there is no such numerically
corresponding day, then as to that month, such day shall be deemed to be the
last calendar day of such month. Any Interest Period which would otherwise end
on a non-Business Day shall end on the next succeeding Business Day unless that
is the first day of a month, in which event such Interest Period shall end on
the next preceding Business Day. "LIBOR BASE RATE" shall mean for each Interest
Period the rate per annum (rounded upward, if necessary, to the nearest 1/100 of
1%) at which dollar deposits, in immediately available funds and in lawful money
of the United States would be offered to Bank, outside of the United States, for
a term coinciding with such Interest Period and for an amount equal to the
amount of principal covered by Debtor's interest rate election. "ORIGINATION
DATE" shall mean the Business Day on which funds are made available to Debtor
relating to Debtor's selection of a Base Interest Rate. "REFERENCE RATE" shall
mean the rate announced by Bank from time to time at its corporate headquarters
at its "Reference Rate." The Reference Rate is an index rate determined by Bank
from time to time as a means of pricing certain extensions of credit and is
neither directly tied to any external rate of interest or index nor necessarily
the lowest rate of interest charged by Bank at any given time.
Up-Right, Inc.
/s/ James Dillon
- -------------------------------
James Dillon
Vice President/Gen. Manager
Page 4
<PAGE> 5
UNION
BANK OF
CALIFORNIA
BUSINESS LOAN AGREEMENT
This Business Loan Agreement (this "Agreement") is entered into as of the date
set forth below between Union Bank of California, N.A. ("Bank") and the
undersigned ("Borrower") with respect to each and every extension of credit
(whether one or more, collectively referred to as the "Loan") from Bank to
Borrower. In consideration of the Loan, Bank and Borrower agree to the following
terms and conditions:
1. THE LOAN.
1.1 THE NOTE. The Loan is evidenced by one or more promissory notes or
other evidences of indebtedness, including each amendment, extension,
renewal or replacement thereof, which are incorporated herein by this
reference (whether one or more, collectively referred to as the
"Note").
1.2 REVOLVING LOAN CLEAN-UP PERIOD. For any portion of the Loan which
is a revolving loan, at least 30 consecutive days during each 12 month
period the principal amount outstanding under such revolving loan must
be zero.
1.3 TERM LOAN AVAILABILITY PERIOD. For any portion of the Loan which is
a term loan, loan proceeds shall be available for disbursement from
N/A*, through _________, only.
1.4 FEE. Borrower shall pay to Bank a fee of $ N/A.
1.5 COLLATERAL. The payment and performance of all obligations of
Borrower under the Loan Documents are and shall he during the term of
the Loan secured by a perfected security interest in such real or
personal property collateral as is required by Bank and each security
interest shall rank in first priority unless otherwise specified in
writing by Bank.
1.6 GUARANTY. The payment and performance of all obligations of
Borrower under the Loan Documents are and shall be during the term of
the Loan guaranteed by: N/A.
1.7 SUBORDINATION. Certain other obligations of Borrower are and shall
be during the term of the Loan subordinated to the repayment of the
Loan and all other obligations of Borrower to Bank, pursuant to one or
more subordination agreement(s) in favor of Bank executed and delivered
by: N/A.
2. CONDITIONS TO AVAILABILITY OF THE LOAN. Before Bank is obligated to disburse
all or any portion of the Loan, Bank must have received (a) the Note and every
other document required by Bank in connection with the Loan, each of which must
be in form and substance satisfactory to Bank (together with this Agreement,
referred to as the "Loan Documents"), (b) confirmation of the perfection of its
security interest in any collateral for the Loan, and (c) payment of any fee
required in connection with the Loan.
3. REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants (and each
request for a disbursement of the proceeds of the Loan shall be deemed a
representation and warranty made on the date of such request) that:
- ----------
* Wherever "N/A" appears in a blank in this Agreement, it means the
Subsection in which it appears is deemed deleted from this Agreement. If only a
portion of a Subsection is to be deleted, it is crossed-out (e.g. [crossed
out]).
Language indicated as being shown by strike-out in the typeset document is
enclosed in brackets in the electronic format.
Page 1
<PAGE> 6
3.1 Borrower is an individual or Borrower is duly organized and
existing under the laws of the state of its organization and is duly
qualified to conduct business in each jurisdiction in which its
business is conducted;
3.2 The execution, delivery and performance of the Loan Documents
executed by Borrower are within Borrower's power, have been duly
authorized, are legal, valid and binding obligations of Borrower, and
are not in conflict with the terms of any charter, bylaw, or other
organization papers of Borrower or with any law, indenture, agreement
or undertaking to which Borrower is a party or by which Borrower is
bound or affected;
3.3 All financial statements and other financial information submitted
by Borrower to Bank are true and correct in all material respects, and
there has been no material adverse change in Borrower's financial
condition since the date of the latest of such financial statements;
3.4 Borrower is properly licensed and in good standing in each state in
which Borrower is doing business, and Borrower has complied with all
laws and regulations affecting Borrower, including without limitation,
each applicable fictitious business name statute;
3.5 There is no event which is, or with notice or lapse of time or both
would be, an Event of Default (as defined in Article 5);
3.6 Borrower is not engaged in the business of extending credit for the
purpose of, and no part of the Loan will be used, directly or
indirectly, for purchasing or carrying margin stock within the meaning
of Federal Reserve Board Reg. U; and
3.7 Borrower is not aware of any fact, occurrence or circumstance which
Borrower has not disclosed to Bank in writing which has, or could
reasonably be expected to have, a material adverse effect on Borrower's
ability to repay the Loan or perform its obligations under the Loan
Documents.
4. COVENANTS. Borrower agrees, so long as the Loan or any commitment to make any
advance under the Loan is outstanding and until full and final payment of all
sums outstanding under any Loan Document, that Borrower will:
4.1 Maintain:
(a) Working Capital of at least $ N/A (As used herein,
"Working Capital" means the excess of current assets over
current liabilities);
(b) A ratio of current assets to current liabilities of at
least 1.20:1.00;
(c) A quick ratio of cash, accounts receivable and marketable
securities to current liabilities of at least N/A:1.00;
(d) Tangible Net Worth of at least $11,500,000.00 (As used
herein, "Tangible Net Worth" means net worth increased by
indebtedness of Borrower subordinated to Bank and decreased by
patents, licenses, trademarks, trade names, goodwill and other
similar intangible assets, organizational expenses, and monies
due from affiliates (including officers, shareholders and
directors));
(e) A ratio of total liabilities to Tangible Net Worth of not
greater than 2.75:1.00 (As used herein "Tangible Net Worth"
means net worth increased by indebtedness of Borrower
subordinated to Bank and decreased by patents, licenses,
trademarks, trade names, goodwill and other similar intangible
assets, organizational expenses, and monies due from
affiliates (including officers, shareholders and directors));
Page 2
<PAGE> 7
(f) A profit after taxes of not less than $1.00, to be
measured as of the end of each fiscal quarter of Borrower for
the 3 month period immediately preceding the date of
measurement;
(g) A ratio of Cash Flow to Debt Service of at least
2.75:1.00. Compliance with this subsection to be measured as
of the end of each fiscal year of Borrower. (As used herein,
"Cash Flow" means net profit after taxes, to which
depreciation, amortization and other non-cash expenses are
added for the 12 month period immediately preceding the date
of calculation, and "Debt Service" means that portion of
long-term liabilities and capital leases coming due within 12
months after the date of calculation); and
(h) N/A
All accounting terms used in this Agreement shall have the definitions given
them by generally accepted accounting principles, unless otherwise defined
herein.
4.2 Give written notice to Bank within 15 days of the following:
(a) Any litigation or arbitration proceeding affecting
Borrower where the amount in controversy is $200,000.00 or
more;
(b) Any material dispute which may exist between Borrower and
any government regulatory body or law enforcement body;
(c) Any Event of Default or any event which, upon notice, or
lapse of time, or both, would become an Event of Default;
(d) Any other matter which has resulted or is likely to result
in a material adverse change in Borrower's financial condition
or operation; and
(e) Any change in Borrower's name or the location of
Borrower's principal place of business, or the location of any
collateral for the Loan, or the establishment of any new place
of business or the discontinuance of any existing place of
business.
4.3 Furnish to Bank an income statement, balance sheet, and statement
of retained earnings, with supportive schedules ("Financial
Statement"), and any other financial information requested by Bank,
prepared in accordance with generally accepted accounting principles
and in a form satisfactory to Bank as follows:
(a) Within 45 days after the close of each quarter, Borrower's
Financial Statement as of the close of such period;
(b) Within 120 days after the close of each fiscal year, a
copy of Borrower's annual Financial Statement prepared by a
certified public accountant on a(n) audited basis. Any
independent certified public accountant who prepares
Borrower's Financial Statement shall be selected by Borrower
and reasonably satisfactory to Bank;
(c) Within N/A days after the close of each fiscal year, a
copy of each guarantor's annual Financial Statement;
(d) If a Borrowing Base Addendum is made part of this
Agreement, within N/A days after each calendar month-end, in
form required by Bank, a copy of Borrower's monthly accounts
receivable and accounts payable agings, a report of Borrower's
inventory, and a certificate of
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<PAGE> 8
compliance with the borrowing base described in said Borrowing
Base Addendum, which certificate shall accurately report the
collateral in form required by Bank; and
(e) Promptly upon request, any other financial information
requested by Bank.
4.4 Furnish to Bank, on Bank's request, a copy of Borrower's and each
guarantor's most recently filed federal income tax return with all
accompanying schedules.
4.5 Pay or reimburse Bank for all costs, expenses and fees incurred by
Bank in preparing and documenting this Agreement and the Loan, and all
amendments and modifications thereof, including but not limited to all
filing and recording fees, costs of appraisals, insurance and
attorneys' fees, including the reasonable estimate of the allocated
costs and expenses of in-house legal counsel and staff.
4.6 Maintain and preserve Borrower's existence, present form of
business and all rights, privileges and franchises necessary or
desirable in the normal course of its business, and keep all of
Borrower's properties in good working order and condition.
4.7 Maintain and keep in force insurance with companies acceptable to
Bank and in such amounts and types, including without limitation fire
and public liability insurance, as is usual in the business carried on
by Borrower, or as Bank may reasonably request. Such insurance policies
must be in form and substance satisfactory to Bank.
4.8 Maintain adequate books, accounts and records and prepare all
financial statements required hereunder in accordance with generally
accepted accounting principles, and in compliance with the regulations
of any governmental regulatory body having jurisdiction over Borrower
or Borrower's business and permit employees or agents of Bank at any
reasonable time to inspect Borrower's assets and properties, and to
examine or audit Borrower's books, accounts and records and make copies
and memoranda thereof.
4.9 At all times comply with, or cause to be complied with, all laws,
statutes, rules, regulations, orders and directions of any governmental
authority having jurisdiction over Borrower or Borrower's business, and
all material agreements to which Borrower is a party.
4.10 Except as provided in this Agreement, or in the ordinary course of
its business as currently conducted, not make any loans or advances,
become a guarantor or surety, pledge its credit or properties in any
manner, or extend credit.
4.11 Not purchase the debt or equity of another person or entity except
for savings accounts and certificates of deposit of Bank, direct U.S.
Government obligations and commercial paper issued by corporations with
top ratings of Moody's or Standard & Poor's, provided that all such
permitted investments shall mature within one year of purchase.
4.12 Not create, assume or suffer to exist any mortgage, encumbrance,
security interest, pledge or lien ("Lien") on Borrower's real or
personal property, whether now owned or hereafter acquired, or upon the
income or profits thereof except the following: (a) Liens in favor of
Bank, (b) Liens for taxes or other items not delinquent or contested in
good faith and (c) other Liens which do not exceed in the aggregate $
N/A at any one time.
4.13 Not sell or discount any account receivable or evidence of
indebtedness, except to Bank; not borrow any money or become
contingently liable for money borrowed, except pursuant to agreements
made with Bank.
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<PAGE> 9
4.14 Neither liquidate, dissolve, enter into any consolidation, merger,
partnership or other combination; nor convey, sell or lease all or the
greater part of its assets or business; nor purchase or lease all or
the greater part of the assets or business of another.
4.15 Not engage in any business activities or operations substantially
different from or unrelated to Borrower's present business activities
and operations.
4.16 Not, in any single fiscal year of Borrower, expend or incur
obligations of more than $ N/A for the acquisition of fixed or capital
assets.
4.17 Not, in any single fiscal year of Borrower, enter into any lease
of real or personal property which would cause Borrower's aggregate
annual obligations under all such real and personal property leases to
exceed $ N/A.
4.18 Borrower will promptly, upon demand by Bank, take such further
action and execute all such additional documents and instruments in
connection with this Agreement as Bank in its reasonable discretion
deems necessary, and promptly supply Bank with such other information
concerning its affairs as Bank may request from time to time.
5. EVENTS OF DEFAULT. The occurrence of any of the following events ("Events of
Default") shall terminate any obligation on the part of Bank to make or continue
the Loan and automatically, unless otherwise provided under the Loan Documents,
shall make all sums of interest and principal and any other amounts owing under
the Loan immediately due and payable, without notice of default, presentment or
demand for payment, protest or notice of nonpayment or dishonor, or any other
notices or demands:
5.1 Borrower shall default in the due and punctual payment of the
principal of or the interest on the Note or any of the other Loan
Documents;
5.2 Any default shall occur under the Note or any of the other Loan
Documents;
5.3 Borrower shall default in the due performance or observance of any
covenant or condition of the Loan Documents;
5.4 Any guaranty or subordination agreement required hereunder shall be
breached or become ineffective, or any guarantor or subordinating
creditor shall die or disavow or attempt to revoke or terminate such
guaranty or subordination agreement; or
5.5 There shall be a change in ownership or control of 10% or more of
the issued and outstanding stock of Borrower or any guarantor, or (if
the Borrower is a partnership) there shall be a change in ownership or
control of any general partner's interest.
6. MISCELLANEOUS PROVISIONS.
6.1 The rights, powers and remedies given to Bank hereunder shall be
cumulative and not alternative and shall be in addition to all rights,
powers and remedies given to Bank by law against Borrower or any other
person, including but not limited to Bank's rights of setoff and
banker's lien.
6.2 Any forbearance or failure or delay by Bank in exercising any
right, power or remedy hereunder shall not be deemed a waiver thereof
and any single or partial exercise of any right, power or remedy shall
not preclude the further exercise thereof. No waiver shall be effective
unless it is in writing and signed by an officer of Bank.
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<PAGE> 10
6.3 The benefits of this Agreement shall inure to the successors and
assigns of Bank and the permitted successors and assigns of Borrower,
and any assignment by Borrower without Bank's consent shall be null and
void.
6.4 This Agreement and all other agreements and instruments required by
Bank in connection herewith shall be governed by and construed
according to the laws of the State of California.
6.5 Should any one or more provisions of this Agreement be determined
to be illegal or unenforceable, all other provisions nevertheless shall
be effective. In the event of any conflict between the provisions of
this Agreement and the provisions of the Note, the provisions of the
Note shall prevail.
6.6 Except for documents and instruments specifically referenced
herein, this Agreement constitutes the entire agreement between Bank
and Borrower regarding the Loan and all prior communications, verbal or
written, between Borrower and Bank shall be of no further effect or
evidentiary value.
6.7 The section and subsection headings herein are for convenience of
reference only and shall not limit or otherwise affect the meaning
hereof.
6.8 This Agreement may be amended only in writing signed by all parties
hereto.
6.9 Borrower and Bank may execute one or more counterparts to this
Agreement, each of which shall be deemed an original, but taken
together shall be one and the same instrument.
6.10 Any notices or other communications provided for or allowed
hereunder shall be effective only when given by one of the following
methods and addressed to the respective party at its address given with
the signatures at the end of this Agreement and shall be considered to
have been validly given: (a) upon delivery, if delivered personally;
(b) upon receipt, if mailed, first class postage prepaid, with the
United States Postal Service; (c) on the next business day if sent by
overnight courier service of recognized standing; and (d) upon
telephoned confirmation of receipt, if telecopied.
7. ADDITIONAL PROVISIONS
The following additional provisions, if any, are hereby made a part of this
Agreement:
7.1 No later than 45 days after the end of each quarter, statements
showing aging and reconciliation of Accounts and collections, and if
requested by Bank, whenever collections on Accounts are delivered to
Bank, a schedule of the amounts so collected and delivered as of the
last day of such month.
7.2 No later than 45 days after the end of each quarter, statements
showing aging of Borrower's accounts payable as of the last day of such
month.
7.3 No later than 45 days after the end of each quarter and, if
requested by Bank more often at the time so requested, an Inventory
Status Certificate Report as of the last day of such month, or as of
the date requested by Bank, as applicable.
7.4 As soon as available, but no later than 20 days after the end of
each quarter, Borrower's written status report and financial analysis
of all Contracts in progress for the prior sixty days prepared and
attested by a responsible financial officer of Borrower as being
complete and correct and fairly presenting the status of Borrower's
Contracts. "Contract" means production orders from to time in existence
on which payment is due to the Borrower.
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<PAGE> 11
7.5 Anything within this agreement in conflict with any prior agreement
with the Borrower or any Guarantor supersedes such prior Agreement(s).
THIS AGREEMENT is executed on behalf of the parties as of October 16, 1996.
UNION BANK OF CALIFORNIA, N.A. ("BANK") ("BORROWER")
By: /s/ Peter Sitov Up-Right, Inc.
-----------------------------
Peter Sitov
Title: Vice President
Address where notices to Bank are /s/ James Dillon
to be sent: -----------------------------
James Dillon
Vice President/Gen. Manager
Oakland Regional Office
1970 Franklin Street
Oakland, CA 94612
Attn: Peter Sitov
Fax Number.:
Telephone No.: (510) 271-1738 Address where notices to
Borrower are to be sent:
Up-Right, Inc.
1775 Park Street
Selma, CA 93662
Attn: James Dillon,
Vice President
Fax Number:
Telephone No.:
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<PAGE> 12
UNION
BANK OF
CALIFORNIA
AMENDMENT TO CREDIT AGREEMENT
THIS SECOND AMENDMENT ("Amendment") is made effective as of the 16th day of
October, 1996, by and between Up-Right, Inc. ("Borrower") and Union Bank of
California, N.A. ("Bank").
RECITALS
A. Borrower is currently indebted to Bank pursuant to the terms and
conditions of that certain Credit Agreement dated November 9, 1994 as
amended November 24, 1995 (the "Agreement");
B. Borrower and Bank have agreed to amend the Agreement to reflect certain
changes in the terms and conditions set forth therein.
NOW, THEREFORE, the parties hereto agree as follows:
1. The definition of "Termination Date" appearing in Article One of the
Agreement is hereby deleted in its entirety and the following
substituted therefor:
"'Termination Date' means the earlier of (a) the date Bank may
terminate making Advances or extending credit pursuant to the rights of
Bank under Article 7; or (b) December 31, 1998 for the Revolving
Credit."
2. Section 2.1.1(1) of the Agreement is hereby amended by deleting "TWO
MILLION AND N0/100 DOLLARS ($2,000,000.00)" by substituting FOUR
MILLION AND NO/100 DOLLARS ($4,000,000.00)" therefor.
3. Section 2.1.1 (2) of the Agreement is hereby amended by deleting
"December 31, 1995" and by substituting "Termination Date" therefor.
4. All references to the "Prime Rate" in all the Loan Documents shall be
deemed to be references to the "Reference Rate". "Reference Rate" shall
mean the rate announced by Bank from time to time at its corporate
headquarters as its Reference Rate. The Reference Rate is an index rate
determined by Bank from time to time as a means of pricing certain
extension of credit and is neither directly tied to any external rate
of interest or index nor necessarily the lowest rate of interest
charged by Bank at any given time.
GENERAL AMENDMENT PROVISIONS
A. Except as specifically provided herein, all terms and conditions of
the Agreement remain in full force and effect, without waiver or modification.
All terms defined in the Agreement shall have the same meaning when used in this
Amendment, and this Amendment and the Agreement shall be read together as one
document. Where any provisions of the Agreement amended by this Amendment appear
in a promissory note tied to the Agreement, the same provisions in said
promissory note shall be deemed likewise amended.
B. Borrower hereby confirms all representations and warranties
contained in the Agreement and reaffirms all covenants set forth therein.
Further, Borrower certifies that, as of the date of this Amendment, there exists
no Event of Default as defined in the Agreement, nor any condition, act or event
which with the giving of notice or the passage of time or both would constitute
an Event of Default.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to become
effective as of the date and year first written above.
Union Bank of California, N.A.
By: /s/ Peter Sitov
-------------------------------
Peter Sitov
Title: Vice President
Up-Right, Inc. Date: 10/31/96
/s/ James Dillon
- -------------------------------
James Dillon
Vice President/Gen. Manager
<PAGE> 13
UNION
BANK OF
CALIFORNIA
ALTERNATIVE DISPUTE RESOLUTION AGREEMENT
THIS ALTERNATIVE DISPUTE RESOLUTION AGREEMENT ("Agreement") is made and
entered into as of the 16th day of October, 1996, by and between the undersigned
("Obligor") and Union Bank of California, N.A. ("Bank") (Obligor and Bank herein
collectively, the "Parties" and individually, a "Party"). Initially capitalized
terms used in this Agreement which are not otherwise defined herein shall have
the respective meanings set forth in Paragraph 7 of this Agreement.
1. CLAIMS SUBJECT TO ARBITRATION OR JUDICIAL REFERENCE.
(a) Any Claim other than a Claim that arises out of or relates to
any obligation under any Subject Document that is secured, in
whole or in part, by an interest in real property shall, at
the written request of any Party, be determined by
Arbitration.
(b) Any Claim that arises out of or relates to any obligation
under any Subject Document that is secured, in whole or in
part, by an interest in real property shall be determined by
Arbitration only with the consent of both Parties. If both
Parties do not consent to the determination of any such Claim
by Arbitration, then such Claim shall, at the written request
of any Party, be determined by Reference.
(c) The determination as to whether or not a Claim arises out of
or relates to any obligation under any Subject Document that
is secured, in whole or in part, by an interest in real
property shall be made at the time the arbitrator or referee
is selected pursuant to Paragraph 2 of this Agreement.
2. SELECTION OF ARBITRATOR OR REFEREE. Within 30 days after written
demand, or within 30 days after commencement by any Party, of any lawsuit
subject to this Agreement, the Parties shall select a single neutral arbitrator
pursuant to the Commercial Arbitration Rules of the AAA or a single neutral
referee pursuant to the Judicial Reference Procedures of the AAA. However, the
arbitrator or referee selected must be a retired state or federal court judge
with at least five years of judicial experience in civil matters. In the event
that the selection pursuant to such Commercial Arbitration Rules or Judicial
Reference Procedures does not result in the appointment of a single neutral
arbitrator or a single neutral referee within 30 days, any such Party may
petition the court to appoint a single neutral arbitrator or single neutral
referee with the judicial experience described above. The Parties shall equally
bear the fees and expenses of the arbitrator or referee unless the arbitrator or
referee otherwise provides in the award or statement of decision.
3. CONDUCT OF ARBITRATION CONFERENCE.
(a) Except as provided in this Agreement, the arbitrator shall
have the powers provided under Applicable State Law and the
Commercial Arbitration Rules of the AAA, and the referee shall
have the powers provided under Applicable State Law and the
Judicial Reference Procedures of the AAA.
(b) The arbitrator or referee shall determine all challenges to
the legality or enforceability of this Agreement.
(c) The arbitrator or referee shall apply the rules of evidence to
the same extent as they would be applied in a court of law.
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<PAGE> 14
(d) A Party may not conduct discovery unless the arbitrator or
referee grants such Party leave to do so upon a showing of
good causes. All discovery shall be completed within 90 days
after the appointment of the arbitrator or referee, except
upon a showing of good cause by any Party. The arbitrator or
referee shall limit discovery to non-privileged material that
is relevant to the issues to be determined by the arbitrator
or referee.
(e) The arbitrator or referee shall determine the time of the
hearing and shall designate its location based upon the
convenience of the arbitrator or referee, the Parties and any
witnesses. However, such hearing shall be commenced within 30
days after completion of discovery, unless the arbitrator or
referee grants a continuance upon a showing of good cause by
any Party. At least 7 days before the date set for such
hearing, the Parties shall exchange copies of exhibits to be
offered as evidence, and lists of the witnesses who will
testify, at such hearing. Once commenced, the hearing shall
proceed day to day until completed, unless the arbitrator or
referee grants a continuance upon a showing of good cause by
any Party. Any Party may cause to be prepared, at its expense,
a written transcription or electronic recordation of such
hearing.
(f) Subject to the provisions of this Agreement, the arbitrator
may award, or the referee may report, a statement of decision
providing for any remedy or relief, including without
limitation judicial foreclosure, deficiency judgment and
equitable relief, and give effect to all legal and equitable
defenses, including without limitation statutes of limitation,
the statute of frauds, waiver and estoppel.
(g) The award of the arbitrator or the statement of decision of
the referee shall be supported by written findings of fact and
conclusions of law delivered by the arbitrator or referee to
the Parties concurrently with such award or statement of
decision.
(h) In the event that punitive damages are permitted under
Applicable State Law, the award of the arbitrator or the
statement of decision of the referee may provide for recovery
of punitive damages provided that the arbitrator or referee
first makes written findings of fact that would satisfy the
requirements for recovery of punitive damages under Applicable
State Law. Any such punitive damages shall not exceed a sum
equal to three times the amount of actual damages as
determined by the arbitrator or referee.
(i) The arbitrator shall have the power to award or the referee
shall have the power to report a statement of decision
providing for reasonable attorneys' fees (including a
reasonable allocation for the costs of in-house counsel) and
costs to the prevailing party.
(j) In the event that Applicable State Law provides that
publications or communications made in a judicial proceeding
are subject to a litigation privilege, such litigation
privilege shall apply to the same extent to publications or
communications made in the Arbitration or Reference.
4. PROVISIONAL REMEDIES, SELF-HELP AND FORECLOSURE. No provision of this
Agreement shall limit the right of any Party (a) to exercise self-help remedies
including, without limitation, set-off, (b) to foreclose against or sell any
collateral, by power of sale or otherwise or (c) to obtain or oppose provisional
or ancillary remedies from a court of competent jurisdiction before, after or
during the pendency of the Arbitration or Reference. The exercise of, or
opposition to, any such remedy does not waive the right of any Party to
Arbitration or Reference pursuant to this Agreement.
5. FINAL, BINDING AND NONAPPEALABLE JUDGMENT. Any court of competent
jurisdiction shall, upon the petition of any Party, confirm the award of the
arbitrator and enter judgment in conformity therewith. Any court of competent
jurisdiction shall, upon the filing of the statement of decision of the referee,
enter judgment thereon. Any such judgment shall be final, binding and
nonappealable.
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<PAGE> 15
6. MISCELLANEOUS. In the event that multiple claims are asserted, some of
which are found not subject to this Agreement, the Parties agree to say the
proceedings of the claims not subject to this Agreement until all other claims
are resolved in accordance with this Agreement. In the event that claims are
asserted against multiple parties, some of whom are not subject to this
Agreement, the Parties agree to sever the claims subject to this Agreement and
resolve them in accordance with this Agreement. In the event that any provision
of this Agreement is found to be illegal or unenforceable, the remainder of this
Agreement shall remain in full force and effect. In the event of any challenge
to the legality or enforceability of this Agreement, the prevailing Party shall
be entitled to recover the costs and expenses, including reasonable attorneys'
fees, incurred by it in connection therewith. Applicable State Law shall govern
the interpretation of this Agreement. This Agreement fully states all of the
terms and conditions of the Parties' agreement regarding the matters mentioned
in, or incidental to, this Agreement. This Agreement supersedes all oral
negotiations and prior writings concerning the subject matter hereof.
7. DEFINED TERMS. As used in this Agreement, the following terms shall
have the respective meanings set forth below:
(a) "AAA" shall mean the American Arbitration Association.
(b) "APPLICABLE STATE LAW" shall mean the law of the state in
which this Agreement is executed by Obligor; provided,
however, that if any Party seeks (i) to exercise self-help
remedies, including without limitation set-off, (ii) to
foreclose against or sell any collateral, by power of sale or
otherwise or (iii) to obtain or oppose provisional or
ancillary remedies from a court of competent jurisdiction
before, after or during the pendency of the Arbitration or
Reference, the law of the state where such collateral is
located shall govern the exercise of or opposition to such
rights and remedies.
(c) "ARBITRATION" shall mean an arbitration conducted pursuant to
this Agreement in accordance with Applicable State Law, and
under the Commercial Arbitration Rules of the AAA, as in
effect at the time the arbitrator is selected pursuant to
paragraph 2 of this Agreement.
(d) "CLAIM" shall mean any claim, cause of action, action, dispute
or controversy between or among the Parties, including any
claim, cause of action, action, dispute or controversy alleged
in or subject to a lawsuit between or among the Parties, which
arises out of or relates to:
(i) any of the Subject Documents,
(ii) any negotiations, correspondence or communications
relating to any of the Subject Documents, whether or
not incorporated into the Subject Documents or any
indebtedness evidenced thereby,
(iii) the administration or management of the Subject
Documents or any indebtedness evidenced thereby or
(iv) any alleged agreements, promises, representations or
transactions in connection therewith, including but
not limited to any claim, cause of action, action,
dispute or controversy which arises out of or is
based upon an alleged tort or other breach of legal
duty.
(e) "REFERENCE" shall mean a judicial reference conducted pursuant
to this Agreement in accordance with Applicable State Law and
under the Judicial Reference Procedures of the AAA, as in
effect at the time the referee is selected pursuant to
paragraph 2 of this Agreement.
(f) "SUBJECT DOCUMENTS" shall mean any and all documents,
instruments and agreements previously, concurrently or
hereafter executed by Obligor in favor of Bank, or between
Obligator and Bank, which incorporate by reference an
alterative dispute resolution agreement or another
Page 3
<PAGE> 16
agreement providing for the resolution of Claims between or
among the Parties by arbitration or judicial reference, any
and all related documents, instruments and agreements, and any
and all extensions, renewals, amendments, substitutions and
replacements of any of the foregoing; and "Subject Document"
shall mean any one of such Subject Documents.
8. WAIVER OF RIGHT TO TRIAL BY JURY. In connection with an Arbitration or
Reference, or any other action or proceeding, the Parties hereby expressly,
intentionally and deliberately waive any right they may otherwise have to trial
by jury of any Claim.
This Agreement is duly executed by the Parties as of the date first written
above.
UNION BANK OF CALIFORNIA, N.A.
By: /s/ Peter Sitov
-------------------------------
Peter Sitov
Title: Vice President
Up-Right, Inc.
/s/ James Dillon
- ----------------------------------
James Dillon
Vice President/Gen. Manager
- ----------------------------------
- ----------------------------------
- ----------------------------------
Page 4
<PAGE> 1
EXHIBIT 10.3
INDUSTRIAL LEASE
This lease is made between A.L.L. A GENERAL PARTNERSHIP, herein called
Lessor, and UPRIGHT, INC., herein called Lessee.
Lessee hereby offers to lease from Lessor the premises situated in the
City of SELMA, County of FRESNO, State of CAL., described as A 2,000 S.F. BLOCK
BUILDING OF 1622 TODD ST., upon the following TERMS and CONDITIONS:
1. Term and Rent. Lessor demises the above premises for a term of SIX
MONTHS, commencing FEBRUARY 18, 1997 and terminating on AUGUST 17, 1997 OR UPON
60 DAYS NOTICE BY EITHER PARTY. At the MONTHLY rental of ($) 600.00 payable in
equal installments in advance on the 18TH day of each month for that month's
rental, during the term of this lease. Rental payments to be mailed to Lessor,
at P.O. box 8579 Fresno, Ca. 93747.
2. Use. Lessee shall use and occupy the premises for PRODUCTS STORAGE.
The premises shall be used for no other purpose. Lessor represents that the
premises may lawfully be used for such purpose. NONE OF THE YARD AREA IS
INCLUDED IN THE LEASED AREA, OTHER THAN INGRESS AND EGRESS.
3. Care and Maintenance of Premises. Lessee acknowledges that the
premises are in good order and repair, unless otherwise indicated herein. Lessee
shall, at his own expense and at all times, maintain the premises in good and
safe condition, including plate glass, electrical wiring, plumbing and heating
installations and any other system or equipment upon the premises, and shall
surrender the same at termination hereof, in as good condition as received,
normal wear and tear excepted. Lessee shall be responsible for all repairs
required, excepting the roof, exterior walls, structural foundations, and:
4. Alterations. Lessee shall not, without first obtaining the written
consent of Lessor, make any alterations, additions, or improvements, in, to or
about the premises.
5. Ordinances and Statutes. Lessee shall comply with all statutes,
ordinances and requirements of all municipal, state and federal authorities now
in force, or which may hereafter be in force, pertaining to the premises,
occasioned by or affecting the use thereof by Lessee.
6. Assignment and Subletting. Lessee shall not assign this lease or
sublet any portion of the premises without prior written consent of the Lessor,
which shall not be unreasonably withheld.
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<PAGE> 2
7. Utilities. All applications and connections for necessary utility
services on the demised premises shall be made in the name of Lessee only, and
Lessee shall be solely liable for utility charges as they become due, including
those for sewer, water, gas, electricity, and telephone services.
8. Entry and Inspection. Lessee shall permit Lessor or Lessor's agents
to enter upon the premises at reasonable times and upon reasonable notice, for
the purpose of inspecting the same, and will permit Lessor at any time to place
upon the premises any usual "To Let" or "For Lease" signs, and permit persons
desiring to lease the same to inspect the premises thereafter.
9. Possession. If Lessor is unable to deliver possession of the
premises at the commencement hereof, Lessor shall not be liable for any damage
caused thereby, nor shall this lease be void or voidable, but Lessee shall not
be liable for any rent until possession is delivered.
10. Indemnification of Lessor. Lessor shall not be liable for any
damage or injury to Lessee, or any other person, or to any property, occurring
on the demised premises or any part thereof, and Lessee agrees to hold Lessor
harmless from any claim for damages, no matter how caused.
11. Insurance. Lessee, at his expense, shall maintain plate glass and
public liability insurance including bodily injury and property damage insuring
Lessee and Lessor with minimum coverage as follows:
Lessee shall provide Lessor with a Certificate of Insurance showing
Lessor as additional insured. The Certificate shall provide for a ten-day
written notice to Lessor in the event of cancellation or material change of
coverage. To the maximum extent permitted by insurance policies which may be
owned by Lessor or Lessee, Lessee and Lessor, for the benefit of each other,
waive any and all rights of subrogation which might otherwise exist.
12. Eminent Domain. If the premises or any part thereof or any estate
therein, or any other part of the building materially affecting Lessee's use of
the premise, shall be taken by eminent domain, this lease shall terminate on the
date when title vests pursuant to such taking. The rent, and any additional
rent, shall be apportioned as of the termination date, and any rent paid for any
period beyond that date shall be repaid to Lessee. Lessee shall not be entitled
to any part of the award for such taking or any payment in lieu thereof, but
Lessee may file a claim for any taking of fixtures and improvements owned by
Lessee, and for moving expenses.
13. Destruction of Premises. In the event of a partial destruction of
the premises during the term hereof, from any
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cause, Lessor shall forthwith repair the same, provided that such repairs can be
made within sixty (60) days under existing governmental laws and regulations,
but such partial destruction shall not terminate this lease, except that Lessee
shall be entitled to a proportionate reduction of rent while such repairs are
being made, based upon the extent to which the making of such repairs shall
interfere with the business of Lessee on the premises. If such repairs cannot be
made within said sixty (60) days, Lessor, at his option, may make the same
within a reasonable time, this lease continuing in effect with the rent
proportionately abated as aforesaid, and in the event that Lessor shall not
elect to make such repairs which cannot be made within sixty (60) days, this
lease may be terminated at the option of either party. In the event that the
building in which the demised premises may be situated is destroyed to an extent
of not less than one-third of the replacement costs thereof, Lessor may elect to
terminate this lease whether the demised premises be injured or not. A total
destruction of the building in which the premises may be situated shall
terminate this lease.
14. Lessor's Remedies on Default. If Lessee defaults in the payment of
rent, or any additional rent, or defaults in the performance of any of the other
covenants or conditions hereof, Lessor may give Lessee notice of such default
and if Lessee does not cure any such default within 10 days, after the giving of
such notice (or if such other default is of such nature that it cannot be
completely cured within such period, if Lessee does not commence such curing
within such 20 days and thereafter proceed with reasonable diligence and in good
faith to cure such default), then Lessor may terminate this lease on not less
than 3 days' notice to Lessee. On the date specified in such notice the term of
this lease shall terminate, and Lessee shall then quit and surrender the
premises to Lessor, but Lessee shall remain liable as hereinafter provided. If
this lease shall have been so terminated by Lessor, Lessor may at any time
thereafter resume possession of the premises by any lawful means and remove
Lessee or other occupants and their effects. No failure to enforce any term
shall be deemed a waiver.
15. Security Deposit. Lessee shall deposit with Lessor on the signing
of this lease the sum of SIX HUNDRED Dollars ($) 600.00 as security deposit for
the performance of Lessee's obligations under this lease, including without
limitation, the surrender of possession of the premises to Lessor as herein
provided. If Lessor applies any part of the deposit to cure any default of
Lessee, Lessee shall on demand deposit with Lessor the amount so applied so that
Lessor shall have the full deposit on hand.
16. Tax Increase. In the event there is any increase during any year of
the term of this lease in the City, County or State real estate taxes over and
above the amount of such taxes assessed for the tax year during which the term
of this lease
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<PAGE> 4
commences, whether because of increased rate or valuation, Lessee shall pay to
Lesser upon presentation of paid tax bills an amount equal to 28% of the
increase in taxes upon the land and building in which the leased premises are
situated.
17. Common Area Expenses. The premises are situated in a PROPERTY WITH
common areas, Lessee agrees to pay his pro-rata share of maintenance, taxes, and
insurance for the common area.
18. Attorney's Fees. In case suit should be brought for recovery of the
premises, or for any sum due hereunder, or because of any act which may arise
out of the possession of the premises, by either party, the prevailing party
shall be entitled to all costs incurred in connection with such action,
including a reasonable attorney's fee.
19. Notices. Any notice which either party may, or is required to give,
shall be given by mailing the same, postage prepaid, to Lessee at the premises,
or Lessor at the address shown below, or at such other places as may be
designated by the parties from time to time.
20. Heirs, Assigns, Successors. This lease is binding upon and inures
to the benefit of the heirs, assigns and successors in interest to the parties.
21. Option to Renew. Provided that Lessee is not in default in the
performance of this lease, Lessee shall have the option to renew the lease for
an additional term. IN ANY EVENT, EITHER PARTY MAY CANCEL THIS LEASE WITHIN 60
DAYS, AT ANY TIME BY SERVING A WRITTEN NOTICE OF INTENT TO CANCEL
22. Subordination. This lease is and shall be subordinated to all
existing and future liens and encumbrances against the property.
23. Entire Agreement. The foregoing constitutes the entire agreement
between the parties and may be modified only by a writing signed by both
parties. The following Exhibits, if any, have been made a part of this lease
before the parties' execution hereof: NONE
Signed this 7TH day of FEBRUARY, 1997
UPRIGHT, INC. A.L.L. A GENERAL PARTNERSHIP
By /s/ [illegible] By /s/ [illegible]
- ------------------------------------ ------------------------------------
Lessee Lessor
ADDRESS: P.O. BOX 560 SELMA, CA. ADDRESS: P.O. BOX 8579 FRESNO, CA.
93662 93747
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<PAGE> 1
EXHIBIT 10.4
TOWNVIEW BUSINESS CENTER
Third & Gest Streets
Cincinnati, Ohio
LEASE DOCUMENTATION
LESSEE:
UPRIGHT, INC.
Address:
Third and Gest Streets
Cincinnati, Ohio 45202
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. DEFINITIONS AND CERTAIN BASIC PROVISIONS . . . . . . . . . . . 1
2. FUNDAMENTAL EXHIBITS TO LEASE . . . . . . . . . . . . . . . . 2
2.1 Exhibits . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 Change in Plans . . . . . . . . . . . . . . . . . . . 3
3. GRANT, PREMISES AND TERM . . . . . . . . . . . . . . . . . . . 3
3.1 Grant and Premises . . . . . . . . . . . . . . . . . . 3
3.2 Additional Areas . . . . . . . . . . . . . . . . . . . 3
3.3 Roof and Walls . . . . . . . . . . . . . . . . . . . . 4
3.4 Terms . . . . . . . . . . . . . . . . . . . . . . . . 4
3.5 "Ready for Occupancy." . . . . . . . . . . . . . . . . 4
4. RENT: ADDITIONAL RENT; OTHER CHARGES . . . . . . . . . . . . 5
4.1 Minimum Rent . . . . . . . . . . . . . . . . . . . . . 5
4.2 Additional Rent . . . . . . . . . . . . . . . . . . . 5
5. SECURITY DEPOSIT . . . . . . . . . . . . . . . . . . . . . . . 9
6. USE AND OCCUPANCY . . . . . . . . . . . . . . . . . . . . . . 9
7. REPAIRS . . . . . . . . . . . . . . . . . . . . . . . . . . 10
8. ACCESS . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
9. ALTERATIONS TO PREMISES; SIGNS . . . . . . . . . . . . . . . 11
10. DAMAGE OR DESTRUCTION . . . . . . . . . . . . . . . . . . . 12
11. INDEMNITY AND TENANT INSURANCE . . . . . . . . . . . . . . . 13
12. WAIVER OF SUBROGATION . . . . . . . . . . . . . . . . . . . 13
13. LIEN . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
14. ASSIGNMENT, SUBLETTING, MORTGAGING . . . . . . . . . . . . . 14
15. PRIORITY OF LEASE . . . . . . . . . . . . . . . . . . . . . 15
16. ESTOPPEL CERTIFICATE . . . . . . . . . . . . . . . . . . . . 15
17. FIXTURES AND PERSONAL PROPERTY: SURRENDER . . . . . . . . . 16
18. INSOLVENCY . . . . . . . . . . . . . . . . . . . . . . . . . 16
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
19. DEFAULT AND REMEDY . . . . . . . . . . . . . . . . . . . . . 16
20. NON-WAIVER OF DEFAULTS . . . . . . . . . . . . . . . . . . . 17
21. NON-PERFORMANCE BY TENANT . . . . . . . . . . . . . . . . . 17
22. HOLD OVER TENANCY . . . . . . . . . . . . . . . . . . . . . 18
23. CONDEMNATION . . . . . . . . . . . . . . . . . . . . . . . . 18
24. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . 19
25. RIGHTS RESERVED BY LANDLORD . . . . . . . . . . . . . . . . 19
26. MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . 20
</TABLE>
EXHIBITS
Exhibit A Site Plan of Center
Exhibit B Description of Landlord's Standard Work and
Landlord's Tenant Finish Work
Exhibit C Rules and Regulations for Center
Exhibit D Minimum Rent Schedule
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<PAGE> 4
TOWNVIEW BUSINESS CENTER
LEASE
BY AND BETWEEN
TOWNVIEW PARTNERS
an Ohio partnership
and
UPRIGHT, INC.
THIS IS A LEASE entered into as of November _, 1995, between
TOWNVIEW PARTNERS
an Ohio partnership
Michael J. Burke, Managing Partner
1800 Provident Tower
Cincinnati, Ohio 45202 ("Landlord")
and
UPRIGHT, INC.
3rd and Gest Streets
Cincinnati, Ohio 45202 ("Tenant")
1. DEFINITIONS AND CERTAIN BASIC PROVISIONS.
1.1 (a) Landlord: TOWNVIEW PARTNERS
(b) Landlord's Address: 1800 Provident Tower
Cincinnati, Ohio 45202
(c) Tenant: Upright, Inc.
(d) Tenant's Address: 3rd and Gest Streets
Cincinnati, Ohio 45202
(e) Tenant's Trade Name: None
(f) Agent: Frank Scarborough, Vice President, Marketing
(g) Premises: A warehouse and office unit containing
approximately 4,756 square feet, located in Townview Business Center (the
"Center") of Third & Gest Streets, Cincinnati,
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Hamilton County, Ohio. The Premises are shown and outlined on the plan
attached hereto as Exhibit A.
(h) Lease Term: The term of this Lease (the "Lease Term") shall
be for a period of five (5) years plus a part of a month, if any, from the date
of commencement of the Lease Term to the first day of the first full calendar
month in the Lease Term.
(i) Commencement Date: The Lease Term shall commence January 1,
1996, through December 31, 2001.
(j) Minimum Rental: See Exhibit D
(k) Additional Rental: Beginning in year 3, payable in (12) equal
monthly installments plus any Additional Rent as set forth in Section 4.2(a) of
this Lease.
(l) Prepaid Rental:
(m) Security Deposit: $3,459.98
(n) Permitted Use: Tenant shall be permitted "to utilize the
premises for any and all uses associated with its present business of office
and warehousing provided such use conforms with all applicable zoning
requirements of the appropriate governmental authority sufficient to entitle
Tenant to an occupancy permit from such governmental authority.
1.2 Each of the foregoing definitions and basic provisions shall
be construed in conjunction with and limited by the references thereto in the
other provisions of this Lease.
2. FUNDAMENTAL EXHIBITS TO LEASE.
2.1 Exhibits.
The following exhibits attached to this Lease are incorporated herein
by this reference:
Exhibit A Site plan of the Center and the Premises
Exhibit B Description of Landlord's standard work
and Landlord's tenant finish work
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<PAGE> 6
Exhibit C Center's Rules and Regulations
Exhibit D Minimum Rent Schedule
2.2 Change in Plans.
Notwithstanding Exhibit A or anything else in this Lease, Landlord
reserves the right to make changes or revisions in the site plan reflected by
Exhibit A or any other site plan, to change or modify and add to or subtract
from the size and dimension of the Center or any part thereof, the number,
location and dimensions of buildings and warehouse or office units, any
designated parking spaces, the number of floors in any building, the locations,
size and number of tenants' spaces, the identity, type and location of other
units and tenants, (except that Landlord shall not have the right, without
Tenants' consent, to change the location of the Premises) and the size, shape,
location and arrangement of common areas, and to design and decorate any
portion of the Center as Landlord desires. The site plan attached hereto as
Exhibit A is subject to change without notice, does not grant any easement
rights to Tenant, does not obligate Landlord to construct any buildings shown
on Exhibit A other than the building in which the Premises are located and is
not to be construed as containing any representations or agreements by the
Landlord. Landlord's exercise of its rights under this Section 2.2 shall not
unreasonably impair the visibility of or access to tho Premises. This Lease
and the provisions contained herein define all rights of Tenant in and to the
Center.
3. GRANT, PREMISES AND TERM.
3.1 Grant and Premises.
Landlord leases to Tenant and Tenant leases from Landlord upon the
terms and conditions set forth herein, the Premises more fully described in
Section 1.1(g) of this Lease.
3.2 Additional Areas.
Tenant shall have the nonexclusive use of the common facilities
designated from time to time by Landlord, subject to the Rules and Regulations
attached as Exhibit C, including the following common facilities: the parking
spaces, sidewalks and driveways. Landlord may at any time close temporarily any
common facilities to make repairs or changes therein or to effect construction,
repairs or changes within the Center, to prevent acquisition of public rights
in such facilities and to discourage non-customer parking; and may do such
other acts in and to the
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<PAGE> 7
common facilities as in Landlord's judgment may be desirable to improve the
convenience thereof.
3.3 Roof and Walls.
Landlord shall have the exclusive right to use all or any part of the
roof, side and rear walls of the Premises for any purpose, including but not
limited to erecting signs or other structures on or over all or any part of the
same, erecting scaffolds and other aids to the construction and installation of
the same, and installing, maintaining, using, repairing and replacing pipes,
ducts, conduits and wires leading through, to or from the Premises and serving
other parts of the Center in locations which do not materially-interfere with
Tenant's use of the Premises. Tenant shall have no right whatsoever in the
exterior walls or the roof of the Premises except as otherwise provided herein.
3.4 Terms.
The Lease Term shall be for the period set forth in Section 1.1(h) of
this Lease and the Lease Term shall begin on the Commencement Date specified in
Section 1.1(i) of this Lease, unless such date is postponed or the Lease
terminated earlier, as provided elsewhere herein. When the Commencement Date
has been established, Landlord and Tenant shall execute, acknowledge and
deliver a written statement specifying the date of commencement and termination
of the Lease Term. In the event of Landlord's inability to deliver possession
of the Premises upon the Commencement Date, Landlord shall not be liable for
any damage caused thereby nor shall this Lease become void or voidable, nor
shall the Lease Term be extended, but in such event Tenant shall not be liable
for any rent until such time as Landlord delivers possession. If Landlord
permits Tenant to enter into possession of the Premises prior to the
Commencement Date, all of the terms and conditions of this Lease shall apply to
such prior period.
3.5 "Ready for Occupancy."
Outline specifications describing the standard improvements to be
provided and installed by Landlord at its expense and the above standard
improvements to be provided and installed by Landlord on Tenant's behalf at
Tenant's expense have been agreed to by Landlord and Tenant and are attached
hereto as a part hereof and marked Exhibit B. The term "ready for occupancy"
as used herein shall mean the first day on which Landlord shall have
substantially completed all the work to be performed by Landlord in accordance
with Exhibit B attached hereto, including any of Tenant's work
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<PAGE> 8
which is to be performed by Landlord at Tenant's expense pursuant to Exhibit B.
4. RENT: ADDITIONAL RENT; OTHER CHARGES.
4.1 Minimum Rent.
Tenant shall pay minimum and additional rent to Landlord without
notice of demand and without setoff or deduction for any reason at Landlord's
address set forth in Section 1.1(b) of this Lease or at such other place as
Landlord may from time to time designate, as rental for the Premises.
The Minimum Rental specified in Section 1.1(j) of this Lease shall be
payable in advance once first day of each calendar month during the Lease Term
hereof commencing on the Commencement Date subject to prior prepaid rent
specified in Section 1.1(l) in which the month immediately following shall be
prorated. Rent for partial months shall be prorated. The first monthly payment
of minimum rent shall include any prorated rental for the period from the date
of commencement of the Lease Term to the first day of the first full calendar
month in the Lease Term. If Tenant shall fail to pay the foregoing minimum or
additional rental to Landlord on or before the fifth day of the month in which
it is due, and if Tenant fails to cure any such default within seven days after
the mailing of written notice by Landlord to Tenant specifying the default, the
Landlord may, in addition to all other rights and remedies which Landlord may
have, assess a "late charge" on such amount equal to 1.5% of the minimum rental
due for that month.
4.2 Additional Rent.
In addition to the Minimum Rental set forth in Section 4.1, Tenant
shall pay as "Additional Rent" during the term of the lease and any extension
or renewal thereof, Tenant's pro rata share of the Operating Expenses (as
defined below) for the Center. In addition, Tenant shall pay any and all sums
of money or charges required to be paid by Tenant under the terms of this Lease
whether designated Additional Rent or not, and such amounts, if not paid when
due, shall be collectible as additional rent with the next installment of
Minimum Rental thereafter falling due as provided herein and shall be subject
to all provisions of this lease and of law as to default in the payment of
rent; provided, nothing herein shall be deemed to excuse or delay the
obligation of Tenant to pay any amount of money or charge at the time the same
shall become due under the terms of this Lease. Tenant's obligation to pay
Additional Rent shall commence on January 1, 1999 and
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<PAGE> 9
not at the time Tenant's obligation to pay Minimum Rental commences not to
exceed $4500.00 per year 1999, 2000.
(a) Operating Expenses. In event the Landlord's Operating
Expenses for the Center exceed $1.78 per square foot, Tenant shall pay Tenant's
pro rata share (as hereafter defined) of all Operating Expenses incurred by
Landlord with respect to the Center which shall be paid in equal monthly
installments. The term "Operating Expenses" shall mean all expenses, costs and
disbursements (but not replacement of capital investment items) of every kind
and nature which Landlord shall pay or become obligated to pay because of, or
in connection with, the ownership, operation and maintenance of the Center,
including but not limited to the following:
(i) All parking area maintenance. The term "parking area
maintenance" shall mean all expenses incurred by Landlord in
connection with the maintenance of the parking and roadway facilities
located in the Center, including gardening, landscaping,
noncapitalized repairs, line painting, lighting, and removal of snow,
trash, rubbish and refuse from parking and roadway areas. The term
"parking and roadway facilities" shall mean all parking and roadway
areas, spaces, equipment and special services provided by Landlord for
the common or joint use and benefit of the occupants of the Center,
their employees, agents, servants, customers and other invitees,
including without limitation parking areas, access roads, driveways,
retaining walls, landscaped areas, sidewalks, and such other like
services customarily provided for such common or joint parking and
roadway areas.
(ii) All maintenance (including that required by Section 7.1
of this Lease), repair, cleaning, snow and ice removal, planting,
replanting, landscaping, repair of signs, painting of exterior walls,
water and sewage charges, worker's compensation insurance, wages,
unemployment taxes, social security taxes, employee benefits, personal
property taxes, fees for required licenses and permits, supplies,
reasonable depreciation of equipment, and administrative property
management fees; but for the purpose of this calculation there shall
be excluded the costs of equipment properly chargeable to capital
account and depreciation of the original cost of constructing,
erecting and installing the common areas, common facilities and
related services.
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<PAGE> 10
(iii) "Taxes" shall mean and include the amount paid by
Landlord for all taxes and assessments upon the Center and its
appurtenances and upon the real property upon which the same are
constructed, but shall not include income, occupational or similar
taxes based upon Landlord's income or profits. If at any time a tax
or excise on rents, or other tax, however described, is levied or
assessed against Landlord on account of the rent reserved hereunder,
the same shall be included within the terms "Taxes" for the purposes
hereof.
(iv) "Insurance" shall mean all premiums for fire and
extended coverage, liability and property damage insurance. Landlord
shall carry such insurance which shall be in such amounts as Landlord
or Landlord's lender deems necessary. Tenant acknowledges that such
insurance shall be solely for the benefit of Landlord and Landlord's
mortgagee(s), and Tenant waives and releases any and all rights to any
proceeds payable by reason of such insurance.
(b) Utilities. Tenant shall be solely responsible for and shall
promptly pay all charges for telephone service and for electricity, gas and all
other utilities used upon or furnished to the Premises which are metered by a
separate meter for the Premises. Landlord shall be responsible for water and
sewer utilities for which there is a common meter for the Center and which are
included in Operating Expenses; provided, however, that if Tenant's usage of
such utilities exceeds, in Landlord's opinion, the normal usage of other
tenants in the center whose utilities are metered through the common meter,
Tenant shall pay the full cost of the excess usage of such utilities. In no
event shall Landlord be liable in damages or otherwise for any interruption or
failure in the supply of such utilities, or if either the quantity or character
of such utilities supplied is changed or is no longer available or suitable for
Tenant's requirements. Landlord at any time at Landlord's option and upon not
less than one hundred eighty (180) days prior written notice to Tenant, may
discontinue the furnishing of such water and sewer utilities and in ouch case,
Tenant shall contract for the supply of such service with the public utility
company supplying the same and Landlord shall permit its equipment, to the
extent available, suitable and safely capable therefore, to be used for the
purpose of supplying such services.
(c) Pro Rata Share. Unless otherwise defined herein, the term
"Tenant's pro rata share" shall mean the percentage that the total number of
square feet of the floor area in the Premises
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<PAGE> 11
bears to the total number of square feet of leasable floor area in the Center;
provided, however, if at any time during the Lease Term Landlord has leased at
least 901 of the leasable floor area in the Center, then the term "Tenant's pro
rata share" shall mean the percentage that the total number of square feet of
the floor area in the Premises bears to the total number of square feet of
leased floor areas in the Center.
(d) Taxes - Other. Tenant shall pay before delinquency any and
all taxes and assessments, and license, sales, business, occupation or other
taxes, fees or charges levied, assessed or imposed upon its business operations
in the Premises. Tenant shall pay before delinquency any and all taxes and
assessments levied, assessed or imposed upon its trade fixtures, leasehold
improvements, merchandise and other personal property in, on or upon the
Premises. In the event any taxes, fees or charges referred to in this Section
4.2(d) shall be assessed, levied or imposed upon or with the business or
property of Landlord, such assessment, fees or charges shall be paid by Tenant
to Landlord promptly upon Landlord's request for such payment.
(e) Payment of Additional Rent. For each rental year the
additional rental provided for in this Section 4.2 shall be paid by Tenant in
monthly installments on the first day of each calendar month, in advance, in an
initial amount estimated by Landlord. Landlord shall give Tenant written notice
of such estimated amounts at least thirty (30) days before the first payment of
such amounts is due from Tenant. Subsequent to the end of each rental year or
partial rental year, Landlord shall furnish Tenant with a statement of the
actual amount of Tenant's proportionate share of such costs and expenses for
such period. If the total amount paid by Tenant under this Section 4.2 for any
calendar year shall be less than the actual amount due for Tenant for such year
as shown on such statement, Tenant shall pay to Landlord the difference between
the amount paid by Tenant and the actual amount due, such deficiency to be paid
within thirty (30) days after the furnishing of each such statement; and if the
total amount paid by Tenant hereunder for any such calendar year shall exceed
such actual amount due from Tenant for such calendar year, such excess shall be
credited against the next installment due from Tenant to Landlord under this
Section 4.2.
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<PAGE> 12
5. SECURITY DEPOSIT.
Tenant has paid to Landlord upon execution of this Lease the Security
Deposit as set forth in Section 1.1(m) of this Lease as security for the
performance of Tenant's obligations hereunder, including the payment of all
rentals. In the event of a default by Tenant, Landlord at its option may apply
such part of the deposit as may be necessary to cure the default, and if
Landlord does so, Tenant shall, upon demand, redeposit with Landlord an amount
equal to that so applied so that Landlord will have the full security deposit
on hand at all times during the term of this Lease. Upon the termination of
this Lease, provided Tenant is not in default hereunder, Landlord shall refund
to Tenant any then remaining balance of the deposit, without interest. In the
event of a sale or leasing of the land and building of which the Premises form
a part, Landlord shall have the right to transfer the deposit to the vendee or
lessee and Landlord shall thereupon be released by Tenant from all liability
for the return of the deposit; and Tenant agrees to look to the new landlord
solely for the return of the deposit; and it is agreed that the provisions
hereof shall apply to every transfer or assignment made of the deposit to a new
landlord.
6. USE AND OCCUPANCY.
6.1 The premises are to be used solely for the purposes set forth
in Section 1.1(n) of this Lease and for no other business or purpose without
the prior written consent of Landlord. Tenant shall not do or permit to be
done in or about the Premises anything which is illegal or unlawful; or which
is of a hazardous or dangerous nature, or which is noxious or offensive to
other tenants in the Center or to Landlord, or which will increase the rates of
insurance carried by Landlord. Tenant shall obtain all permits, licenses,
certificates or other authorizations and any renewals, extensions or
continuances of the same required in connection with the lawful and proper use
of the Premises and shall pay when due all taxes upon its merchandise, stock,
fixtures, equipment and leasehold improvements in the Premises. Neither a
failure on the part of Tenant to procure such permits, licenses, certificates
or other authorizations, nor the revocation of the same, shall in any way
affect the liability of Tenant for payment of rent herein reserved or the
performance of observance of any of the covenants or conditions herein
contained on Tenant's part to be performed and observed. Tenant shall (and
shall cause its employees to) observe the Rules and Regulations attached as
Exhibit C or such other rules and regulations applicable to the Center, as the
same may be imposed by Landlord from time to time, and Tenant shall comply with
all governmental laws and ordinances and all regulations applicable to the use
and occupancy of the Center. Without limiting the generality of the
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foregoing, Tenant shall not display anything outside of the Premises nor
operate any loud speakers without the specific written consent of Landlord. If
Tenant receives any notices affecting use of property, Tenant shall promptly
notify Landlord in writing; but under no circumstances shall Tenant cause
insurance rates of Landlord to increase due to non-compliance with Section
1.1(n). Any increases caused by the Tenant's use not specified in Section
1.1(n) shall be paid by the Tenant.
6.2 Tenant acknowledges that its continued occupancy of the
Premises and the regular conduct of its business for the Permitted Use are of
the utmost importance to Landlord in avoiding the appearance and impression
generally created by vacant space in commercial buildings, in facilitating the
leasing of vacant space in the Center, in the renewal of other leases in the
Center, and in maintaining the character and quality of the Center and of the
tenants in the Center, and that Landlord will suffer substantial damage if the
Premises are left vacant or are vacated by Tenant during the term of this Lease
even in the event Tenant continues to pay rent as required hereunder. Tenant
therefore covenants that it will occupy and utilize the entire Premises in the
active conduct of its business for the Permitted Use during the whole of the
Lease Term hereof and will conduct such business in a reputable, diligent and
energetic manner, and maintain a full stock of inventory and a full staff of
employees.
6.3 If at any time during the Lease Term Tenant abandons the
Premises or ceases to use the Premises for the Permitted Use, then Landlord may
cancel this Lease. Tenant's abandonment shall constitute a default, and
Landlord shall pursue all remedies of default.
7. REPAIRS.
7.1 Landlord shall keep or cause to be kept in as good repair, as
same are in when possession hereunder is given to Tenant: the foundations, the
roof and the structural soundness of the floors, and the exterior walls
(excluding the interior surface of the exterior walls and excluding the
exterior and interior portions of all windows, doors, plate glass and
showcase); the exterior water, sewage and gas and electrical services up to the
point of entry to the Premises; the common areas in the Center including,
without limitation, the sidewalks and parking areas; the heating and air
conditioning systems, except ordinary maintenance; and Landlord shall make all
repairs and restorations made necessary by fire or other peril covered by the
standard extended coverage endorsement on fire insurance policies (except where
such improvements are required by special use of Tenant which will be
reimbursed to Landlord); provided,
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however, that Tenant shall reimburse Landlord upon demand for the cost of
repairing any damage to the Premises, the building or the common areas caused
by the negligence or the deliberate act of Tenant, its employees, agents or
invitees.
7.2 Tenant shall, in all other respects, keep or cause to be kept
in good repair and in a neat, clean and tenantable condition the interior of
the Premises, including but not limited to the interior surface of the exterior
walls, the exterior and interior portions of all windows, doors, plate glass
and showcases, and all plumbing, lighting fixtures, pipes and equipment, floor
coverings, ceilings, walls and plasterings; and Tenant agrees to make all
repairs necessitated by the negligence or deliberate act of Tenant, its
employees, agents or invitees; to provide ordinary maintenance for the heating
and air conditioning systems and to provide maintenance service contracts on
said systems which are satisfactory to Landlord (submitted to Landlord and
approved in writing by Landlord); and to make all other repairs not
specifically required to be made by Landlord under the provisions of the
foregoing paragraph.
8. ACCESS.
Landlord has the right to enter the Premises periodically and shall
have access to the Premises at reasonable hours for inspection or in connection
with the improvement or repair of and the providing of utilities and other
services to the Premises or to other buildings or common areas in the Center.
9. ALTERATIONS TO PREMISES; SIGNS.
Tenant shall not make any alterations, additions or improvements to
the Premises without first obtaining Landlord's written consent. Further,
Tenant shall not place, direct, maintain or paint any signs on the Premises
except such signs as are in accordance with plans specifying design, size and
locations which have been submitted to and approved in writing by Landlord.
Any alterations shall be made in good workmanlike manner and subject to
Landlord's approval. Landlord may make any repairs, alterations or
improvements which Landlord may deem necessary for the preservation, safety or
improvement of the Premises or the Center; provided, however, that in so doing
Landlord shall not unreasonably interfere with Tenant's use and occupancy of
the Premises. All alterations, additions and improvements made by Tenant shall
become the property of Landlord upon the making thereof and shall be
surrendered to Landlord upon the expiration of this Lease. Any damage to the
Premises in
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<PAGE> 15
connection with the making of alterations, additions and improvements by Tenant
or in connection with the placement, direction, maintenance, painting or
removal of any signs on the Premises shall be paid by Tenant.
10. DAMAGE OR DESTRUCTION.
10.1 If the Premises are damaged or destroyed by fire, earthquake
or any other casualty to such an extent as to render the same untenantable in
whole or in substantial part, Tenant shall give Landlord immediate notice of
the occurrence of any such casualty. Either party shall have the right to
notify the other within sixty (60) days after receipt of such notice of its
election to terminate this Lease and if such notice of termination is given by
either party, this Lease shall terminate at the end of such sixty (60) day
period and if Tenant shall not be in default under this lease, then Tenant's
liability for rent shall cease as of the day following the casualty and any
rent paid by Tenant in advance and not yet earned as of the date of termination
shall be refunded to Tenant. If neither party notifies the other of its
election to terminate, then the rent shall be abated during the period from the
day following the casualty until completion of the repair or restoration in the
same proportion as the untenantable portion of the Premises bears to the former
rentable area thereof.
10.2 If the Premises are damaged by fire, earthquake or any other
casualty to such an extent that the Premises shall be rendered untenantable in
part (but less than a substantial part), then Landlord, to the extent of
insurance proceeds, shall promptly at its own expense repair and restore the
Premises; provided, nothing herein shall obligate Landlord to repair or restore
the Premises if the casualty occurs within twelve (12) months of the end of the
Lease Term. The rent shall be abated proportionately as to the portion of the
Premises rendered untenantable from the day following the casualty until
completion of the repair and restoration.
10.3 If the Premises shall be damaged by fire, earthquake or any
other casualty but are not thereby rendered untenantable in whole or in part,
then Landlord, to the extent of insurance proceeds, shall promptly at its own
expense repair and restore the Premises; provided, nothing herein shall
obligate Landlord to repair or restore the Premises if the casualty occurs
within twelve (12) months of the end of the Lead Term. The rent shall not be
abated.
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<PAGE> 16
11. INDEMNITY AND TENANT INSURANCE.
11.1 Tenant shall indemnify and hold Landlord harmless from all
loss, damage, liability or expense resulting from any injury to or death of any
person, or any loss of or damage to any property, caused by or resulting from
any act or omission of any officer, agent, employee, guest, invitee or visitor
of Tenant in or about the Premises or the Center, but the foregoing provision
shall not be construed to make Tenant responsible for injuries to third parties
caused by the negligence of Landlord or any agent or employee of Landlord.
Landlord shall not be liable for any injury to or the death of any person, or
any loss of or damage to property, sustained by Tenant, or by any other
person(s) whatsoever, which may be caused by the Center or the Premises or any
appurtenances thereto or thereof being out of repair, or by the bursting or
leakage of any water, gas, sewer or steam pipes, or by theft or by any act of
neglect of any tenant or occupant of the Center, or of any other person, or by
any other cause of whatsoever nature, unless caused by the negligence of
Landlord or its officers, agent or employees.
11.2 Tenant covenants and agrees that it will carry and maintain
during the Lease Term, at Tenant's sole cost and expense, comprehensive public
liability insurance in a combination single limited amount of not less than
Five Hundred Thousand and 00/100 Dollars ($500,000.00) insuring against injury
or death to any person or persons and damage to property. Such liability
insurance shall specifically insure the performance by Tenant of the indemnity
agreement as contained in paragraph 11.1 of this Lease, and shall name Landlord
as an additional insured.
11.3 Certificates of such policies shall be delivered to Landlord
within ten (10) days after delivery of possession of the Premises to Tenant and
thereafter within thirty (30) days prior to the expiration of the term of each
such policy. Renewal of additional policies shall be procured and maintained
by Tenant in like manner and to like extent. All policies of insurance must
contain a provision that the insuring company will give to Landlord thirty (30)
days notice in writing in advance of any cancellation or lapse of the policies
or of the effective date of any reduction in the amounts of insurance.
12. WAIVER OF SUBROGATION.
Landlord and Tenant each releases and relieves the other and on behalf
of its insurers waives its entire right of recovery against the other for loss
or damage arising out of or incident to the perils of fire, explosion, or other
perils generally
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<PAGE> 17
described in "extended coverage" insurance endorsements used in the Cincinnati,
Ohio, area, which occur in, on or about the Center and/or the Premises, whether
due to the negligence of such other part, its agents or employees, or
otherwise. This provision does not apply if forbidden by either insurance
policy.
13. LIEN.
Tenant will keep the Premises and/or the Center free and clear of all
mechanics' and materialmen's liens and other liens on account of work done for
or by Tenant or persons claiming under it. Should any such lien be filed
against the Premises and/or the Center, Landlord may, without notice to Tenant,
elect to obtain the release of such lien and any sums expended by Landlord
shall be immediately repaid to Landlord by Tenant together with interest at the
rate of eighteen percent (18%) per annum.
14. ASSIGNMENT, SUBLETTING, MORTGAGING.
Tenant shall not voluntarily, involuntarily or by operation of law
assign, transfer, mortgage or otherwise encumber all or any part of Tenant's
interest in this Lease, or sublet the Premises or any part thereof without
first obtaining in each and every instance Landlord's prior written consent,*
and any attempt to so assign, transfer, mortgage, encumber or sublet without
Landlord's written consent shall be null and void; and if any such assignment,
transfer, mortgage or encumbrance is made with the written consent of Landlord,
Tenant shall nevertheless remain liable to Landlord for payment of rent
according to the terms hereof and for due performance of all the terms,
covenants and conditions of this Lease. Landlord will not unreasonably
withhold its consent to any such assignment or subletting. If Tenant is a
corporation, then any transfer of this Lease by merger, consolidation or
liquidation or any change in the ownership of, or power to vote the majority of
its outstanding voting stock shall constitute an assignment for the purposes of
this paragraph. If written consent is once given by Landlord to any such
assignment or subletting, such consent shall not operate as a waiver of the
necessity for obtaining Landlord's written consent to any subsequent assignment
or subletting.
_______________
* which shall not be unreasonably withheld or delayed
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<PAGE> 18
15. PRIORITY OF LEASE.
This Lease shall be subordinate to any and all mortgages and other
security instruments now existing, or which may hereafter be made covering the
Center and/or the real property underlying the same or any portion or portions
thereof, and for the full amount of all advances made or to be made thereunder
(without regard to the time or character of such advances), together with
interest thereon, and subject to all the terms and provisions thereof and to
any renewals, extensions, modifications and consolidations thereof; and Tenant
covenants to make, execute, acknowledge and deliver upon request any and all
documents or instruments reasonably demanded by Landlord which are or may be
necessary or proper for more fully and certainly assuring the subordination of
this Lease to any such mortgages or other security instruments; provided,
however, that any person or persons purchasing or otherwise acquiring any
interest at any sale and/or other proceedings under such mortgages or other
security instruments will elect to continue this Lease in full force and effect
in the same manner, and with like effect as if such reason or persons bad been
named as Landlord herein, and in the event of such election, this Lease shall
continue in full force and effect as aforesaid, and Tenant hereby attorns and
agrees to attorn to such person or persons. If required by any first mortgagee,
Tenant shall execute an agreement that this Lease will be superior to such
first mortgage or if required by any first mortgagee, Tenant shall execute a
separate subordination, attornment and nondisturbance agreement. Tenant hereby
appoints Landlord the attorney-in-fact of Tenant, irrevocably to execute and
deliver any document provided herein, for and in the name of Tenant. So long
as Tenant shall not be in default under this Lease, its right of possession and
enjoyment of the Premises shall be and remain undisturbed and unaffected and
any subordination agreement executed by Landlord shall contain language
specifically so providing.
16. ESTOPPEL CERTIFICATE.
Tenant shall at any time and from time to time execute, acknowledge
and deliver to Landlord a statement in writing certifying: (a) that this Lease
is unmodified and in full force and effect (or if there has been any
modification hereof that the same is in full force and effect as modified and
stating the nature of the modification or modifications); (b) that to the best
of its knowledge Landlord is not in default under this Lease (or if any such
default exists the specific nature and extent thereof); (c) the date to which
rent and other charges have been paid in advance, if any; and (d) any other
information regarding this Lease or Tenant's occupancy as required by Estoppel
Certificate.
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<PAGE> 19
17. FIXTURES AND PERSONAL PROPERTY: SURRENDER.
17.1 Upon the termination of this Lease, Tenant shall surrender to
Landlord the Premises (including, without limitation, all buildings, apparatus
and fixtures, except trade fixtures and furniture installed by Tenant, and
cube-type partitions if not permanently affixed then upon the Premises) in good
condition and repair, reasonable wear and tear and damage by casualty not
caused by Tenant or its agents or employees excepted, and all alterations,
improvements, additions, machinery and equipment which may be made or installed
from time to time by either party hereto, in, upon or about the Premises
(except trade fixtures and furniture installed by Tenant) shall be the property
of Landlord, and upon any such termination, shall be surrendered to Landlord by
Tenant without any injury, damage or disturbance thereto or payment there for.
The property surrendered to Landlord shall include, but not be limited to, all
lighting fixtures and fluorescent tubes and bulbs, except cube-type partitions
if not permanently affixed.
17.2 Trade fixtures, furniture and other personal property
installed or placed in the Premises at the cost of Tenant shall be the property
of Tenant unless otherwise specified in this Lease and Tenant shall remove the
same prior to the termination of this Lease. Tenant shall at its own cost and
expense completely repair any and all damage to the Premises resulting from or
caused by such removal. If Tenant fails to remove all or any of such property,
Landlord may at Landlord's option retain all or any of such property and title
thereto shall thereupon vest in Landlord, or Landlord may remove from the
Premises and dispose of in any manner all or any of such property, in which
latter event Tenant shall, upon demand, pay to Landlord the actual expense of
such removal and disposition and the cost of repair of any and all damage to
the Premises resulting from or caused by such removal.
18. INSOLVENCY.
In the event Tenant becomes insolvent or files a voluntary petition in
bankruptcy or becomes involuntarily bankrupt, or if a receiver, assignee or
other liquidating officer is appointed for the business of Tenant, then
Landlord at its option may immediately cancel this Lease by notice to Tenant to
that effect.
19. DEFAULT AND REMEDY.
19.1 If at any time Tenant shall (a) fail to pay any sum due under
this lease for five (5) days after such payment is due, or (b) fail to remedy
any default with respect to any of the other
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<PAGE> 20
provisions, covenants or conditions of this Lease to be kept or performed by
Tenant within thirty (30) days after notice (or such additional time as is
reasonably required to cure such default, as long as Tenant is proceeding
diligently), then in either such event Landlord shall have all such rights and
remedies as are provided by law in respect of such default, including, at
Landlord's election, the right to terminate this Lease; provided, however, that
Tenant's obligation and liability to make good any damages and deficiencies
from any reletting shall survive such termination of this Lease.
19.2 Landlord shall in no event be in default in the performance of
any of its obligations in this Lease contained unless and until Landlord shall
have failed to perform such obligation within thirty (30) days (or such
additional time as is reasonably required to correct any such default, as long
as Tenant is proceeding diligently after notice by Tenant to Landlord properly
specifying wherein Landlord has failed to perform any such obligation.
20. NON-WAIVER OF DEFAULTS.
No waiver of any default by Tenant hereunder shall be implied from any
omission by Landlord to take any action on account of such default if such
default persists or is repeated, and no express waiver shall affect any default
other than the default specified in the express waiver, and that only for the
time and to extent therein stated. The acceptance by Landlord of rent with
knowledge of the breach of any of the covenants of this Lease by Tenant shall
not be deemed a waiver of any such breach. One or more waivers of any breach of
any covenant, term or condition of this Lease shall not be construed as a
waiver of any subsequent breach of the same covenant, term or condition. The
consent or approval by Landlord to or of any act by Tenant requiring Landlord's
consent or approval shall not be deemed to waive or render unnecessary
Landlord's consent or approval to or of any subsequent similar acts by Tenant.
21. NON-PERFORMANCE BY TENANT.
If Tenant shall default in the performance of any covenant on its part
to be performed by virtue of any provisions of this Lease, Landlord may, after
any notice and the expiration of any period with respect thereto as required
pursuant to the applicable provisions of this Lease, perform the same for the
account of Tenant. If Landlord, at any time, is compelled to pay or elects to
pay any sum of money or do any acts which would require the payment of any sum
of money by reason of the default of Tenant, or if Landlord is compelled to
incur any expense, including reasonable attorneys' fees, in instituting,
prosecuting
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or defending any action or proceeding instituted by reason of the default of
Tenant, the sum or sums so paid by Landlord with interest at the rate of
eighteen percent (18%) per annum for the date paid until the date repaid by
Tenant, plus costs and damages, shall be deemed to be additional rental
hereunder and shall be due from Tenant to Landlord on the first day of the
month following the incurring of such expenses. If Tenant is compelled to
incur any expense, including reasonable attorneys' fees, in instituting,
prosecuting or defending any action or proceeding instituted by reason of
default of Landlord and if Tenant is successful in such litigation, the sum or
sums so paid by Tenant with interest at the rate of eighteen percent (18%) per
annum from the date paid until the date repaid by Landlord, plus costs and
damages, shall be due and payable from Landlord to Tenant on the first day of
the month following the incurring of such expense, provided, that any sum or
sums due and payable from Landlord to Tenant, pursuant to the provisions of
this paragraph, shall in no event be treated as an offset against the rent due
and payable under this Lease.
22. HOLD OVER TENANCY.
If, without the execution of a new lease or written extension and with
the consent of Landlord, Tenant shall hold over after the expiration of the
Lease Term of this Lease, Tenant shall be deemed to be occupying the Premises
as a tenant from month to month, which tenancy may be terminated by either
Landlord or Tenant upon thirty (30) days prior written notice to the other.
During such tenancy, Tenant agrees to pay to Landlord one hundred fifty percent
(150%) of the monthly installment of Minimum Rental and Additional Rent which
was payable in the month immediately preceding the month in which the
expiration or termination occurs, and to be otherwise bound by all of the other
terms, covenants and conditions as herein specified. If Tenant fails to
surrender the Premises upon the termination of this Lease, in addition to any
other liabilities to Landlord arising there from, Tenant shall indemnify and
hold Landlord harmless from loss or liability resulting from such failure,
including any claims made by any succeeding tenant founded on such failure.
23. CONDEMNATION.
If the whole or any part of the Premises shall be taken under the
power of eminent domain, then the Lease shall terminate as to the part taken on
the day when Tenant is required to yield possession thereof, and Landlord, to
the extent of the condemnation aware, shall make such repairs and alterations
as may be necessary in order to restore the part not taken to useful
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condition. The minimum rental shall be reduced proportionately as to the part
of the Premises taken, the reduction to be effective on the date that Tenant is
required to yield possession. If the amount of the Premises so taken is such
as to impair substantially the usefulness of the Premises for the purposes for
which the same are hereby leased, then either party shall have the option to
terminate this Lease as of the date when Tenant is required to yield
possession. All compensation awarded for such taking of the fee and the
leasehold shall belong to and be the property of Landlord; provided, however,
that Landlord shall not be entitled to any portion of the award made to Tenant
for the cost of removal of stock and fixtures.
24. NOTICES.
Whenever in this Lease it shall be required or permitted that notice,
approval, advice, consent or demand be given or served by either party to this
Lease to or on the other, such notice or demand shall not be deemed to have
been duly given or served unless in writing and forwarded by certified or
registered mail to the Landlord's and Tenant's addresses set forth in Sections
1.1(b) and 1.1(d), respectively, of this Lease (or such other address as may be
given by one party to the other pursuant to this Section 24).
25. RIGHTS RESERVED BY LANDLORD.
25.1 Landlord shall have the sole and exclusive right to designate
(and from time to time, in its discretion, redesignate) the name of the Center.
25.2 Tenant shall not, without Landlord's prior written consent,
use the name, picture or representation of the center, or words to that effect,
in connection with any business carried on in the Premises (except at Tenant's
address).
25.3 Landlord shall have the right, at its option, upon at least
thirty (30) days prior written notice to Tenant, to relocate Tenant and to
substitute for the Premises described herein other space in the Center
containing at least as much rentable area as the Premises. Such substituted
space shall be improved by Landlord, at its expense, with improvements at least
equal in quantity and quality to those in the Premises. Landlord shall pay all
reasonable expenses incurred by Tenant in connection with such relocation. Upon
completion of the relocation, Landlord and Tenant shall amend this Lease to
change the description of the Premises k and any other matters pertinent
thereto.
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26. MISCELLANEOUS PROVISIONS.
26.1 The term "Landlord" as used in this Lease so far as covenants
or obligations on the part of Landlord are concerned shall be limited to mean
and include only the owner or owners at the time in question of the Premises
and in the event of any transfer or transfers of the title to the Premises,
Landlord herein named (and in case of any subsequent transfers or conveyances,
the then Landlord) shall be automatically freed and relieved from and after the
date of such transfer or conveyance of all liability as respect to the
performance of any covenants or obligations on the part of Landlord contained
in his Lease thereafter to be performed.
26.2 The captions of the paragraphs in this Lease are for
convenience only and shall not be considered or referred to in resolving
questions of interpretation or construction.
26.3 The terms "Landlord" and "Tenant" wherever used herein shall
be applicable to one or more persons, as the case may be, and the singular
shall include the plural, and the neuter shall include the masculine and
feminine, and if there be more than one, the obligations hereof shall be joint
and several.
26.4 Both the word "person" and the word "persons" wherever used in
this Lease shall include individuals, partnerships, firms, associations and
corporations or any other form of business entity. In the event that two or
more individuals, corporations, partnerships or other business associations (or
any combination of two or more thereof) shall sign this Lease agreement as
Tenant, the liability of each such individual, corporation, partnership or
other business association to pay rent and perform all other obligations
hereunder shall be deemed to be Joint and several. In like manner, in the
event that Tenant named in this Lease shall be a partnership or other business
association the members of which are, by virtue of statute or general law,
subject to personal liability, then in the event, the liability of each such
member shall be deemed to be joint and several.
26.5 The various rights, options, elections, powers and remedies
contained in this Lease shall be construed as cumulative and no one of them
shall be exclusive of any of the others, or of any other legal or equitable
remedy which either party might otherwise have in the event of breach or
default in the terms hereof, and the exercise of one right or remedy by such
party shall not impair its right to any other right or remedy until all
obligations upon the other party have been fully performed.
26.6 Time is of the essence with respect to the performance of each
of the covenants and agreements under this Lease.
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26.7 Each and all the provisions of this Lease shall be binding
upon and inure to the benefit of the parties hereto and, except as set forth in
Section 26.1 and as otherwise specifically provided elsewhere in this Lease,
their respective heirs, executors, administrators, successors and assigns,
subject at all times, nevertheless, to all agreements and restrictions
contained elsewhere in this Lease with respect to the assignment, transfer,
encumbering or subletting of all or any part of Tenant's interest in this
Lease.
26.8 This Lease shall be interpreted in accordance with the law of
the State of Ohio.
26.9 This Lease contains all covenants and agreements between
Landlord and Tenant relating in any manner to the rental, use and occupancy of
the Premises and Tenant's licensed use of the Center and the other matters set
forth in this Lease. No prior agreement or understanding pertaining to the
same shall be valid or of any force or effect, and the covenants and agreements
of this Lease cannot be altered, changed, modified or added to except in
writing signed by Landlord and Tenant. No representation, inducement,
understanding or anything of any nature whatsoever made, stated or represented
on Landlord's behalf, either orally or in writing (except this Lease), has
induced Tenant to enter into this Lease.
26.10 Any provision or provisions of this Lease which shall prove to
be invalid, void or illegal shall in no way affect, impair or invalidate any
other provision hereof, and the remaining provisions hereof shall nevertheless
remain in full force and effect.
26.11 Except with respect to those conditions, covenants and
agreements of this Lease which by their nature could only be applicable after
the commencement of, during or throughout the term of this Lease, all of the
other conditions, covenants and agreements of this Lease shall be deemed to be
effective as of the date of execution of this Lease.
26.12 Tenant represents and warrants to Landlord that it has not
engaged any broker, finder or other person who would be entitled to any
commission or fee in respect of the negotiation, execution of delivery of this
Lease, and shall indemnify Landlord against loss, cost, liability or expense
incurred by Landlord as a result of any claim asserted by any such broker,
finder or other person on the basis of any arrangement or agreement made or
alleged to have been made by or on behalf of Tenant.
26.13 Nothing contained herein will be deemed or construed by the
parties hereto, nor by any third party, as creating the
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relationship of principal and agent or of partnership or of joint venture
between the parties hereto, it being understood and agreed that neither the
method of computation of rent, nor any other provision contained herein nor any
acts of the parties herein, shall be deemed to create any relationship between
the parties hereto other than the relationship of Landlord and Tenant.
26.14 Tenant agrees that it will not record this Lease. Both parties
shall, upon the request of either, execute, acknowledge and deliver a notice of
lease in statutory, or short form, for recording.
26.15 Tenant agrees to give any Mortgagees and/or Trust Deed Holders,
by registered mail, a copy of any notice of default served upon Landlord,
provided that prior to such notice Tenant has been notified in writing (by way
of Notice of Assignment of Rents and Leases, or otherwise) of the addresses of
such Mortgagees and/or Trust Deed Holders. Tenant further agrees that if
Landlord shall have failed to cure such default within the time provided for in
this Lease, then the Mortgagees and/or 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.
26.16 The submission of this Lease, whether in blank form or with all
or some of the blanks herein completed, shall not vest in Tenant any rights
with respect to the Premises or the Center or be deemed, in any respect, to be
binding upon Landlord. Until both Landlord and Tenant have executed this
Lease, Tenant shall not be deemed to have acquired any rights with respect to
the Premises or the Center.
26.17 Landlord, and any person, firm, or corporation comprising
Landlord shall not have any personal liability with respect to any of the
provisions of this Lease. Tenant's sole recourse shall be against the Center,
and the real and personal property comprising the same for the satisfaction of
any of the Tenant's claims and remedies.
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IN WITNESS WHEREOF, Landlord and Tenant (if a corporation, pursuant to
resolution adopted by the board of directors of Tenant on _______________,
19__) have executed three originals hereof as of the above date, but actually
on the dates set forth below.
<TABLE>
<S> <C>
WITNESS LANDLORD
TOWNVIEW PARTNERS,
an Ohio partnership
______________________________ By: __________________________
Michael J. Burke
- ------------------------------
Title: Managing Partner
Date: ________________________
</TABLE>
STATE OF OHIO )
) ss
COUNTY OF HAMILTON )
BE IT REMEMBERED, that on this ______ day of October, 1995, before me,
the subscriber, a Notary Public in and for said County and State, personally
appeared at Cincinnati, Ohio, a General Partner of Townview Partners through
Michael J. Burke, its Managing Partner, which is the Owner and Lessor in the
foregoing instrument and for itself and as such Partner, and for and on behalf
of said partnership, acknowledged the signing and execution of said instrument,
and acknowledged that it executed said instrument on behalf of said
partnership; and that the signing thereof is its free and voluntary act and
deed, its free act and deed as said Partner, and the free and voluntary act and
deed of said partnership, for the uses and purposes therein mentioned.
IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed my
notarial seal on the day and year last aforesaid.
______________________________
NOTARY PUBLIC
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<PAGE> 27
<TABLE>
<S> <C>
TENANT
UPRIGHT, INC.
By: /s/ [illegible]
- ------------------------------ -------------------------------
______________________________
Title: V.P. Sales & Marketing
Date: 12/4/95
</TABLE>
STATE OF OHIO )
) ss:
COUNTY OF HAMILTON )
BEFORE ME, the Subscriber, a Notary Public in and for said County and
State, personally appeared ___________________, of Upright, Inc., the
corporation which executed the foregoing instrument, who acknowledged he did
sign said instrument as such officer on behalf of said corporation, and by
authority of its Board of Directors, and that the execution of said instrument
is his free and voluntary act and deed individually and as such officer, and
the free and voluntary act and deed of said corporation.
IN TESTIMONY WHEREOF, I have hereunto subscribed my name and affixed
my Notarial Seal this _____ day of October, 1995.
______________________________
Notary Public
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EXHIBIT 10.5
RECOURSE AGREEMENT
To induce American Equipment Leasing ("AEL") to enter into a certain
Master Lease Agreement together with all Schedules thereto, and Master Lease
Letter Agreements executed in connection therewith (all of which shall be
referred to as the "Lease Documents") wherein AEL is the Lessor, and American
Aerial Equipment ("Lessee") is the Lessee, and wherein the undersigned is the
"Supplier" of Equipment, and intending to be legally bound hereby, in the amount
of $1,300,000.000 (plus applicable interest as calculated in accordance with
this agreement), the undersigned hereby guarantees to AEL, and to any assignee
of AEL's interest therein, the prompt payment, when due, whether or not by
reason of acceleration the balance outstanding calculated by the simple interest
refund method at a rate of 10.25% per annum, without first requiring the AEL or
such assignee or assignees to proceed against the Lessee. The undersigned hereby
further waives notice of the acceptance of this Guaranty and the occurrence of
any default on the part of the Lessee under said Lease Documents and agrees that
its liability hereunder will not be affected by said AEL or such assignee or
assignees releasing rights against, or granting extensions to the Lessee. Upon
the occurrence of any default, cancellation or termination for any reason by the
Lessee under said Lease Documents, the undersigned agrees to pay the balance
outstanding calculated by the simple interest method at a rate of 10.25% per
annum within ten (10) days of demand by AEL.
DATED: 2/11/97
---------------
Horizon High Reach
----------------------------------
/s/ Shaun Flanagan
----------------------------------
(VICE-PRESIDENT)
/s/ Randall Fortel
----------------------------------
(ASST. SECRETARY)
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EXHIBIT 10.6
BETWEEN
W R CARPENTER NORTH
AMERICA, INC.
"the Company"
GRIFFIN GROUP INTERNATIONAL MANAGEMENT LTD
"the Consultant"
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MANAGEMENT SERVICES AGREEMENT
---------------------
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THIS AGREEMENT is made on the twelfth day of May 1997.
BETWEEN W R Carpenter North America, Inc. a company duly incorporated
in the United States and having its registered office at 229
South State Street, Dover, Delaware, USA (hereinafter called
the "the Company") of the one part
AND Griffin Group International Management Ltd a company duly
incorporated in Ireland and having its registered office at 17
Percy Place, Dublin 4, Ireland (hereinafter called the
"Consultant') of the other part
WHEREAS
A The Company is a holding company of companies which carry on
business in the manufacture, sale and rental of scaffolding
and access equipment.
B The Consultant carries on the business of providing
international management services worldwide specialising in
the field of business management and strategic direction of
conglomerate business groups. Further as a result of being
involved in businesses carried on in many
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countries throughout the world the Consultant has available to
it the latest up to date worldwide management and market data,
strategies, technologies and methodology. This agreement
represents an understanding of arrangements that currently
exist.
NOW IT IS HEREBY AGREED by the parries in consideration of their mutual
covenants herein as follows:
CLAUSE 1 DEFINITIONS, INTERPRETATIONS AND GOVERNING LAW
1.1 In this Agreement (including the recitals) unless, and except to the
extent that, there is something in the subject of context inconsistent
therewith:
(a) "Business Day" means a day on which banks are open for general banking
business in the City of London, England.
(b) "Company" means W R Carpenter North America, Inc. and its successors
and assigns;
(c) "Consultant" means Griffin Group International Management Ltd and
includes its successors;
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(d) "Direction of the Company" means any authorisation, decision, demand,
determination, direction, instruction, notice, notification, order
permission, rejection, request or requirement which the Company may
make, give or issue to the Consultant in respect to the Work;
(e) "Fee" means the fee payable by the Company to the Consultant for
services performed, being the amount specified under the Heading "Fee"
in Clause 5 hereto or such other amount as may from time to time be
agreed in writing between the parties;
(f) "Group" means the company and/or its subsidiaries;
(g) "Financial Year" means a period of twelve (12) consecutive calendar
months ending on the 30th day of June;
(h) "Party" means the Company or the Consultant as the case may be and
"Parties" means both of them;
(i) "Protected Rights" means copyright, patent rights, trade mark, trade
rights, design rights, confidential information, trade secrets and any
other similar rights;
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(j) "Subsidiary" shall have the same meaning as that ascribed in Section
736 of the Companies Act 1985 as amended;
(k) "This Agreement" means the agreement as may be added to, varied or
amended from time to time and includes the Schedules hereto;
(l) "Work" means the services to be provided by the Consultant pursuant to
this Agreement and as set out more fully in Clause 2 hereof.
1.2 In this Agreement words importing the singular shall include the plural
and vice versa; words importing any gender shall include any other
gender; and words importing persons shall include any other gender; and
words importing persons shall include bodies corporate and unicorporate
and vice versa as well as an individual.
1.3 All prices and sums of money and all payments shall be made under this
Agreement in United States currency at such places as may be agreed
upon between the company and the Consultant from time to time.
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1.4 This Agreement shall be governed by and construed in accordance with
the laws of England and Wales and each party hereby submits to the
non-exclusive jurisdiction of the English courts.
CLAUSE 2 DUTIES OF THE CONSULTANT
During the term of this Agreement the Consultant will:
(a) Reasonably inform itself as to all aspects of the Group's financing,
management, organisation, operations and marketing arrangements its
duties and obligations to security holders, financing organizations,
operating associates, governmental regulatory bodies, agencies and
representatives, and from time to time, make such recommendations in
respect thereto as it may deem is in the best interests of the Group.
(b) Direct the preparation of planning documentation and financial
forecasts, analyse financial results, review accounting systems, and
advise on asset management, treasury management and effective capital
expenditure policy.
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(c) Advise the group in respect of the strategic direction policy for its
administration, development, capital structure and expansion of
activities which the Group may undertake.
(d) Advise the Group in respect of the formulation of marketing and
economics strategies including the development of market based
strategies and the conduct of market research.
(e) Advise the Group in respect of operations management, including
strategies to be employed and the conduct of operational improvement
studies.
(f) Advise the Group in respect of technology management, including its
computing and communications facilities, systems and security and
control.
(g) Advise the Group in respect of the property management.
(h) Periodically review the public relations of the Group and advise in
respect of public relations services and facilities which may be
considered desirable.
(i) Advise the Group in respect of relations with governmental, financial,
legal and public relations firms or organisations with which it does
business.
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(j) Assist in the selection of executives and personnel for the Group.
(k) Periodically review the insurance requirements of the Group and assist
and advise in planning and carrying out programmes for adequate
insurance protection, or self insurance as may be expedient.
CLAUSE 3 PERFORMANCE OF THE CONSULTANT'S DUTIES
3.1 It is understood and agreed that the Consultant shall furnish the
services it has agreed to supply which are fully set out under the
provisions of Clause 2 of this Agreement, wherever in the World they
may be required to be performed by the Group, by and through any of the
Consultant's personnel provided that if any of the Consultant's
personnel are performing services in the US the Group shall be entitled
to engage the relevant person directly in its own right. If for any
reason the Consultant is unable to furnish the services of any of the
members of its personnel, it will furnish the services of such other
person or persons of equal calibre as shall mutually be agreed upon.
3.2 It is acknowledged by both parties that the services to be provided by
the Consultant by and through any of its personnel are special,
unusual, extraordinary and of an intellectual character giving them a
peculiar value, the
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loss of which cannot be reasonably or adequately compensated in damages
in an action at law, and that the Group in the event of any breach by
the Consultant shall be entitled to equitable relief by way of
injunction or otherwise.
CLAUSE 4 TERM
4.1 This Agreement shall continue, subject to Clause 14, unless and until
terminated by either party giving to the other at least 30 days written
notice.
CLAUSE 5 FEES AND EXPENSES
5.1 In consideration for the services to be provided hereunder, the
Consultant shall be entitled to receive such fees as shall be agreed
between the Parties in writing from time to time and in the event that
such fees cannot be agreed they shall be determined by an independent
accountant agreed by both parties or in the event of default of
agreement, by an independent accountant nominated by the President for
the time being of the Institute of Chartered Accountants of England &
Wales who shall act as an expert and not as an arbitrator and whose
decision (in the absence of manifest error) shall be final and binding
on the Parties.
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5.2 In addition to the fees the Group shall reimburse the Consultant at
cost of all expenses reasonably incurred by the Consultant in providing
the services set out fully under Clause 2 of this Agreement.
CLAUSE 6 PAYMENTS OF FEES AND EXPENSES
6.1 The company shall make payments to the Consultant under this Agreement:
(a) in a manner reasonably required by the Consultant and at the address of
the Consultant as specified in this Agreement or as otherwise notified
to the Company by the Consultant;
(b) in immediately available funds and without set off, counter claims,
conditions or, unless required by law, deductions or withholdings;
(c) monthly within seven (7) days of issuance of invoice by the Consultant.
6.2 If the day on which any payment is to be made is not a Business Day the
payment shall be made on the preceding Business Day.
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CLAUSE 7 THE CONSULTANT'S PERSONNEL
7.1 The Consultant shall ensure that each person made available by pursuant
to and in order to fulfil its obligations under this Agreement will:
(a) undertake the Work and perform such duties and exercise such powers in
relation to the performance of the Work as the Group shall from time to
time during the term of this Agreement assign to or vest in the
Consultant pursuant hereto;
(b) comply with all reasonable directions given by the Group to the
Consultant in relation to the performance of the Work and the exercise
of any duties or powers assigned or vested as aforesaid;
(c) devote such of their time and attention to the performance of the Work
and the discharge of any duties or powers assigned to or vested in the
Consultant pursuant hereto as may be reasonably necessary to properly
perform the Work.
PROVIDED THAT in carrying out Work the Consultant and the Consultant's personnel
shall operate as and have the status of independent contractors and shall not
act as employees of the Group, nor as agents of the Group.
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7.2 The Consultant acknowledges that the Group may object to and request
the Consultant to terminate the use of any person in carrying out the
Work who, in the opinion of the Group misconducts himself or is
incompetent or negligent in the carrying out of the Work and the
Consultant shall not refuse any such request.
CLAUSE 8 OTHER CONSULTANTS AND THE COMPANY'S EMPLOYEES
8.1 The Consultant shall co-operate with and give assistance to any other
consultant and each and every employee of the Group.
8.2 The Consultant shall not engage any consultant or contractor to assist
execution of the Work without the prior specific approval of the Group.
CLAUSE 9 CONFIDENTIALITY
The Consultant shall not, without the Company's prior consent, use for its own
purposes nor divulge in whole or in part to third parties any information,
documents or data acquired by the Consultant as a result of the operation of
this Agreement except to the extent:
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(a) necessary to ensure the efficient operation of this Agreement;
(b) required by the law applicable to any party;
(c) that such information or data is already within the public domain;
(d) required for the purpose of review by any consultant or expert employed
or retained by the Consultant; or
(e) the Consultant shall ensure that its employees and any consultant or
expert retained under the terms of this Agreement is bound by a
confidentiality agreement substantially in the form of this clause.
CLAUSE 10 PROTECTED RIGHTS
10.1 The Consultant shall indemnify and keep indemnified the Group against
any action, claim or demand, cost or expense arising from or incurred
by reason of any infringement or alleged infringement of a Protected
Right in respect of any design, machine, equipment, work, material or
thing, system or method of using, fixing, working or arrangement used
or fixed or supplied by the Consultant to the Group during its
execution of the Work.
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10.2 If the Consultant becomes aware of any infringement or possible
infringement of a Protected Right during its execution of the Work then
it shall:
(a) immediately give written notice thereof to the Company; and
(b) thenceforth only use the Protected Right in execution of the Work upon
receiving the Company's prior written consent.
CLAUSE 11 CONSULTANT'S LIABILITIES AND RESPONSIBILITIES
11.1 Subject to Clause 11.2, the Consultant makes no representation,
warranty or guarantee in respect of how the Work is performed or any
other representation, warranty or guarantee expressed or implied.
11.2 The Consultant shall not be liable to the Group for any loss or damages
or costs directly or indirectly arising out of or in connection with
this Agreement and the Work except to the extent that:
(a) such loss, damage or costs arise from gross negligence, fraud,
dishonesty, or refusal to follow a Direction of the Group by the
Consultant, its employees or consultants or experts retained by it to
follow a Direction of the Group; or
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(b) Such loss, damage or costs are directly caused by the failure of the
Consultant or its employees or consultant or expert retained by it to
exercise that degree of care and skill which would normally be
exercised by a duly qualified person in performing similar functions.
AND IN ANY EVENT the Consultant's liability hereunder shall not exceed in
aggregate one hundred per cent (100%) of the total fees paid or payable to the
Consultant during the term of this Agreement.
CLAUSE 12 CONSULTANT'S WARRANTIES
12.1 The Consultant hereby warrants with the Group that it will at all times
during the term of this Agreement:
(a) obey and comply with each Direction of the Group;
(b) comply with the requisitions of relevant legislation, awards and
agreements relating to its personnel;
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(c) produce to the Company each financial year and at any other times
reasonably required by the Group evidence of the currency of any
insurance required to be effected by the Consultant for the
performances of the Work;
(d) not make purchases on behalf of the Company, nor directly or indirectly
pledge the credit of the company for any purpose whatsoever without
having first obtained the express written authority of the Company;
(e) not without the prior consent in writing of the Company make or permit
to be made by any of its personnel any representation that the
Consultant or such of its personnel have authority to represent to bind
the Group in any manner whatsoever.
12.2 The Consultant shall not during this Agreement assign or transfer any
of its rights or obligations under this Agreement or any part thereof
unless it has obtained the prior written consent of the Company.
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CLAUSE 13 GROUP'S WARRANTIES
13.1 The Company shall furnish to the Consultant all relevant data and
information available to it and shall give the Consultant such
assistance as may reasonably be required for the carrying out of the
Work.
13.2 The Company shall give the appropriate Direction in respect of all
drawings, reports, recommendations and other documents and information
and requests laid before it by the Consultant within such reasonable
time so as not to delay the Work.
CLAUSE 14 TERMINATION
14.1 This Agreement may be terminated by either Party by written notice if
the other Party commits any material breach of any obligation, warranty
or condition contained herein and, if such breach is capable of remedy,
has failed to remedy such breach within seven (7) days of receipt of
the written notice requiring it to do so, provided that such notice
need not be given in the extent of a persistent breach, being one that
has occurred more than three times in the previous twelve month period.
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14.2 On and from the effective date of any termination of this Agreement the
Consultant shall:
(a) cease performing the Work;
(b) deliver to the Company or dispose of in accordance with the Company's
written instructions all property, materials, drawings, equipment and
other things which are in the Consultant's possession or control that
relate to the Work or this Agreement; and
(c) do everything possible to mitigate any loss incurred by the Group in
consequence of the performance of the Work subject to Clause 11 of the
Agreement.
14.3 The company shall, as son as possible, after the effective date of
termination, pay to the Consultant all outstanding fees payable for the
Work performed and any expenses which the Consultant has incurred prior
to the effective date of such termination.
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CLAUSE 15 RELATIONSHIP OF PARTIES
Neither the Consultant nor any of the personnel of the Consultant shall be
entitled to look to the Group for cover or hold or attempt to hold the Group
liable for any entitlement under any legislation or industrial award covering
the rights of the Consultant's employees.
CLAUSE 16 NOTICES
16.1 All notices between the parties authorised or required to be given by
or pursuant to this Agreement shall, unless otherwise in this Deed
specifically provided, be:
(a) given in writing and either personally served or forwarded by
registered pre-paid mail addressed to the other Party at the address
appearing in Clause 16.2 or to such other address as may be notified in
writing by the party to the other from time to time;
(b) served or given only when received by the Party to whom they are
addressed except when forwarded by registered pre-paid mail when they
shall be deemed served two (2) days after they were so forwarded.
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16.2 Address of the Company : 229 South State Street, Dover, Delaware,
USA.
Address of the Consultant : 17 Percy Place, Dublin 4, Ireland
CLAUSE 17 FORCE MAJEURE
If the performance of this Agreement or other obligation hereunder is prevented,
restricted, delayed or interfered with by reason of:
(a) fire, explosion, cyclone or floods;
(b) war, revolution, acts of public enemies, blockage or embargo;
(c) any law, order proclamation, regulation, ordinance, demand or
requirements of any government or any sub-division, authority, or
representative of any such government including restrictive trade
practices or regulations;
(d) strikes, slowdowns or labour disputes which are not instigated by the
Consultant for the purpose of avoiding its obligations herein; or
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(e) any other circumstances beyond the reasonable control of the party
affected.
that notwithstanding anything heretofore contained the party affected shall be
excused from its performance to the extent that such performance relates to such
prevention, restriction or delay or interference, and provided that party so
affected uses its best efforts to remove such cause of non-performance and when
removed, both parties shall continue performance with the utmost dispatch.
IN WITNESS WHEREOF, this Agreement has been executed on the day and year first
hereinbefore written:
SIGNED for an on behalf of the Company /s/ D. K. Sargent
---------------------------
SIGNED for an on behalf of the Consultant /s/ Peter B. Sawdy
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EXHIBIT 10.7
AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE--GROSS
(Do not use this form for Multi-Tenant Property)
1. BASIC PROVISIONS ("BASIC PROVISIONS")
1.1 Parties: This Lease ("Lease"), dated for reference purposes
only, November 15, 1996, is made by and between Akzo Nobel Coatings, Inc.
("Lessor") and Horizon High Reach, Inc. ("Lessee"), (collectively the
"Parties," or individually a "Party").
1.2 Premises: That certain real property, including all
improvements therein or to be provided by Lessor under the terms of this Lease,
and commonly known by the street address of 1215 Lambert Road, Brea, located in
the County of Orange, State of California, and generally described as (describe
briefly the nature of the property) an approximately 21,600 square foot
freestanding industrial building situated on approximately 5.25 acre land
parcel as shown more particularly on Exhibit "A" attached hereto.
1.3 Term: See Addendum Paragraph 1.3. 10 years and 3 months
("Original Term") commencing December 1, 1996 ("Commencement Date") and ending
February 28, 2007 ("Expiration Date"). (See Paragraph 3 for further
provisions.)
1.4 Early Possession: Upon execution of lease agreement ("Early
Possession Date"). (See Paragraphs 3.2 and 3.3 for further provisions.)
1.5 Base Rent: $ See Addendum per month ("Base Rent"), payable on
the first (1st) day of each month commencing April 1, 1997. (See Paragraph 4
for further provisions.)
[ ] If this box is checked, there are provisions in this Lease for the Base
Rent to be adjusted.
1.6 Base Rent Paid Upon Execution: $___________________ as Base
Rent for the period __________________________________________________________.
1.7 Security Deposit: $12,000.00 ("Security Deposit"). (See
Paragraph 5 for further provisions.)
1.8 Permitted Use: General office, warehouse light assembly,
maintenance and service of high lifts, fork lifts and rental related equipment,
and other related uses permitted by applicable laws. (See Paragraph 6 for
further provisions.)
1.9 Insuring Party: Lessor is the "Insuring Party." $1,066.48 is
the "Base Premium." (See Paragraph 8 for further provisions.)
1.10 Real Estate Brokers: The following real estate brokers
(collectively, the "Brokers") and brokerage relationships exist in this
transaction and are consented to by the Parties (check applicable boxes):
____________________________________________________________________ represents
[ ] Lessor exclusively ("Lessor's Broker"); [ ] both Lessor and Lessee, and
____________________________________________________________________ represents
[ ] Lessee exclusively ("Lessee's Broker"); [ ] both Lessee and Lessor. (See
Paragraph 15 for further provisions.)
1.11 Guarantor. The obligations of the Lessee under this Lease are
to be guaranteed by N/A ("Guarantor"). (See Paragraph 37 for further
provisions.)
1.12 Addenda. Attached hereto is an Addendum or Addenda consisting
of Paragraphs 49 through 62 and Exhibits "A," "B," "C," "D," "E," and "F" all
of which constitute a part of this Lease.
2. PREMISES.
2.1 Letting. Lessor hereby leases to Lessee, and Lessee hereby
leases from Lessor, the Premises, for the term, at the rental, and upon all of
the terms, covenants and conditions set forth in this Lease. Unless otherwise
provided herein, any statement of square footage set forth in this Lease, or
that may have been used in calculating rental, is an approximation which Lessor
and Lessee agree is reasonable and the rental based thereon is not subject to
revision whether or not the actual square footage is more or less.
2.2 Condition. Lessor shall deliver the Premises to Lessee clean
and free of debris on the Commencement Date and warrants to Lessee that the
existing plumbing, fire sprinkler system, lighting, air conditioning, heating,
and loading doors,
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if any, in the Premises, other than those constructed by Lessee, shall be in
good operating condition on the Commencement Date. If a non- compliance with
said warranty exists as of the Commencement Date, Lessor shall, except as
otherwise provided in this Lease, promptly after receipt of written notice from
Lessee setting forth with specificity the nature and extent of such
non-compliance, rectify same at Lessor's expense. If Lessee does not give
Lessor written notice of a non-compliance with this warranty within fifteen
(15) days after the Commencement Date, correction of that non-compliance shall
be the obligation of Lessee at Lessee's sole cost and expense.
2.4 Acceptance of Premises. Lessee hereby acknowledges: (a) that
it has been advised by the Brokers to satisfy itself with respect to the
condition of the Premises (including but not limited to the electrical and fire
sprinkler systems, security, environmental aspects, compliance with Applicable
Law, as defined in Paragraph 6.3) and the present and future suitability of the
Premises for Lessee's intended use, (b) that Lessee has made such investigation
as it deems necessary with reference to such matters and assumes all
responsibility therefor as the same relate to Lessee's occupancy of the
Premises and/or the term of this Lease, and (c) that neither Lessor, nor any of
Lessor's agents, has made any oral or written representations or warranties
with respect to the said matters other than as set forth in this Lease.
2.5 Lessee Prior Owner/Occupant. The warranties made by Lessor in
this Paragraph 2 shall be of no force or effect if immediately prior to the
date set forth in Paragraph 1.1 Lessee was the owner or occupant of the
Premises. In such event, Lessee shall, at Lessee's sole cost and expense,
correct any non-compliance of the Premises with said warranties.
3. TERM.
3.1 Term. See Addendum Paragraph 3.1. The Commencement Date,
Expiration Date and Original Term of this Lease are as specified in Paragraph
1.3.
3.2 Early Possession. If Lessee totally or partially occupies the
Premises prior to the Commencement Date, the obligation to pay Base Rent shall
be abated for the period of such early possession. All other terms of this
Lease, however, shall be in effect during such period. Any such early
possession shall not affect nor advance the Expiration Date of the Original
Term.
3.3 Delay in Possession. If, for any reason, Lessor cannot deliver
possession of the Premises to Lessee as agreed herein by the Early Possession
Date, if one is specified in Paragraph 1.4, or, if no Early Possession Date is
specified, by the Commencement Date, Lessor shall not be subject to any
liability therefor, nor shall such failure affect the validity of this Lease,
or the obligations of Lessee hereunder, or extend the term hereof, but in such
case, Lessee shall not, except as otherwise provided herein, be obligated to
pay rent or perform any other obligation of Lessee under the terms of this
Lease until Lessor delivers possession of the Premises to Lessee. If
possession of the Premises is not delivered to Lessee within sixty (60) days
after the Commencement Date, Lessee may, at its option, by notice in writing to
Lessor within ten (10) days thereafter, cancel this Lease, in which event the
Parties shall be discharged from all obligations hereunder; provided, however,
that if such written notice by Lessee is not received by Lessor within said ten
(10) day period, Lessee's right to cancel this Lease shall terminate and be of
no further force or effect. Except as may be otherwise provided, and
regardless of when the terms actually commences, if possession is not tendered
to Lessee when required by this Lease and Lessee does not terminate this Lease,
as aforesaid, the period free of the obligation to pay Base Rent, if any, that
Lessee would otherwise have enjoyed shall run from the date of delivery of
possession and continue for a period equal to what Lessee would otherwise have
enjoyed under the terms hereof, but minus any days of delay caused by these
acts, changes or omissions of Lessee.
4. RENT.
4.1 Base Rent. Lessee shall cause payment of Base Rent and other
rent or charges, as the same may be adjusted from time to time in accordance
with this Agreement, to be received by Lessor in lawful money of the United
States, without offset or deduction, on or before the day on which it is due
under the terms of this Lease. Base Rent and all other rent and charges for
any period during the terms hereof which is for less than one (1) full calendar
month shall be prorated based upon the actual number of days of the calendar
month involved. Payment of Base Rent and other charges shall be made to Lessor
at its address stated herein or to such other persons or at such other
addresses as Lessor may from time to time designate in writing to Lessee.
5. SECURITY DEPOSIT. Lessee shall deposit with Lessor upon execution
hereof the Security Deposit set forth in Paragraph 1.7 as security for Lessee's
faithful performance of Lessee's obligations under this Lease. If Lessee fails
to pay Base Rent or other rent or charges due hereunder, or otherwise Defaults
under this Lease (as defined in Paragraph 13.1), Lessor may use, apply or
retain all or any portion of said Security Deposit for the payment of any
amount due Lessor or to reimburse or
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<PAGE> 3
compensate Lessor for any liability, cost, expense, loss or damage (including
attorneys' fees) which Lessor may suffer or incur by reason thereof. If Lessor
uses or applies all or any portion of said Security Deposit, Lessee shall
within ten (10) days after written request therefor deposit moneys with Lessor
sufficient to restore said Security Deposit to the full amount required by this
Lease. Any time these Base Rent increases during the terms of this Lease,
Lessee shall, upon written request from Lessor, deposit additional moneys with
Lessor sufficient to maintain the same ratio between the Security Deposit and
the Base Rent as those amounts are specified in the Basic provisions. Lessor
shall not be required to keep all or any part of the security deposit separate
from its general accounts. Lessor shall, at the expiration or earlier
termination of the terms hereof and after Lessee has vacated the Premises,
return to Lessee (or, at Lessor's option, to the last assignee, if any, of
Lessee's interest herein), that portion of the Security Deposit not used or
applied by Lessor. Unless otherwise expressly agreed in writing by Lessor, no
part of the Security Deposit shall be considered to be held in trust, to bear
interest or other increment for its use, or to be prepayment for any moneys to
be paid by Lessee under this Lease.
6. USE.
6.1 Use. Lessee shall use and occupy the Premises only for the
purposes set forth in Paragraph 1.8, or any other use which is comparable
thereto, and for no other purpose. Lessee shall not use or permit the use of
the Premises in a manner that creates waste or a nuisance, or that disturbs
owners and/or occupants of, or causes damage to, neighboring premises or
properties. Lessor hereby agrees to not unreasonably withhold or delay its
consent to any written request by Lessee, Lessee's assignees for subtenants,
and by prospective assignees and subtenants of the Lessee, its assignees and
subtenants, for a modification of said permitted purpose for which the premises
may be used or occupied, so long as the same will not impair the structural
integrity of the improvements on the Premises, the mechanical or electrical
systems therein, is not significantly more burdensome to the Premises and the
improvements thereon, and is otherwise permissible pursuant to this Paragraph
6. If Lessor elects to withhold such consent, Lessor shall within five (5)
business days give a written notification of same, which notice shall include
an explanation of Lessor's reasonable objections to the change in use.
6.2 Hazardous Substances. See Addendum Paragraph 62.
(b) Duty to Inform Lessor. If Lessee knows, or has
reasonable cause to believe, that a Hazardous Substance, or a condition
involving or resulting from same, has come to be located in, on, under or about
the Premises, other than as previously consented to or disclosed by Lessor,
Lessee shall immediately give written notice of such fact to Lessor. Lessee
shall also immediately give Lessor a copy of any statement, report, notice,
registration, application, permit, business plan, license, claim, action or
proceeding given to, or received from, any governmental authority or private
party, or persons entering or occupying the Premises, concerning the presence,
spill, release, discharge of, or exposure to, any Hazardous Substance or
contamination in, on, or about the Premises, including but not limited to all
such documents as may be involved in any Reportable Uses involving the
Premises.
(c) Indemnification. Lessee shall indemnify, protect,
defend and hold Lessor, its agents, employees, lenders and ground lessor, if
any, and the Premises, harmless from and against any and all loss of rents
and/or damages, liabilities, judgments, costs, claims, liens, expenses,
penalties, permits and attorney's and consultant's fees arising out of or
involving any Hazardous Substance or storage tank brought onto the Premises by
or for Lessee or under Lessee's control. Lessee's obligations under this
Paragraph 6 shall include, but not be limited to, the effects of any
contamination or injury to person, property or the environment created or
suffered by Lessee, and the cost of investigation (including consultant's and
attorney's fees and testing), removal, remediation, restoration and/or
abatement thereof, or of any contamination therein involved, and shall survive
the expiration or earlier termination of this Lease. No termination,
cancellation or release agreement entered into by Lessor and Lessee shall
release Lessee from its obligations under this Lease with respect to Hazardous
Substances or storage tanks, unless specifically so agreed by Lessor in writing
at the time of such agreement.
6.3 Lessee's Compliance with Law. Except as otherwise provided in
this Lease, Lessee, shall, at Lessee's sole cost and expense, fully, diligently
and in a timely manner, comply with all "Applicable Law," which term is used in
this Lease to include all laws, rules, regulations, ordinances, directives,
covenants, easements and restrictions of record, permits, the requirements of
any applicable fire insurance underwriter or rating bureau, and the
recommendations of Lessor's engineers and/or consultants, relating in any
manner to the Premises (including but not limited to matters pertaining to (i)
industrial hygiene, (ii) environmental conditions on, in, under or about the
Premises, including soil and groundwater conditions, and (iii) the use,
generation, manufacture, production, installation, maintenance, removal,
transportation storage, spill or release of any Hazardous Substance or storage
tank), now in effect or which may hereafter come into effect, and whether or
not reflecting a change in policy from any previously existing policy. Lessee
shall, within five (5) days after receipts of Lessor's written request, provide
Lessor with copies of all documents and information, including, but not limited
to, permits, registrations, manifests, applications, reports and certificates,
evidencing Lessee's compliance with any Applicable Law specified by Lessor, and
shall immediately upon receipt, notify Lessor in writing (with copies of any
documents involved) of
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any threatened or actual claim, notice, citation warning, complaint or report
pertaining to or involving failure by Lessee or the Premises to comply with any
Applicable Law. See Addendum Paragraph 6.3.
6.4 Inspection; Compliance. Lessor and Lessor's Lender(s) (as
defined in Paragraph 8.3(a)) shall have the right to enter the Premises at any
time, in the case of an emergency, and otherwise at reasonable times, for the
purpose of inspecting the condition of the Premises and for verifying
compliance by Lessee with this Lease and all Applicable Laws (as defined in
Paragraph 6.3), and to employ experts and/or consultants in connection
therewith and/or to advise Lessor with respect to Lessee's activities,
including but not limited to the installation, operation, use, monitoring,
maintenance, or removal of any Hazardous Substance or storage tank on or from
the Premises. The costs and expenses of such inspections shall be paid by the
party requesting same, unless a Default or Breach of this Lease, violation of
Applicable Law, or a contamination, caused or materially contributed to be
Lessee is found to exist or be imminent, or unless the inspection is requested
or ordered by a governmental authority as the result of any such existing or
imminent violation or contamination. In any such case, Lessee shall upon
request reimburse Lessor or Lessor's Lender, as the case may be, for the costs
and expenses of such inspections.
7. MAINTENANCE; REPAIRS; UTILITY INSTALLATIONS; TRADE FIXTURES AND
ALTERATIONS.
7.1 Lessee's Obligations.
(a) Subject to the provisions of Paragraphs 2.2 (Lessor's
warranty as to condition), 2.3 (Lessor's warranty as to compliance with
covenants, etc), 7.2 (Lessor's obligations to repair), 9 (damage and
destruction), and 14 (condemnation), Lessee shall, at Lessee's sole cost and
expense and at all times, keep the Premises and every part thereof in good
order, condition and repair, (whether or not such portion of the Premises
requiring repair, or the means of repairing the same, are reasonably or readily
accessible to Lessee, and whether or not the need for such repairs occurs as a
result of Lessee's use, any prior use, the elements or the age of such portion
of the Premises), including, without limiting the generality of the foregoing,
all equipment or facilities serving the Premises, such as plumbing, heating,
air conditioning, ventilating, electrical, lighting facilities, boilers, fired
or unfired pressure vessels, fire sprinkler and/or standpipe and hose or other
automotive fire extinguishing system, including fire alarm and/or smoke
detection systems and equipment, fire hydrants, fixtures, walls (interior and
exterior), ceilings, floors, windows, doors, plate glass, skylights,
landscaping, driveways, parking lots, fences, retaining walls, signs, sidewalks
and parkways located in, on, about, or adjacent to the Premises, but excluding
foundations, the exterior roof and the structural aspects of the Premises,
Lessee shall not cause or permit any Hazardous Substance to be spilled or
released in, on, under or about the Premises (including through the plumbing or
sanitary sewer system) and shall promptly, at Lessee's expense, take all
investigatory and/or remedial action reasonably recommended, whether or not
formally ordered or required, for the cleanup of any contamination of, and for
the maintenance, security and/or monitoring of, the Premises, the elements
surrounding same, or neighboring properties, that was caused or materially
contributed to by Lessee, or pertaining to or involving any Hazardous Substance
and/or storage tank brought onto the Premises by or for Lessee or under it
control. Lessee, in keeping the Premises in good order, condition and repair,
shall exercise and perform good maintenance practices. Lessee's obligations
shall include restorations, replacements or renewals when necessary to keep the
Premises and all improvements thereon or a part thereof in good order,
condition and state of repair.
(b) Lessee shall, at Lessee's sole cost and expense,
procure and maintain contracts, with copies to Lessor, in customary form and
substance for, and with contractors specializing and experienced in, the
inspection, maintenance and service of the following equipment and
improvements, if any, located on the Premises: (i) heating, air conditioning
and ventilation equipment, (ii) boiler, fired or unfired pressure vessels,
(iii) fire sprinkler and/or standpipe and house or other automatic fire
extinguishing systems, including fire alarm and/or smoke detection, (iv)
landscaping and irrigation systems, (v) roof covering the drain maintenance and
(vi) asphalt and parking lot maintenance.
7.2 Lessor's Obligations. Upon receipt of written notice of the
need for such repairs and subject to Paragraph 13.5, Lessor shall, at Lessor's
expense, keep the foundations, exterior roof and structural aspects of the
Premises in good order, condition and repair, Lessor shall not however, be
obligated to paint the exterior surface of the exterior walls or to maintain
the windows, doors or plate glass or the interior surface of exterior walls.
Lessor shall not, in any event, have any obligation to make any repairs until
Lessor receives written notice of the need for such repairs. It is the
intention of the Parties that the terms of this Lease govern the respective
obligations of the Parties as to maintenance and repair of the Premises.
Lessee and Lessor expressly waive the benefit of any statute now or hereafter
in effect to the extent it is inconsistent with the terms of this Lease with
respect to, or which affords Lessee the right to make repairs at the expense of
Lessor or to terminate this Lease by reason of, any needed repairs.
7.3 Utility Installations; Trade Fixtures; Alterations.
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(a) Definitions; Consent Required. The term "Utility
Installations" is used in this Lease to refer to all carpeting, window
coverings, air lines, power panels, electrical distribution, security, fire
protection systems, communication systems, lighting fixtures, hearing,
ventilating, and air conditioning equipment, plumbing, and fencing in, on or
about the Premises. The term "Trade Fixtures" shall mean Lessee's machinery
and equipment that can be removed without doing material damage to the
Premises. The term "Alternations" shall mean any modification of the
improvements on the Premises from that which are provided by Lessor under the
terms of this Lease, other than Utility Installations or Trade Fixtures,
whether by addition or deletion. "Lessee Owned Alterations and/or Utility
Installations" are defined as Alterations and/or Utility Installations made by
lessee that are not yet owned by Lessor as defined in Paragraph 7.4(a). Lessee
shall not make any Alterations or Utility Installations in, on, under or about
the Premises without Lessor's prior written consent. See Addendum Paragraph
7.3(a)(i). Lessee may, however, make non-structural Utility Installations to
the interior of the Premises (excluding the roof), as long as they are not
visible from the outside, do not involve puncturing, relocating or removing the
roof or any existing walls, see Addendum Paragraph 7.3(a)(ii) and the
cumulative cost thereof during the term of this Lease as extended does not
exceed $100,000.
(b) Consent. Any Alterations or Utility Installations
that Lessee shall desire to make and which require the consent of the Lessor
shall be presented to Lessor in written form with proposed detailed plans. All
consents given by Lessor, whether by virtue of Paragraph 7.3(a) or by
subsequent specific consent, shall be deemed conditioned upon: (i) Lessee's
acquiring all applicable permits required by governmental authorities, (ii) the
furnishing of copies of such permits together with a copy of the plans and
specifications for the Alteration or Utility Installation to Lessor prior to
commencement of the work thereon, and (iii) the compliance by Lessee with all
conditions of said permits in a prompt and expeditious manner. Any Alterations
or Utility Installations by Lessee during the term of this Lease shall be done
in a good and workmanlike manner, with good and sufficient materials, and in
compliance with all Applicable Law. Lessee shall promptly upon completion
thereof furnish Lessor with as-built plans and specification therefor. Lessor
may (but without obligation to do so) condition its consent to any requested
Alteration or Utility Installation that costs $10,000 or more upon Lessee's
providing Lessor with a lien and completion bond in an amount equal to one and
one-half times the estimated cost of such Alteration or Utility Installation
and/or upon Lessee's posting an additional security deposit with Lessor under
Paragraph 36 hereof.
(c) Indemnification. Lessee shall pay, when due, all
claims for labor or materials furnished or alleged to have been furnished to or
for Lessee at or for use on the Premises, which claims are or may be secured by
any mechanics' or materialmen's lien against the Premises or any interest
therein. Lessee shall give Lessor not less than ten (10) days' notice prior to
the commencement of any work in, on or about the Premises, and Lessor shall
have the right to post notices of non-responsibility in or on the Premises as
provided by law. If Lessee shall, in good faith, contest the validity of any
such lien, claim or demand, then Lessee shall, at its sole expense defendant
and protect itself, Lessor and the Premises against the same and shall pay and
satisfy any such adverse judgment that may be rendered thereon before the
enforcement thereof against the Lessor or the Premises. If Lessor shall
require, Lessee shall furnish to Lessor a surety bond satisfactory to Lessor in
an amount equal to one and one-half times the amount of such contested lien
claim or demand, indemnifying Lessor against liability for the same, as
required by law for the holding of the Premises free from the effect of such
lien or claim. In addition, Lessor may require Lessee to pay Lessor's
attorney's fees and costs in participating in such action if Lessor shall
decide it is to its best interest to do so.
7.4 Ownership; Removal; Surrender; and Restoration.
(a) Ownership. Subject to Lessor's right to require
their removal or become the owner thereof as hereinafter provided in this
Paragraph 7.4, all Alterations and Utility Additions made to the Premises by
Lessee shall be the property of and owned by Lessee, but considered a part of
the Premises. Lessor may, at any time and at its option, elect in writing to
Lessee to be the owner of all or any specified part of the Lessee Owned
Alterations and Utility Installations. Unless otherwise instructed per
subparagraph 7.4(b) hereof, all Lessee Owned Alterations and Utility
Installations shall, at the expiration or earlier termination of this Lease,
become the property of Lessor and remain upon and be surrendered by Lessee with
the Premises.
(b) Removal. Unless otherwise agreed in writing, Lessor may
require that any or all Lessee Owned Alterations or Utility Installations be
removed by the expiration or earlier termination of this Lease, notwithstanding
their installation may have been consented to by Lessor. Lessor may require
the removal at any time of all or any part of any Lessee Owned Alterations or
Utility Installations made without the required consent of Lessor. See
Addendum Paragraph 7.[illegible](b).
(c) Surrender/Restoration. Lessee shall surrender the
Premises by the end of the last day of the Lease term or any earlier
termination date, with all of the improvements, parts and surfaces thereof
clean and free of debris and in substantially the same order, condition and
state of repair, ordinary wear and tear excepted as existed as of the
Commencement Date. "Ordinary Wear and Tear" shall not include any damage or
deterioration that would have been
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prevented by good maintenance practice or by Lessee performing all of its
obligations under this Lease. Except as otherwise agreed or specified in
writing by Lessor, the Premises, as surrendered, shall include the Utility
Installations. The obligation of Lessee shall include the repair of any damage
occasioned by the installation, maintenance or removal of Lessee's Trade
Fixtures, furnishings, equipment, and Alterations and/or Utility Installations,
as well as the removal of any storage tank installed by or for Lessee, and the
removal, replacement, or remediation of any soil, material or ground water
contaminated by Lessee, all as may then be required by Applicable Law and/or
good service practice. Lessee's Trade Fixtures shall remain the property of
Lessee and shall be removed by Lessee subject to its obligation to repair and
restore the Premises per this Lease. The provisions of this Paragraph 7.4 and
applicable Addendum Paragraphs shall survive the termination or expiration of
this Lease.
8. INSURANCE; INDEMNITY.
8.1 Payment of Premium Increases.
(a) Lessee shall pay to Lessor any insurance cost increase
("Insurance Cost Increase") occurring during the term of this Lease.
"Insurance Cost Increase" is defined as any increase in the actual cost of the
insurance required under Paragraphs 8.2(b), 8.3(a) and 8.3(b) ("Required
Insurance"), over and above the Base Premium, as hereinafter defined,
calculated on an annual basis. "Insurance Cost Increase" shall include, but
not be limited to, increases resulting from the nature of Lessee's occupancy,
any act or omission of Lessee, requirements of the holder of a mortgage or deed
of trust covering the Premises, increased valuation of the Premises, and/or a
premium rate increase. If the parties insert a dollar amount in Paragraph 1.9
such amount shall be considered the "Base Premium." In lieu thereof, if the
Premises have been previously occupied, the "Base Premium" shall be the annual
premium applicable to the most recent occupancy. If the Premises have never
been occupied, the "Base Premium" shall be the lowest annual premium reasonably
obtainable for the Required Insurance as of the commencement of the Original
Term, assuming the most nominal use possible of the Premises. In no event,
however, shall Lessee be responsible for any portion of the premium cost
attributable to liability insurance coverage in excess of $1,000,000 procured
under Paragraph 8.2(b) (Liability Insurance Carried By Lessor.)
(b) Lessee shall pay any such Insurance Cost Increase to
Lessor within thirty (30) days after receipt by Lessee of a copy of the premium
statement or other reasonable evidence of the amount due. If the insurance
policies maintained hereunder cover other property besides the Premises, Lessor
shall also deliver to Lessee a statement of the amount of such Insurance Cost
Increase attributable only to the Premises showing in reasonable detail the
manner in which such amount was computed. Premiums for policy periods
commencing prior to, or extending beyond, the term of this Lease shall be
prorated to coincide with the corresponding Commencement or Expiration of the
Lease term.
8.2 Liability Insurance.
(a) See Addendum Paragraph [illegible]. Carried by Lessee.
Lessee shall obtain and keep in force during the term of this Lease a
Commercial General Liability policy of insurance protecting Lessee and Lessor
(as an additional insured) against claims for bodily injury, personal injury
and property damage based upon, involving or arising out of the ownership, use,
occupancy or maintenance of the Premises and all areas appurtenant thereto.
Such insurance shall be on an occurrence basis providing single limit coverage
in an amount not less than $1,000,000 per occurrence. The policy shall not
contain any intra-insured exclusions as between insured persons or
organizations, but shall include coverage for liability assumed under this
Lease as an "insured contract" for the performance of Lessee's indemnity
obligations under this Lease. The limits of said insurance required by this
Lease or as carried by Lessee shall not, however, limit the liability of Lessee
nor relieve Lessee of any obligation hereunder. All insurance to be carried by
Lessee shall be primary to and not contributory with any similar insurance
carried by Lessor, whose insurance shall be considered excess insurance only.
(b) Carried by Lessor. In the event Lessor is the
Insuring Party, Lessor shall also maintain liability insurance described in
Paragraph 8.2(a) above, in addition to, and not in lieu of, the insurance
required to be maintained by Lessee. Lessee shall not be named as an
additional insured therein.
8.3 Property Insurance--Building, Improvements and Rental Value.
(a) Building and improvements. The Insuring Party shall
obtain and keep in force during the term of this Lease a policy or policies in
the name of Lessor, with loss payable to Lessor and to the holders of any
mortgages, deeds of trust or ground leases on the Premises ("Lender(s)"),
insuring loss or damage to the Premises. The amount of such insurance shall be
equal to the full replacement cost of the Premises, as the same shall exist
from time to time, or the amount required by Lenders, but in no event more than
the commercially reasonable and available insurable value thereof if, by reason
of the unique nature or age of the improvements involved, such latter amount is
less than full replacement cost. Lessee Owned
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Alterations and Utility installations shall be insured by Lessee under
Paragraph 8.4. If the coverage is available and commercially appropriate, such
policy or policies shall insure against all risks of direct physical loss or
damage (except the perils of flood and/or earthquake unless required by a
Lender), including coverage for any additional costs resulting from debris
removal and reasonable amounts of coverage for the enforcement of any ordinance
or law regulating the reconstruction or replacement of any undamaged sections
of the Premises required to be demolished or removed by reason of the
enforcement of any building, zoning, safety or land use laws as the result of a
covered cause of loss, but not including plate glass insurance. Said policy or
policies shall also contain an agreed valuation provision in lieu of any
coinsurance clause, waiver of subrogation, and inflation guard protection
causing an increase in the annual property insurance coverage amount by a
factor of not less than the adjusted U.S. Department of Labor Consumer Price
Index for All Urban Consumers for the city nearest where the Premises are
located. See Addendum Paragraph 8.3(a).
(b) Rental Value. Lessor shall, in addition, obtain and keep
in force during the term of this Lease a policy or policies in the name of
Lessor, with loss payable to Lessor and Lender(s), insuring the loss of the
full rental and other charges payable by Lessee to Lessor under this Lease for
one (1) year (including all real estate taxes, insurance costs, and any
scheduled rental increases). Said insurance shall provide that in the event
the Lease is terminated by reason of an insured loss, the period of indemnity
for such coverage shall be extended beyond the date of the completion of
repairs or replacement of the Premises, to provide for one full year's loss of
rental revenues from the date of any such loss. Said insurance shall contain an
agreed valuation provision in lieu of any coinsurance clause, and the amount of
coverage shall be adjusted annually to reflect the projected rental income,
property taxes, insurance premiums costs and other expenses, if any, otherwise
payable by lessee, for the next twelve (12) month period.
(c) Adjacent Premises. If the premises are part of a larger
building, or if the Premises are part of a group of buildings owned by Lessor
which are adjacent to the Premises, the Lessee shall pay for any increase in
the premiums for the property insurance of such building or buildings if said
increase is caused by Lessee's acts, omissions, use or occupancy of the
Premises.
(d) Tenant's Improvements. Since Lessor is the Insuring
Party, the Lessor shall not be required to insure Lessee Owned Alterations and
Utility Installations unless the item in question has become the property of
Lessor under the terms of this Lease.
8.4 Lessee's Property Insurance. Subject to the requirements of
Paragraph 8.5, Lessee at its cost shall either by separate policy or, at
Lessor's option, by endorsement to a policy already carried, maintain insurance
coverage on all of Lessee's personal property, Lessee Owned Alterations and
Utility Installations in, on, or about the Premises similar in coverage to that
carried by the Insuring Party under Paragraph 8.3. Such insurance shall be
full replacement cost coverage with a deductible of not to exceed $1,000 per
occurrence. The proceeds from any such insurance shall be used by Lessee for
the replacement of personal property or the restoration of Lessee Owned
Alterations and Utility Installations. Lessee shall be the Insuring Party with
respect to the insurance required by this Paragraph 8.4 and shall provide
Lessor with written evidence that such insurance is in force.
8.5 Insurance Policies. Insurance required hereunder shall be in
companies duly licensed to transact business in the state where the Premises
are located and maintaining during the policy term a "General Policyholders
Rating" at least B+, V, or such other rating as may be required by a Lender
having a lien on the Premises, as set forth in the most current issue of
"Best's Insurance Guide." Lessee shall not do or permit to be done anything
which shall invalidate the insurance policies referred to in this Paragraph 8.
Lessee shall cause to be delivered to Lessor certified copies of, or
certificates evidencing the existence and amounts of, the insurance, and with
the additional insureds, required under Paragraph 8.2(a) and 8.4. No such
policy shall be cancelable or subject to modification except after thirty (30)
days prior written notice to Lessor. Lessee shall at least thirty (30) days
prior to the expiration of such policies, furnish Lessor with evidence of
renewals or "insurance binders" evidencing renewal thereof, or Lessor may order
such insurance and charge the cost thereof to Lessee, which amount shall be
payable by Lessee to Lessor upon demand.
8.6 Waiver of Subrogation. Without affecting any other rights or
remedies, Lessee and Lessor ("Waiving Party") each hereby release and relieve
the other, and waive their entire right to recover damages (whether in contract
or in tort) against the other, for loss of or damage to the Waving Party's
property arising out of or incident to the perils required to be insured
against under Paragraph 8. The effect of such releases and waivers of the
right to recover damages shall not be limited by the amount of insurance
carried or required, or by any deductibles applicable thereto.
8.7 Indemnity. Except for Lessor's negligence and/or breach of
express warranties, Lessee shall indemnify, protect, defend and hold harmless
the Premises, Lessor and its agents, Lessor's master or ground lessor, partners
and Lenders, from and against any and all claims loss of rents and/or damages
costs, liens, judgments, penalties, permits, attorney's and
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consultant fees, expenses and/or liabilities arising out of, involving, or in
dealing with, the occupancy of the Premises by Lessee, the conduct of Lessee's
business, any act, omission or neglect of Lessee, its agents, contractors,
employees or invitees, and out of any Default or Breach by Lessee in the
performance in a timely manner of any obligation on Lessee's part to be
performed under this Lease. The foregoing shall include, but not limited to,
the defense or pursuit of any claim or any action or proceeding involved
therein, and whether or not (in the case of claims made against Lessor)
litigated and/or reduced to judgment, and whether well founded or not. In case
any action or proceeding be brought against Lessor by reason of any of the
foregoing matters, Lessee upon notice from Lessor shall defend the same at
Lessee's expense by counsel reasonably satisfactory to Lessor and Lessor shall
cooperate with Lessee in such defense. Lessor need not have first paid any
such claim in order to be so indemnified. The provisions of this Paragraph 8.7
shall survive the termination or expiration of the Lease. See Addendum
Paragraph 8.8.
8.8 Exemption of Lessor from Liability. Lessor shall not be
liable for injury or damage to the person or goods, wares, merchandise or other
property of Lessee, Lessee's employees, contractors, invitees, customers, or
any other person in or about the Premises, whether such damage or injury is
caused by or results from fire, steam, electricity, gas, water or rain, or from
the breakage, leakage, obstruction or other defects of pipes, fire sprinklers,
wires, appliances, plumbing, air conditioning or lighting fixtures, or from any
other cause, whether the said injury or damage results from conditions arising
upon the Premises or upon other portions of the building of which the Premises
are a part, or from other sources or places, and regardless of whether the
cause of such damage or injury or the means of repairing the same is accessible
or not. Lessor shall not be liable for any damages arising from any act or
neglect of any other tenant of Lessor. Notwithstanding Lessor's negligence or
breach of this Lease, Lessor shall under no circumstances be liable for injury
to Lessee's business or for any loss of income or profit therefrom.
9. DAMAGE OR DESTRUCTION.
9.1 Definitions.
(a) "Premises Partial Damage" shall mean damage or
destruction to the improvements on the Premises, other than Lessee owned
Alterations and Utility Installations, the repair cost of which damage or
destruction is less than 50% of the then Replacement Cost of the Premises
immediately prior to such damage or destruction, excluding from such
calculation the value of the land and Lessee Owned alterations and Utility
Installations.
(b) "Premises Total Destruction" shall mean damage or
destruction to the Premises other than Lessee Owned Alterations and Utility
Installations the repair cost of which damage or destruction is 50% or more of
the then Replacement Cost of the Premises immediately prior to such damage or
destruction, excluding from such calculation the value of the land and Lessee
Owned Alterations and Utility Installations.
(c) "Insured Loss" shall mean damage or destruction to
improvements on the Premises, other than Lessee Owned Alterations and Utility
Installations, which was caused by an event required to be covered by the
insurance described in Paragraph 8.3(a), irrespective of any deductible amounts
or coverage limits involved.
(d) "Replacement Cost" shall mean the cost to repair or
rebuild the improvements owned by Lessor at the time of the occurrence to their
condition existing immediately prior thereto, including demolition, debris
removal and upgrading required by the operation of applicable building codes,
ordinances or laws, and without deduction for depreciation.
(e) "Hazardous Substance Condition" shall mean the
occurrence or discovery of a condition involving the presence of, or a
contamination by, a Hazardous Substance as defined in Paragraph 62 of the
Addendum in, on, or under the Premises not including conditions related to
prior releases.
9.2 Partial Damage--Insured Loss. If a Premises Partial Damage
that is an Insured Loss occurs, then Lessor shall, at Lessor's expense, repair
such damage (but not Lessee's Trade Fixtures or Lessee Owned Alterations and
Utility Installations) as soon as reasonably possible and this Lease shall
continue in full force and effect. Notwithstanding the foregoing, if the
required insurance was not in force or the insurance proceeds are not
sufficient to effect such repair, the Insuring Party shall promptly contribute
the shortage in proceeds as and when required to complete said repairs. In the
event, however, the shortage in proceeds was due to the fact that, by reason of
the unique nature of the improvements, full replacement cost insurance coverage
was not commercially reasonable and available, Lessor shall have no obligation
to pay for the shortage in insurance proceeds or to fully restore the unique
aspects of the Premises unless Lessee provides Lessor with the funds to cover
same, or adequate assurance thereof, within ten (10) days following receipt of
written notice of such shortage and request therefor. If Lessor receives said
funds or adequate assurance thereof within said ten (10) day period, the party
responsible for making the repairs shall complete them as soon as reasonably
possible and this Lease shall remain
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in full force and effect. If Lessor does not receive such funds or assurance
within said period, Lessor may nevertheless elect by written notice to Lessee
within ten (10) days thereafter to make such restoration and repair as is
commercially reasonable with Lessor paying any shortage in proceeds, in which
case this Lease shall remain in full force and effect. If in such case Lessor
does not so elect, then this Lease shall terminate sixty (60) days following
the occurrence of the damage or destruction. Unless otherwise agreed, Lessee
shall in no event have any right to reimbursement from Lessor for any funds
contributed by Lessees to repair any such damage or destruction. Premises
Partial Damage due to flood or earthquake shall be subject to Paragraph 9.3
rather than Paragraph 9.2, notwithstanding that there may be some insurance
coverage, but the net proceeds of any such insurance shall be made available
for the repairs if made by either Party.
9.3 Partial Damage--Uninsured Loss. If a Premises Partial Damage
that is not an Insured Loss occurs, unless caused by a negligent or willful act
of Lessee (in which event Lessee shall make the repairs at Lessee's expense and
this Lease shall continue in full force and effect, but subject to lessor's
rights under Paragraph 13), Lessor may at Lessor's option, either: (i) repair
such damage as soon as reasonably possible at Lessor's expense, in which event
this Lease shall continue in full force and effect, or (ii) give written notice
to Lessee within thirty (30) days after receipt by Lessor of knowledge of
occurrence of such damage of Lessor's desire to terminate this Lease as of the
date sixty (60) days following the giving of such notice. In the event Lessor
elects to give such notice of Lessor's intention to terminate this Lease,
Lessee shall have the right within ten (10) days after the receipt of such
notice to give written notice to Lessor of Lessee's commitment to pay for the
repair of such damage totally at Lessee's expense and without reimbursement
from Lessor. Lessee shall provide Lessor with the required funds or
satisfactory assurance thereof within thirty (30) days following Lessee's said
commitment. In such event this Lease shall continue in full force and effect,
and lessor shall proceed to make such repairs as soon as reasonably possible
and the required funds are available. If Lessee does not give such notice and
provide the funds or assurance thereof within the times specified above, this
Lease shall terminate as of the date specified in Lessor's notice of
termination.
9.4 Total Destruction. Notwithstanding any other provision
hereof, if a Premises Total Destruction occurs (including any destruction
required by any authorized public authority), this Lease shall terminate as of
the date of such Premises Total Destruction, whether or not the damage or
destruction is an Insured Loss or was caused by a negligent or willful act of
Lessee. In the event, however, that the damage or destruction was caused by
Lessee, Lessor shall have the right to recover Lessor's damages from Lessee
except as released and waived in Paragraph 8.6.
9.5 Damage Near End of Term. If at any time during the last six
(6) months of the term of this Lease there is damage for which the cost to
repair exceeds one (1) month's Base Rent, whether or not an Insured Loss,
Lessor may, at Lessor's option, terminate this Lease effective sixty (60) days
following the date of occurrence of such damage by giving written notice to
Lessee of Lessor's election to do so within thirty (30) days after the date of
occurrence of such damage. Provided, however, if Lessee at that time has an
exercisable option to extend this Lease or to purchase the Premises, then
Lessee may preserve this Lease by, within twenty (20) days following the
occurrence of the damage, or before the expiration of the time provided in such
option for its exercise, whichever is earlier ("Exercise Period"), (i)
exercising such option and (ii) providing Lessor with any shortage in insurance
proceeds (or adequate assurance thereof) needed to make the repairs. If Lessee
duly exercises such option during Said Exercise Period and provides Lessor with
funds (or adequate assurance thereof) to cover any shortage in insurance
proceeds, Lessor shall, at Lessor's expense repair such damage as soon as
reasonably possible and this Lease shall continue in full force and effect. If
Lessee fails to exercise such option and provide such funds or assurance during
said Exercise Period, then Lessor may at Lessor's option terminate this Lease
as of the expiration of said sixty (60) day period following the occurrence of
such damage by giving written notice to Lessee of Lessor's election to do so
within ten (10) days after the expiration of the Exercise Period,
notwithstanding any term or provision in the grant of option to the contrary.
9.6 Abatement of Rent; Lessee's Remedies.
(a) In the event of damage described in Paragraph 9.2
(Partial Damage-Insured), whether or not Lessor or Lessee repairs or restores
the Premises, the Base Rent, Real Property Taxes, insurance premiums, and other
charges, if any, payable by Lessee hereunder for the period during which such
damage, its repair or restoration continues (not to exceed the period for which
rental value insurance is required under Paragraph 8.3(b)), shall be abated in
proportion to the degree to which Lessee's use of the Premises is impaired.
Except for abatement of Base Rent, Real Property Taxes, insurance premiums, and
other charges, if any, as aforesaid, all other obligations of Lessee hereunder
shall be performed by Lessee, and Lessee shall have no claim against Lessor for
any damage suffered by reason of any such repair or restoration.
(b) If Lessor shall be obligated to repair or restore the
Premises under the provisions of this Paragraph 9 and shall not commence, in a
substantial and meaningful way, the repair or restoration of the Premises
within ninety (90) days after such obligation shall accrue, Lessee may, at any
time prior to the commencement of such repair or restoration, give
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written notice to Lessor and to any Lenders of which Lessee has actual notice
of Lessee's election to terminate this Lease on a date not less than sixty (60)
days following the giving of such notice. If Lessee gives such notice to
Lessor and such Lenders and such repair or restoration is not commenced within
thirty (30) days after the receipt of such notice, this Lease shall terminate
as of the date specified in said notice. If Lessor or a Lender commences the
repair or restoration of the Premises within thirty (30) days after receipt of
such notice, this Lease shall continue in full force and effect. "Commence" as
used in this Paragraph shall mean either the unconditional authorization of the
preparation of the required plans, or the beginning of the actual work on the
Premises, whichever first occurs.
9.7 Hazardous Substance Conditions. If a Hazardous Substance
Condition occurs, unless Lessee is legally responsible therefore (in which case
Lessee shall make the investigation and remediation thereof required by
Applicable Law and this Lease shall continue in full force and effect, but
subject to Lessor's rights under Paragraph 13), Lessor may at Lessor's option
either (i) investigate and remediate such Hazardous Substance Condition, if
required, as soon as reasonably possible at Lessor's expense, in which event
this Lease shall continue in full force and effect, or (ii) if the estimated
cost to investigate and remediate such condition exceeds twelve (12) times the
then monthly Base Rent or $250,000, whichever is greater, give written notice
to Lessee within thirty (30) days after receipt by Lessor of knowledge of the
occurrence of such Hazardous substance Condition of Lessor's desire to
terminate this Lease as of the date sixty (60) days following the giving of
such notice. In the event Lessor elects to give such notice of Lessor's
intention to terminate this Lease, Lessee shall have the right within ten (10)
days after the receipt of such notice to give written notice to Lessor of
Lessee's commitment to pay for the investigation and remediation of such
Hazardous substance Condition totally at Lessee's expense and without
reimbursement from Lessor except to the extent of an amount equal to twelve
(12) times the then monthly Base Rent or $250,000, whichever is greater.
Lessee shall provide Lessor with the funds required of Lessee or satisfactory
assurance thereof within thirty (30) days following Lessee's said commitment.
In such event this Lease shall continue in full force and effect, and Lessor
shall proceed to make such investigation and remediation as soon as reasonably
possible and the required funds are available. If Lessee does not give such
notice and provide the required funds or assurance thereof within the times
specified above, this lease shall terminate as of the date specified in
Lessor's notice of termination. If a Hazardous Substance Condition occurs for
which Lessee is not legally responsible, there shall be abatement of Lessee's
obligations under this Lease to the same extent as provided in Paragraph 9.6(a)
for a period of not to exceed twelve (12) months.
9.8 Termination-Advance Payments. Upon termination of this Lease
pursuant to this Paragraph 9, an equitable adjustment shall be made concerning
advance Base Rent and any other advance payments made by Lessee to Lessor.
Lessor shall, in addition, return to Lessee so much of Lessee's Security
Deposit as has not been, or is not then required to be, used by Lessor under
the terms of this Lease.
9.9 Waive Statutes. Lessor and Lessee agree that the terms of
this Lease shall govern the effect of any damage to or destruction of the
Premises with respect to the termination of this Lease and hereby waive the
provisions of any present or future statute to the extent inconsistent
herewith. See Addendum Paragraph 9.10.
10. REAL PROPERTY TAXES.
10.1 (a) Payment of Taxes. Lessor shall pay the Real Property
Taxes, as defined in Paragraph 10.2, applicable to the Premises; provided,
however, that Lessee shall pay, in addition to rent, the amount, if any, by
which Real Property Taxes applicable to the Premises increase over the fiscal
tax year during which the Commencement Date occurs ("Tax Increase"). Subject
to Paragraph 10.1(b), payment of any such Tax Increase shall be made by Lessee
within thirty (30) day after receipt of Lessor's written statement setting
forth the amount due and the computation thereof. Lessee shall promptly
furnish Lessor with satisfactory evidence that such taxes have been paid. If
any such taxes to be paid by Lessee shall cover any period of time prior to or
after the expiration or earlier termination of the term hereof, Lessee's share
of such taxes shall be equitably prorated to cover only the period of time
within the tax fiscal year this Lease is in effect, and Lessor shall reimburse
Lessee for any overpayment after such proration.
(b) Advance Payment. In order to insure payment when due
and before delinquency of any or all Real Property Taxes, Lessor reserves the
right at Lessor's option, to estimate the current Real Property Taxes
applicable to the Premises, and to require such current year's Tax Increase to
be paid in advance to Lessor by Lessee, either: (i) in a lump sum amount equal
to the amount due, at least twenty (20) days prior to the applicable
delinquency date, or (ii) monthly in advance with the payment of the Base Rent.
If Lessor elects to require payment monthly in advance, the monthly payment
shall be that equal monthly amount which, over the number of months remaining
before the month in which the applicable tax installment would become
delinquent (and without interest thereon), would provide a fund large enough to
fully discharge before delinquency the estimated Tax Increase to be paid. When
the actual amount of the applicable Tax Increase is known, the amount of such
equal monthly advance payment shall be adjusted as required to provide the fund
needed to pay
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the applicable Tax Increase before delinquency. If the amounts paid to Lessor
by Lessee under the provisions of this Paragraph are insufficient to discharge
the obligations of Lessee to pay such Tax Increase as the same becomes due,
Lessee shall pay to Lessor, upon Lessor's demand, such additional sums as are
necessary to pay such obligation. All moneys paid to Lessor under this
Paragraph may be intermingled with other moneys of Lessor and shall not bear
interest. In the event of a Breach by Lessee in the performance of the
obligations of Lessee under this Lease, then any balance of funds paid to
Lessor under the provisions of this Paragraph may, subject to proration as
provided in Paragraph 10.1(a), at the option of Lessor, be treated as an
additional Security Deposit under Paragraph 5.
(c) Additional Improvements. Notwithstanding Paragraph
10.1(a) hereof, Lessee shall pay to Lessor upon demand therefor the entirety of
any increase in Real Property Taxes assessed by reason of Alterations or
Utility Installations placed upon the Premises by Lessee or at Lessee's
request.
10.2 Definition of "Real Property Taxes." As used herein, the term
"Real Property Taxes' shall include any form of real estate tax or assessment,
general, special, ordinary or extraordinary, and any license fee, commercial
rental tax, improvement bond or bonds, levy or tax (other than inheritance,
personal income or estate taxes) imposed upon the Premises by any authority
having the direct or indirect power to tax, including any city, state or
federal government, or any school, agricultural, sanitary, fire, street,
drainage or other improvement district thereof, levied against any legal or
equitable interest of Lessor in the Premises or in the real property of which
the Premises are a part, Lessor's right to rent or other income therefrom,
and/or Lessor's business of leasing the Premises. The term "Real Property
Taxes" shall also include any tax, fee, levy, assessment or charge, or any
increase therein, imposed by reason of events occurring, or changes in
applicable law taking effect, during the term of this Lease, including but not
limited to a change in the ownership of the Premises or in the improvements
thereon, the execution of the Lease, or any modification, amendment or transfer
thereof, and whether or not contemplated by the Parties.
10.3 Joint Assessment. If the premises are not separately
assessed, Lessee's liability shall be an equitable proportion of the real
Property Taxes for all of the land and improvements included within the tax
parcel assessed, such proportion to be determined by Lessor from the respective
valuations assigned in the assessor's work sheets or such other information as
may be reasonably available. Lessor's reasonable determination thereof, in
good faith, shall be conclusive.
10.4 Personal Property Taxes. Lessee shall pay prior to
delinquency all taxes assessed against and levied upon Lessee Owned
Alterations, Utility Installations, Trade Fixtures, furnishings, equipment and
all personal property of Lessee contained in the Premises or elsewhere. When
possible, Lessee shall cause its Trade Fixtures, furnishings, equipment and all
other personal property to be assessed and billed separately from the real
property of Lessor. If any of Lessee's said personal property shall be
assessed with Lessor's real property, Lessee shall pay Lessor the taxes
attributable to Lessee within ten (10) days after receipt of a written
statement setting forth the taxes applicable to Lessee's property or, at
Lessor's option, as provided in Paragraph 10.1(b).
11. UTILITIES. Lessee shall pay for all water, gas, heat, light, power,
telephone, trash disposal and other utilities and services supplied to the
Premises, together with any taxes thereon. If any such services are not
separately metered to Lessee, Lessee shall pay a reasonable proportion, to be
determined by Lessor, of all charges jointly metered with other premises.
12. ASSIGNMENT AND SUBLETTING.
12.1 Lessor's Consent Required.
(a) Lessee shall not voluntarily or by operation of law
assign, transfer, mortgage or otherwise transfer or encumber (collectively,
"assignment") or sublet all or any part of Lessee's interest in this Lease or
in the Premises without Lessor's prior written consent given under and subject
to the terms of Paragraph 36. See Addendum Paragraph 12.1(b).
(d) An assignment or subletting of Lessee's interest in
this Lease without Lessor's specific prior written consent shall, at Lessor's
option, be a Default curable after notice per Paragraph 13.1(c). If such
Default is not cured, Lessor shall have the right to either: (i) terminate
this Lease, or (ii) upon thirty (30) days written notice ("Lessor's Notice"),
increase the monthly Base Rent to fair market rental value or one hundred ten
percent (110%) of the Base Rent then in effect, whichever is greater. Pending
determination of the new fair market rental value, if disputed by Lessee,
Lessee shall pay the amount set forth in Lessor's Notice, with any overpayment
credited against the next installment(s) of Base Rent coming due, and any
underpayment for the period retroactively to the effective date of the
adjustment being due and payable immediately upon the determination thereof.
Further, in the event of such Default that is not timely cured and market value
adjustment, (i) the purchase price of any option to purchase the premises held
by Lessee shall be subject to similar adjustment to then
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fair market value (without the Lease being considered an encumbrance or any
deduction for depreciation or obsolescence, and considering the Premises at its
highest and best use and in good condition), or one hundred ten percent (110%)
of the price previously in effect, whichever is greater, (ii) any
index-oriented rental or price adjustment formulas contained in this Lease
shall be adjusted to require that the base index be determined with reference
to the index applicable to the time of such adjustment, and (ii) any fixed
rental adjustments scheduled during the remainder of the Lease term shall be
increased in the same ratio as the new market rental bears to the Base Rent in
effect immediately prior to the market value adjustment.
(b) Lessee's remedy for any breach of this Paragraph 12.1
by Lessor shall be limited to compensatory damages and injunctive relief.
12.2 Terms and Conditions Applicable to Assignment and Subletting.
(a) Regardless of Lessor's consent, any assignment or
subletting shall not: (i) be effective without the express written assumption
by such assignee or sublessee of the obligations of Lessee under this Lease,
(ii) release Lessee of any obligations hereunder, or (ii) alter the primary
liability of Lessee for the payment of Base Rent and other sums due Lessor
hereunder or for the performance of any other obligations to be performed by
Lessee under this Lease.
(b) Lessor may accept any rent or performance of Lessee's
obligations from any person other than Lessee pending approval or disapproval
of an assignment. Neither a delay in the approval or disapproval of such
assignment nor the acceptance of any rent or performance shall constitute a
waiver or estoppel of Lessor's right to exercise its remedies for the Default
or Breach by Lessee of any of the terms, covenants or conditions of this Lease.
(c) The consent of Lessor to any assignment or subletting
shall not constitute a consent to any subsequent assignment or subletting by
Lessee or to any subsequent or successive assignment or subletting by the
sublessee. However, Lessor may consent to subsequent sublettings and
assignments of the sublease or any amendments or modifications thereto without
notifying Lessee or anyone else liable on the Lease or sublease and without
obtaining their consent, and such action shall not relieve such persons from
liability under this Lease or sublease.
(d) In the event of any Default or Breach of Lessee's
obligations under this Lease, Lessor may proceed directly against Lessee, any
Guarantors or any one else responsible for the performance of the Lessee's
obligations under this Lease, including the sublessee, without first exhausting
Lessor's remedies against any other person or entity responsible therefor to
Lessor, or any security held by Lessor or Lessee.
(e) Each request for consent to an assignment or
subletting shall be in writing, accompanied by information relevant to Lessor's
determination as to the financial and operational responsibility and
appropriateness of the proposed assignee or sublessee, including but not
limited to the intended use and/or required modification of the Premises, if
any, together with a non-refundable deposit of $500, as reasonable
consideration for Lessor's considering and processing the request for consent.
Lessee agrees to provide Lessor with such other or additional information
and/or documentation as may be reasonably requested by Lessor.
(f) Any assignee of, or sublessee under, this Lease
shall, by reason of accepting such assignment or entering into such sublease,
be deemed, for the benefit of Lessor, to have assumed and agreed to conform and
comply with each and every term, covenant, condition and obligation herein to
be observed or performed by Lessee during the term of said assignment or
sublease, other than such obligations as are contrary to or inconsistent with
provisions of an assignment or sublease to which Lessor has specifically
consented in writing.
12.3 Additional Terms and Conditions Applicable to Subletting. The
following terms and conditions shall apply to any subletting by Lessee of all
or any part of the Premises and shall be deemed included in all subleases under
this Lease whether or not expressly incorporated therein:
(a) Lessee hereby assigns and transfers to Lessor all of
Lessee's interest in all rentals and income arising from any sublease of all or
a portion of the Premises heretofore or hereafter made by Lessee, and Lessor
may collect such rent and income and apply same toward Lessee's obligations
under this Lease; provided, however, that until a Breach (as defined in
Paragraph 13.1) shall occur in the performance of Lessee's obligations under
this Lease, Lessee may, except as otherwise provided in this Lease, receive,
collect and enjoy the rents accruing under such sublease. Lessor shall not, by
reason of this or any other assignment of such sublease to Lessor, nor by
reason of the collection of the rents from a sublease, be deemed liable to the
sublessee for any failure of Lessee to perform and comply with any of Lessee's
obligations to such sublessee under such sublease. Lessee hereby irrevocably
authorizes and directs any such sublessee,
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upon receipt of a written notice from Lessor stating that a Breach exists in
the performance of Lessee's obligations under this Lease, to pay to Lessor the
rents and other charges due and to become due under the sublease. Sublessee
shall rely upon any such statement and request from Lessor and shall pay such
rents and other charges to Lessor without any obligation or right to inquire as
to whether such Breach exists and notwithstanding any notice from or claim from
Lessee to the contrary. Lessee shall have no right or claim against said
sublessee, or, until the Breach has been cured, against Lessor, for any such
rents and other charges so paid by said sublessee to Lessor.
(b) In the event of a Breach by Lessee in the performance
of its obligations under this Lease, Lessor, at its option and without any
obligation to do so, may require any sublessee to attorn to Lessor, in which
event Lessor shall undertake the obligations of the sublessor under such
sublease from the time of the exercise of said option to the expiration of such
sublease; provided, however, Lessor shall not be liable for any prepaid rents
or security deposit paid by such sublessee to such sublessor or for any other
prior Defaults or Breaches of such sublessor under such sublease.
(c) any matter or thing requiring the consent of the
sublessor under a sublease shall also require the consent of Lessor herein.
(d) No sublessee shall further assign or sublet all or
any part of the Premises without Lessor's prior written consent.
(e) Lessor shall deliver a copy of any notice of Default
or Breach by Lessee to the sublessee, who shall have the right to cure the
Default of Lessee within the grace period, if any specified in such notice.
The sublessee shall have a right of reimbursement and offset from and against
Lessee for any such Defaults cured by the sublessee.
13. DEFAULT; BREACH; REMEDIES.
13.1 Default; Breach. Lessor and Lessee agree that if an attorney
is consulted by Lessor in connection with a Lessee Default or Breach (as
hereinafter defined), $350.00 is a reasonable minimum sum per such occurrence
for legal services and costs in the preparation and service of a Default, and
that Lessor may include the cost of such services and costs in said notice as
rent due and payable to cure said Default. A "Default" is defined as a failure
by the Lessee to observe, comply with or perform any of the terms, covenants,
conditions or rules applicable to Lessee under this Lease. A "Breach" is
defined as the occurrence of any one or more of the following Defaults, and,
where a grace period for cure after notice is specified herein, the failure by
Lessee to cure such Default prior to the expiration of the applicable grace
period, shall entitle Lessor to pursue the remedies set forth in Paragraphs
13.2 and/or 13.3:
(a) The abandonment of the Premises.
(b) Except as expressly otherwise provided in this Lease, the
failure by Lessee to make any payment of Base Rent or any other monetary
payment required to be made by Lessee hereunder, whether to Lessor or to a
third party, as and when due, the failure by Lessee to provide Lessor with
reasonable evidence of insurance or surety bond required under this Lease, or
the failure of Lessee to fulfill any obligation under this Lease which
endangers or threatens life or property, where any failure continues for a
period of three (3) days following written notice thereof by or on behalf of
Lessor to Lessee.
(c) Except as expressly otherwise provided in this Lease, the
failure by Lessee to provide Lessor with reasonable written evidence (in duly
executed original form, if applicable) of (i) compliance with applicable law
per Paragraph 6.3, (ii) the inspection, maintenance and service contracts
required under Paragraph 7.1(b), (iii) the recision of an unauthorized
assignment or subletting per paragraph 12.1(b), (iv) a Tenancy Statement per
paragraphs 16 or 37, (v) the subordination or non-subordination of this Lease
per paragraph 30, (vi) the guaranty of the performance of Lessee's obligations
under this Lease if required under Paragraphs 1.11 and 37, (vii) the execution
of any document requested under Paragraph 42 (easements),or (viii) any other
documentation or information which Lessor may reasonably require of Lessee
under the terms of this Lease, where any such failure continues for a period of
thirty (30) days following written notice by or on behalf of Lessor to Lessee.
(d) A Default by Lessee as to the terms, covenants,
conditions or provisions of this Lease, or of the rules adopted under Paragraph
40 hereof, that are to be observed, complied with or performed by Lessee, other
than those described in subparagraphs (a), (b) or (c), above, where such
Default continues for a period of thirty (30) days are reasonably required for
its cure, then it shall not be deemed to be a Breach of this Lease by Lessee if
Lessee commences such cure within said thirty (30) day period and thereafter
diligently prosecutes such cure to completion and in any event fully cures such
default within ninety (90) days.
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(e) The occurrence of any of the following events: (1) The
making by lessee of any general arrangement or assignment for the benefit of
creditors; (ii) Lessee's becoming a "debtor" as defined in 11 U.S.C. Section
101 or any successor statute thereto (unless, in the case of a petition filed
against Lessee, the same is dismissed within sixty (60) days); (iii) the
appointment of a trustee or receiver to take possession of substantially all of
Lessee's assets located at the Premises or of Lessee's interest in this Lease,
where possession is not restored to Lessee within thirty (30) days; or (iv) the
attachment, execution or other judicial seizure of substantially all of
Lessee's assets located at the Premises or of Lessee's interest in this Lease,
where such seizure is not discharged within thirty (30) days; provided,
however, in the event that any provision of this subparagraph (e) is contrary
to any applicable law, such provision shall be of no force or effect, and not
affect the validity of the remaining provisions.
(f) The discovery by Lessor that any financial statement
given to Lessor by Lessee or any Guarantor of Lessee's obligations hereunder
was materially false.
(g) If the performance of Lessee's obligations under this
Lease is guaranteed: (i) the death of guarantor, (ii) the termination of a
guarantor's liability with respect to this Lease other than in accordance with
the terms of such guaranty, (iii) a guarantor's becoming insolvent or the
subject of a bankruptcy filing, (iv) a guarantor's refusal to honor the
guaranty, or (v) a guarantor's breach of its guaranty obligation on an
anticipatory breach basis, and Lessee's failure, within sixty (60) days
following written notice by or on behalf of Lessor to Lessee of any such event,
to provide Lessor with written alternative assurance or security, which when
coupled with the then existing resources of Lessee, equals or exceeds the
combined financial resources of Lessee and the guarantors that existed at the
time of execution of this Lease.
13.2 Remedies. If Lessee fails to perform any affirmative duty or
obligation of Lessee under this Lease, within ten (10) days after written
notice to Lessee (or in case of an emergency, without notice), Lessor may at
its option (but without obligation to do so), perform such duty or obligation
on Lessee's behalf, including but not limited to the obtaining of reasonably
required bonds, insurance policies, or governmental licenses, permits or
approvals. The costs and expenses of any such performance by Lessor shall be
due and payable by Lessee to Lessor upon invoice therefor. If any check given
to lessor by Lessee shall not be honored by the bank upon which it is drawn,
Lessor, at its option, may require all future payments to be made under this
Lease by Lessee to be made only by cashier's check. In the event of a Breach
of this Lease by Lessee, as defined in Paragraph 13.1, with or without further
notice of demand, and without limiting Lessor in the exercise of any right or
remedy which Lessor may have by reason of such Breach, Lessor may:
(a) Terminate Lessee's right to possession of the
Premises by any lawful means, in which case this Lease and the term hereof
shall terminate and Lessee shall immediately surrender possession of the
Premises to Lessor. In such event Lessor shall be entitled to recover from
Lessee: (i) the worth at the time of the award of the unpaid rent which had
been earned at the time of termination; (ii) the worth at the time of award of
the amount by which the unpaid rent which would have been earned after
termination until the time of award exceeds the amount of such rental loss that
the Lessee proves could have been reasonably avoided; (iii) the worth at the
time of award of the amount by which the unpaid rent for the balance of the
term after the time of award exceeds the amount of such rental loss that the
Lessee proves could be reasonably avoided; and (iv) any other amount necessary
to compensate Lessor for all the detriment proximately caused by the Lessee's
failure to perform its obligations under this Lease or which in the ordinary
course of things would be likely to result therefrom, including but not limited
to the cost of recovering possession of the Premises, expenses of reletting,
including necessary renovation and alteration of the Premises, reasonable
attorneys' fees, and that portion of the leasing commission paid by Lessor
applicable to the unexpired term of this Lease. The worth at the time of award
of the amount referred to in provision (iii) of the prior sentence shall be
computed by discounting such amount at the discount rate of the Federal Reserve
Bank of San Francisco at the time of award plus one percent (1%). Efforts by
Lessor to mitigate damages caused by Lessee's Default of Breach of this Lease
shall not waive Lessor's right to recover damages under this Paragraph. If
termination of this Lease is obtained through the provisional remedy of
unlawful detainer, Lessor shall have the right to recover in such proceeding
the unpaid rent and damages as are recoverable therein, or Lessor may reserve
therein the right to recover all or any part thereof in a separate suit for
such rent and/or damages. If a notice and grace period required under
subparagraphs 13.1(b), (c) or (d) was not previously given, a notice to pay
rent or quit, or to perform or quit, as the case may be, given to Lessee under
any statute authorizing the forfeiture of leases for unlawful detainer shall
also constitute the applicable notice for grace period purposes required by
subparagraphs 13.1(b), (c), or (d). In such case, the applicable grace period
under subparagraphs 13.1(b), (c), or (d) and under the unlawful detainer
statute shall run concurrently after the one such statutory notice, and the
failure of Lessee to cure the Default within the greater of the two such grace
periods shall constitute both an unlawful detainer and a Breach of this Lease
entitling Lessor to the remedies provided for in this Lease and/or by said
statute.
(b) Continue the Lease and Lessee's right to possession
in effect (in California under California Civil Code Section 1951.4) after
Lessee's Breach and abandonment and recover the rent as it becomes due,
provided Lessee has the
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right to sublet or assign, subject only to reasonable limitations. See
paragraphs 12 and 36 for the limitations on assignment and subletting which
limitations Lessee and Lessor agree are reasonable. Acts of maintenance or
preservation, efforts to relet the Premises, or the appointment of a receiver
to protect the Lessor's interest under the Lease, shall not constitute a
termination of the Lessee's right to possession.
(c) Pursue any other remedy now or hereafter available to
Lessor under the laws or judicial decisions of the state wherein the Premises
are located.
(d) The expiration or termination of this Lease and/or the
termination of Lessee's right to possession shall not relieve Lessee from
liability under any indemnity provisions of this Lease as to matters occurring
or accruing during the term hereof or by reason of Lessee's occupancy of the
Premises.
13.3 Inducement Recapture in Event of Breach. Any agreement by
Lessor for free or abated rent or other charges applicable to the Premises, or
for the giving or paying by Lessor to or for Lessee of any cash or other bonus,
inducement or consideration for Lessee's entering into this Lease, all of which
concessions are hereinafter referred to as "Inducement Provisions," shall be
deemed conditioned upon Lessee's full and faithful performance of all of the
terms, convents and conditions of this Lease to be performed or observed by
Lessee during the term hereof as the same may be extended. Upon the occurrence
of a Breach of this Lease by Lessee, as defined in Paragraph 13.1, any such
Inducement Provision shall automatically be deemed deleted from this Lease and
of no further force or effect, and any rent, other charge, bonus, inducement or
consideration theretofore abated, given or paid by Lessor under such an
Inducement Provision shall be immediately due and payable by Lessee to Lessor,
and recoverable by Lessor as additional rent due under this Lease,
notwithstanding any subsequent cure of said Breach by Lessee. The acceptance
by Lessor of rent of the cure of the Breach which initiated the operation of
the Paragraph shall not be deemed a waiver by Lessor of the provisions of this
Paragraph unless specifically so stated in writing by Lessor at the time of
such acceptance.
13.4 Late Charges. Lessee hereby acknowledges that late payment by
Lessee to Lessor of rent and other sums due hereunder will cause Lessor to
incur costs not contemplated by this Lease, the exact amount of which will be
extremely difficult to ascertain. Such costs include, but are not limited to,
processing and accounting charges, and late charges which may be imposed upon
Lessor by the terms of any ground lease, mortgage or trust deed covering the
Premises. Accordingly, if any installment of rent or any other sum due from
Lessee shall not be received by Lessor or Lessor's designee within five (5)
days after notice to Lessee, Lessee shall pay to Lessor a late charge equal to
six percent (6%) of such overdue amount. The parties hereby agree that such
late charge represents a fair and reasonable estimate of the costs Lessor will
incur by reason of late payment by Lessee. Acceptance of such late charge by
Lessor shall in no event constitute a waiver of Lessee's Default or Breach with
respect to such overdue amount, nor prevent Lessor from exercising any of the
other rights and remedies granted hereunder. In the event that a late charge
is payable hereunder, whether or not collected, for three (3) consecutive
installments of Base Rent, then notwithstanding Paragraph 4.1 or any other
provision of this Lease to the contrary, Base Rent shall, at Lessor's option,
become due and payable quarterly in advance.
13.5 Breach by Lessor. Lessor shall not be deemed in breach of
this Lease unless Lessor fails within a reasonable time to perform an
obligation required to be performed by Lessor. For purposes of this Paragraph
13.5, a reasonable time shall in no event be less than thirty (30) days after
receipt by Lessor, and by the holders of any ground lease, mortgage or deed of
trust covering the Premises whose name and address shall have been furnished
Lessee in writing for such purpose, of written notice specifying wherein such
obligation of Lessor has not been performed; provided, however, that if the
nature of Lessor's obligation is such that more than thirty (30) days after
such notice are reasonably required for its performance, then Lessor shall not
be in breach of this Lease if performance is commenced within such thirty (30)
day period and thereafter diligently pursued to completion. See Addendum
Paragraph 13.5.
14. CONDEMNATION. If the Premises or any portion thereof are taken under
the power of eminent domain or sold under the threat of the exercise of said
power (all of which are called "condemnation"), this Lease shall terminate as
to the part so taken as of the date the condemning authority takes title or
possession, whichever first occurs. If more than ten percent (10%) of the
floor area of the Premises, or more than twenty-five percent (25%) of the land
area not occupied by any building, is taken by condemnation, Lessee may, at
Lessee's option, to be exercised in writing within ten (10) days after Lessor
shall have given Lessee written notice of such taking (or in the absence of
such notice, within ten (10) days after the condemning authority shall have
taken possession) terminate this Lease as of the date the condemning authority
takes such possession. If Lessee does not terminate this Lease in accordance
with the foregoing, this Lease shall remain in full force and effect as to the
portion of the Premises remaining, except that the Base Rent shall be reduced
in the same proportion as the rentable floor area of the Premises taken bears
to the total rentable floor area of the building located on the Premises. No
reduction of Base Rent shall occur if the only portion of the Premises taken is
land on which there is not building. Any award for the taking of all or any
part of the Premises under the power of eminent domain or any payment
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made under threat of the exercise of such power shall be the property of
Lessor, whether such award shall be made as compensation separately awarded to
Lessee for Lessee's relocation expenses and/or loss of Lessee's Trade Fixtures.
In the event that this Lease is not terminated by reason of such condemnation,
Lessor shall to the extent of its net severance damages received, over and
above the legal and other expenses incurred by Lessor in the condemnation
matter, repair any damage to the Premises caused by such condemnation, except
to the extent that Lessee has been reimbursed therefor by the condemning
authority. Lessee shall be responsible for the payment of any amount in excess
of such net severance damages required to complete such repair.
16. TENANCY STATEMENT.
16.1 Each Party (as "Responding Party") shall within ten (10) days
after written notice from the other Party (the "Requesting Party") execute,
acknowledge and deliver to the Requesting Party a statement in writing in form
similar to the then most current "Tenancy Statement" form published by the
American Industrial Real Estate Association, plus such additional information,
confirmation and/or statement as may be reasonably requested by the Requesting
party.
16.2 If Lessor desires to finance, refinance, or sell the Premises,
any part thereof, or the building of which the Premises are a part, Lessee and
all Guarantors of Lessee's performance hereunder shall deliver to any potential
lender or purchaser designated by Lessor such financial statements of Lessor
and such Guarantors as may be reasonably required by such lender or purchaser,
including but not limited to Lessee's financial statements for the past three
(3) years. All such financial statement shall be received by Lessor and such
lender or purchaser in confidence and shall be used only for the purposes
herein set forth.
17. LESSOR'S LIABILITY. The term "Lessor" as used herein shall mean the
owner or owners at the time in question of the fee title to the Premises, or,
if this is a sublease, of the Lessee's interest in the prior lease. In the
event of a transfer of Lessor's title or interest in the Premises or in this
Lease, Lessor shall deliver to the transferee or assignee (in cash or by
credit) any unused Security Deposit held by Lessor at the time of such transfer
or assignment. Except as provided in Paragraph 15, upon such transfer or
assignment and deliver of the Security Deposit, as aforesaid, the prior Lessor
shall be relieved of all liability with respect to the obligations and/or
covenants under this Lease thereafter to be performed by the Lessor. Subject
to the foregoing, the obligations and/or covenants in this Lease to be
performed by the Lessor shall be binding only upon the Lessor as hereinabove
defined.
18. SEVERABILITY. The validity of any provision of this Lease, as
determined by a court of competent jurisdiction, shall in no way affect the
validity of any other provision hereof.
19. INTEREST ON PAST-DUE OBLIGATIONS. Any monetary payment due Lessor
hereunder, other than late charges, not received by Lessor within thirty (30)
days following the date on which it was due, shall bear interest from the
thirty-first (31st) day after it was due at the rate of 10% per annum, in
addition to the late charge provided for in Paragraph 13.4
20. TIME OF ESSENCE. Time is of the essence with respect to the
performance of all obligations to be performed or observed by the Parties under
this Lease.
21. RENT DEFINED. All monetary obligations of Lessee to Lessor under the
terms of this Lease are deemed to be rent.
22. NO PRIOR OR OTHER AGREEMENTS; BROKER DISCLAIMER. This Lease contains
all agreements between the Parties with respect to any matter mentioned herein,
and no other prior or contemporaneous agreement or understanding shall be
effective. Lessor and Lessee each represents and warrants to the Brokers that
it has made, and is relying solely upon, its own investigation as to the
nature, quality, character and financial responsibility of the other Party to
this Lease and as to the nature, quality and character of the Premises.
Brokers have no responsibility with respect thereto or with respect to any
default or breach hereof by either Party.
23. NOTICES.
23.1 All notices required or permitted by this Lease shall be in
writing and may be delivered in person (by hand or by messenger or courier
service) or may be sent by regular, certified or registered mail or U.S. Postal
Service Express Mail, with postage prepaid, or by facsimile transmission, and
shall be deemed sufficiently given if served in a manner specified in this
Paragraph 23. The addresses noted adjacent to a Party's signature on this Lease
shall be that Party's address for deliver or mailing of notice purposes. Either
Party may by written notice to the other specify a different address for notice
purposes, except that upon Lessee's taking possession of the Premises, the
Premises shall constitute Lessee's address for the purpose of mailing or
delivering noticed to Lessee. A copy of all notices required or permitted to be
given to Lessor
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hereunder shall be concurrently transmitted to such party or parties at such
addresses as Lessor may from time to time hereafter designate by written notice
to Lessee.
23.2 Any notice sent by registered or certified mail, return receipt
requested, shall be deemed given on the date of delivery shown on the receipt
card, or if no delivery date is shown, the postmark thereon. If sent by
regular mail the notice shall be deemed given forty-eight (48) hours after the
same is addressed as required herein and mailed with postage prepaid. Notices
delivered by the United States Express Mail or overnight courier that
guarantees next day delivery shall be deemed given twenty-four (24) hours after
delivery of the same to the United States Postal Service or courier. If any
notice is transmitted by facsimile transmission or similar means, the same
shall be deemed served or delivered upon telephone confirmation of receipt of
the transmission thereof, provided a copy is also delivered via delivery or
mail. If notice is received on a Sunday or legal holiday, it shall be deemed
received on the next business day.
24. WAIVER. No waiver by Lessor of the Default or Breach of any term,
covenant or condition hereof, Lessor's consent to, or approval of, any act
shall not be deemed to render unnecessary the obtaining of Lessor's consent to,
or approval of, any subsequent or similar act by Lessee, or be construed as the
basis of an estoppel to enforce the provision or provisions of this Lease
requiring such consent. Regardless of Lessor's knowledge of a Default or
Breach at the time of accepting rent, the acceptance of rent by lessor shall
not be a waiver of any preceding Default of Breach by Lessee of any provision
hereof, other than the failure to Lessee to pay the particular rent so
accepted. Any payment given Lessor by Lessee may be accepted by Lessor on
account of moneys or damages due Lessor, notwithstanding any qualifying
statements or conditions made by Lessee in connection therewith, which such
statements and/or conditions shall be of not force or effect whatsoever unless
specifically agreed to in writing by Lessor at or before the time of deposit of
such payment.
25. RECORDING. Either Lessor or Lessee shall, upon request of the other,
execute, acknowledge and deliver to the other a short form memorandum of this
Lease for recording purposes. The Party requesting recordation shall be
responsible for payment of any fees or taxes applicable thereto.
26. NO RIGHT TO HOLDOVER. Lessee has no right to retain possession of the
Premises or any part thereof beyond the expiration or earlier termination of
this Lease.
27. CUMULATIVE REMEDIES. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies
at law or in equity.
28. COVENANTS AND CONDITIONS. All provisions of this Lease to be observed
or performed by Lessee are both covenants and conditions.
29. BINDING EFFECT; CHOICE OF LAW. This Lease shall be binding upon the
parties, their personal representatives, successors and assigns and be governed
by the laws of the State in which the Premises are located. Any litigation
between the Parties hereto concerning this Lease shall be initiated in the
county in which the Premises are located.
30. SUBORDINATION; ATTORNMENT; NON-DISTURBANCE.
30.1 Subordination. See Addendum Paragraph 30.1. This Lease and any
Option granted hereby shall be subject and subordinate to any ground lease,
mortgage, deed of trust, or other hypothecation or security device
(collectively, "Security Device"), now or hereafter placed by Lessor upon the
real property of which the Premises are a part, to any and all advances made on
the security thereof, and to all renewals, modifications, consolidations,
replacements and extensions thereof. Lessee agrees that the Lenders holding
any such Security Device shall have no duty, liability or obligation to perform
any of the obligations of Lessor under this Lease, but that in the event of
Lessor's default with respect to any such obligation, Lessee will give any
Lender whose name and address have been furnished Lessee in writing for such
purpose notice of Lessor's default and allow such Lender thirty (30) days
following receipt of such notice for the cure of said default before invoking
any remedies Lessee may have by reason thereof. If any Lender shall elect to
have this Lease and/or any Option granted hereby superior to the lien of its
Security Device and shall give written notice thereof to Lessee, this Lease and
such Options shall be deemed prior to such Security Device, notwithstanding the
relative dates of the documentation or recordation thereof.
30.2 Attornment. Subject to the non-disturbance provisions of
Paragraph 30.3, Lessee agrees to attorn to a Lender or any other party who
acquires ownership of the Premises by reason of a foreclosure of a Security
Device, and that in the event of such foreclosure, such new owner shall not:
(i) be liable for any act or omission of any prior lessor or with respect to
events occurring prior to acquisition of ownership, (ii) be subject to any
offsets or defenses which Lessee might have against any prior lessor, or (iii)
be bound by prepayment of more than one (1) month's rent.
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30.3 Non-Disturbance. With respect to Security Devices entered
into by Lessor after the execution of this Lease, Lessee's subordination of
this Lease shall be subject to receiving assurance (a "non-disturbance
agreement") from the Lender that Lessee's possession and this Lease, including
any options to extend the term hereof, will not be disturbed so long as Lessee
is not in Breach hereof that would permit Lessor to terminate this Lease and
attorns to the record owner of the Premises.
30.4 Self-Executing. The agreements contained in this Paragraph 30
shall be effective without the execution of any further documents; provided,
however, that upon written request from Lessor or a Lender in connection with a
sale, financing or refinancing of the Premises, Lessee and Lessor shall execute
such further writings as may be reasonably required to separately document any
such subordination or non-subordination, attornment and/or non-disturbance
agreement as is provided for herein.
31. ATTORNEY'S FEES. If any Party brings an action or proceeding to
enforce the terms hereof or declare rights hereunder, the Prevailing Party (as
hereinafter defined) in any such proceeding, action, or appeal thereon, shall
be entitled to reasonable attorney's fees. Such fees may be awarded in the
same suit or recovered in a separate suit, whether or not such action or
proceeding is pursued to decision or judgment. The term, "Prevailing Party"
shall include, without limitation, a Party who substantially obtains or defeats
the relief sought, as the case may be, whether by compromise, settlement,
judgment, or the abandonment by the other Party of its claim or defense. The
attorney's fee award shall not be computed in accordance with any court fee
schedule, but shall be such as to fully reimburse all attorney's fees
reasonably incurred. Lessor shall be entitled to attorney's fees, costs and
expenses incurred in the preparation and service of notices of Default and
consultations in connection therewith, whether or not a legal action is
subsequently commenced in connection with such Default or resulting Breach.
32. LESSOR'S ACCESS; SHOWING PREMISES; REPAIRS. Lessor and Lessor's agents
shall have the right to enter the Premises at any time, in the case of an
emergency, and otherwise at reasonable times for the purpose of showing the
same to prospective purchasers, lenders, or lessees, and making such
alterations, repairs, improvements or additions to the Premises or to the
building of which they are a part, as Lessor may reasonably deem necessary.
Lessor may at any time place on or about the Premises or building any ordinary
"For Sale" signs and Lessor may at any time during the last one hundred twenty
(120) days of the term hereof place on or about the Premises any ordinary "For
Lease" signs. All such activities of Lessor shall be without abatement of rent
or liability to Lessee.
33. AUCTIONS. Lessee shall not conduct, nor permit to be conducted,
either voluntarily or involuntarily, any auction upon the Premises without
first having obtained Lessor's prior written consent. Notwithstanding anything
to the contrary in this Lease, Lessor shall not be obligated to exercise any
standard of reasonableness in determining whether to grant such consent.
34. SIGNS. Lessee shall not place any sign upon the Premises, except that
Lessee may, with Lessor's prior written consent, install (but not on the roof)
such signs as are reasonably required to advertise Lessee's own business. The
installation of any sign on the Premises by or for Lessee shall be subject to
the provisions of Paragraph 7 (Maintenance, Repairs, Utility Installations,
Trade Fixtures and Alterations). Unless otherwise expressly agreed herein,
Lessor reserves all rights to the use of the roof and the right to install, and
all revenues from the installation of, such advertising signs on the Premises,
including the roof, as do not unreasonably interfere with the conduct of
Lessee's business.
35. TERMINATION; MERGER. Unless specifically stated otherwise in writing
by Lessor, the voluntary or other surrender of this Lease by Lessee, the mutual
termination or cancellation hereof, or a termination hereof by Lessor for
Breach by Lessee, shall automatically terminate any sublease or lesser estate
in the Premises; provided, however, Lessor shall, in the event of any such
surrender, termination or cancellation, have the option to continue any one or
all of any existing subtenancies. Lessor's failure within ten (10) days
following any such event to make a written election to the contrary by written
notice to the holder of any such lesser interest, shall constitute Lessor's
election to have such event constitute the termination of such interest.
36. CONSENTS.
(a) Except for Paragraph 33 hereof (Auctions) or as otherwise
provided herein, wherever in this Lease the consent of a Party is required to
an act by or for the other Party, such consent shall not be unreasonably
withheld or delayed. Lessor's actual reasonable costs and expenses (including
but not limited to reasonable architects', attorneys', engineers' or other
consultants' fees) incurred in the consideration of, or response to, a request
by Lessee for any Lessor consent pertaining to this Lease or the Premises,
including but not limited to consents to an assignment, a subletting or the
presence or use of a Hazardous Substance, practice or storage tank, [illegible]
shall be paid by Lessee to Lessor upon receipt of an invoice and
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support documentation therefor. Subject to Paragraph 12.2(e) (applicable to
assignment or subletting), Lessor may, as a condition to considering any such
request by Lessee, require that Lessee deposit with Lessor an amount of money
(in addition to the Security Deposit held under Paragraph 5) reasonably
calculated by Lessor to represent the cost Lessor will incur in considering and
responding to Lessee's request. See Addendum Paragraph 36(a)(ii). Except as
otherwise provided, any unused portion of said deposit shall be refunded to
Lessee without interest. Lessor's consent to any act, assignment of this Lease
or subletting of the Premises by Lessee shall not constitute an acknowledgement
that no Default or Breach by Lessee of this Lease exists, nor shall such
consent be deemed a waiver of any then existing Default or Breach, except as
may be otherwise specifically stated in writing by Lessor at the time of such
consent.
(b) All conditions to Lessor's consent authorized by this Lease
are acknowledged by Lessee as being reasonable. The failure to specify herein
any particular condition to Lessor's consent shall not preclude the imposition
by Lessor at the time of consent of such further or other conditions as are
then reasonable with reference to the particular matter for which consent is
being given.
37. GUARANTOR.
37.1 If there are to be any Guarantors of this Lease per Paragraph
1.11, the form of the guaranty to be executed by each such Guarantor shall be
in the form most recently published by the American Industrial Real Estate
Association, and each said Guarantor shall have the same obligations as Lessee
under this Lease, including but not limited to the obligation to provide the
Tenancy Statement and information called for by Paragraph 16.
37.2 It shall constitute a Default of the Lessee under this Lease
if any such Guarantor fails or refuses, upon reasonable request by Lessor to
give: (a) evidence of the due execution of the guaranty called for by this
Lease, including the authority of the Guarantor (and of the party signing on
Guarantor's behalf) to obligate such Guarantor on said guaranty, together with
a certificate of incumbency showing the signature of the persons authorized to
sign on its behalf, (b) current financial statements of Guarantor as may from
time to time be requested by Lessor, (c) a Tenancy Statement, or (d) written
confirmation that the guaranty is still in effect.
38. QUIET POSSESSION. Upon payment by Lessee of the rent for the Premises
and the observance and performance of all of the covenants, conditions and
provisions on Lessee's part to be observed and performed under this Lease,
Lessee shall have quiet possession of the Premises for the entire term hereof
subject to all of the provisions of this Lease.
39. OPTIONS.
39.1 Definition. As used in this Paragraph 39 the word "Option" has
the following meaning: (a) the right to extend the term of this Lease or to
renew this Lease or to extend or renew any lease that Lessee has on other
property of Lessor; (b) the right of first refusal to lease the Premises or the
right of first offer to lease the Premises or the right of first refusal to
lease other property of Lessor or the right of first offer to lease other
property of Lessor; (c) the right to purchase the Premises, or the right of
first refusal to purchase the Premises, or the right of first offer to purchase
the Premises, or the right to purchase other property of Lessor, or the right
of first refusal to purchase other property of Lessor, or the right of first
offer to purchase other property of Lessor.
39.2 Options Personal to Original Lessee. Each Option granted to
Lessee in this Lease is personal to the original Lessee named in Paragraph 1.1
hereof and cannot be voluntarily or involuntarily assigned or exercised by any
person or entity other than said original Lessee or to any Affiliate (as herein
defined) while the original Lessee [illegible] is in full and actual possession
of the Premises and without the intention of thereafter assigning or
subletting. The Options, if any, herein granted to Lessee are not assignable,
either as a part of an assignment of this Lease or separately or apart
therefrom, and no Option may be separated from this Lease in any manner, by
reservation or otherwise.
39.3 Multiple Options. In the event that Lessee has any Multiple
Options to extend or renew this Lease, a later Option cannot be exercised
unless the prior Options to extend or renew this Lease have been validly
exercised.
39.4 Effect of Default on Options.
(a) Lessee shall have no right to exercise an Option,
notwithstanding any provision in the grant of Option to the contrary: (i)
during the period commencing with the giving of any notice of Default under
Paragraph 13.1 and continuing until the noticed Default is cured, or (ii)
during the period of time any monetary obligation due Lessor from Lessee is
unpaid (without regard to whether notice thereof is given Lessee), or (iii)
during the time Lessee is in Breach of this Lease, or (iv) in
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the event that Lessor has given to Lessee three (3) or more notices of Default
under Paragraph 13.1, whether or not the Defaults are cured, during the twelve
(12) month period immediately preceding the exercise of the Option.
(b) The period of time within which an Option may be
exercised shall not be extended or enlarged by reason of Lessee's inability to
exercise an Option because of the provisions of Paragraph 39.4(a).
(c) All rights of Lessee under the provisions of an
Option shall terminate and be of no further force or effect, notwithstanding
Lessee's due and timely exercise of the Option, if, after such exercise and
during the term of this Lease, (i) Lessee fails to pay to Lessor a monetary
obligation of Lessee for a period of thirty (30) days after such obligation
becomes due (without any necessity of Lessor to give notice thereof to Lessee),
or (ii) Lessor gives to Lessee three (3) or more notices of Default under
Paragraph 13.1 during any twelve (12) month period, whether or not the Defaults
are cured, or (iii) if Lessee commits a Breach of this Lease.
40. MULTIPLE BUILDINGS. If the Premises are part of a group of buildings
controlled by Lessor, Lessee agrees that it will abide by, keep and observe all
reasonable rules and regulations which Lessor may make from time to time for
the management, safety, care, and cleanliness of the grounds, the parking and
unloading of vehicles and the preservation of good order, as well as for the
convenience of other occupants or tenants of such other buildings and their
invitees, and that Lessee will pay its fair share of common expenses incurred
in connection therewith.
41. SECURITY MEASURES. Lessee hereby acknowledges that the rental payable
to Lessor hereunder does not include the cost of guard service or other
security measures, and that Lessor shall have no obligation whatsoever to
provide same. Lessee assumes all responsibility for the protection of the
Premises, Lessee, its agents and invitees and their property from acts of third
parties.
42. RESERVATIONS. Lessor reserves to itself the right, from time to time,
to grant, without the consent or joinder of Lessee, such easements, rights and
dedications that Lessor deems necessary, and to cause the recordation of parcel
maps and restrictions, so long as such easements, rights, dedications, maps and
restrictions do not unreasonably interfere with the use of the Premises by
Lessee. Lessee agrees to sign any documents reasonably requested by Lessor to
effectuate any such easement rights, dedication, map or restrictions.
43. PERFORMANCE UNDER PROTEST. If at any time a dispute shall arise as to
any amount or sum of money to be paid by one Party to the other under the
provisions hereof, the Party against whom the obligation to pay the money is
asserted shall have the right to make payment "under protest" and such payment
shall not be regarded as a voluntary payment and there shall survive the right
on the part of said Party to institute suit for recovery of such sum. If it
shall be adjudged that there was no legal obligation on the part of said Party
to pay such sum or any part thereof, said Party shall be entitled to recover
such sum or so much thereof as it was not legally required to pay under the
provisions of this Lease.
44. AUTHORITY. If either party hereto is a corporation, trust, or general
or limited partnership, each individual executing this Lease on behalf of such
entity represents and warrants that he or she is duly authorized to execute and
deliver this lease on its behalf. If Lessee is a corporation, trust or
partnership, Lessee shall, within thirty (30) days after request by Lessor,
deliver to Lessor evidence satisfactory to Lessor of such authority.
45. CONFLICT. Any conflict between the printed provisions of this Lease
and the typewritten or handwritten provisions shall be controlled by the
typewritten or handwritten provisions.
46. OFFER. Preparation of this Lease by Lessor or Lessor's agent and
submission of same to Lessee shall not be deemed an offer to lease to Lessee.
This Lease is not intended to be binding until executed by all Parties hereto.
47. AMENDMENTS. This Lease may be modified only in writing, signed by the
parties in interest at the time of the modification. The parties shall amend
this Lease from time to time to reflect any adjustments that are made to the
Base Rent or other rent payable under this Lease. As long as they do not
materially change Lessee's obligations hereunder, Lessee agrees to make such
reasonable non-monetary modifications to this Lease as may be reasonably
required by an institutional, insurance company, or pension plan Lender in
connection with the obtaining of normal financing or refinancing of the
property of which the Premises are a part.
48. MULTIPLE PARTIES. Except as otherwise expressly provided herein, if
more than one person or entity is named herein as either Lessor or Lessee, the
obligations of such Multiple Parties shall be the joint and several
responsibility of all persons or entities named herein as such Lessor or
Lessee.
PAGE 20
Initials /s/ [illegible]
<PAGE> 21
LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND
PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR
INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE
TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY
REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH
RESPECT TO THE PREMISES.
IF THIS LEASE HAS BEEN FILLED IN, IT HAS BEEN PREPARED FOR SUBMISSION
TO YOUR ATTORNEY FOR HIS APPROVAL. FURTHER, EXPERTS SHOULD BE
CONSULTED TO EVALUATE THE CONDITION OF THE PROPERTY AS TO THE POSSIBLE
PRESENCE OF ASBESTOS, STORAGE TANKS OR HAZARDOUS SUBSTANCES. NO
REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN INDUSTRIAL
REAL ESTATE ASSOCIATION OR BY THE REAL ESTATE BROKER(S) OR THEIR
AGENTS OR EMPLOYEES AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX
CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT RELATES; THE
PARTIES SHALL RELY SOLELY UPON THE ADVICE OF THEIR OWN COUNSEL AS TO
THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE. IF THE SUBJECT PROPERTY
IS LOCATED IN A STATE OTHER THAN CALIFORNIA, AN ATTORNEY FROM THE
STATE WHERE THE PROPERTY IS LOCATED SHOULD BE CONSULTED.
The parties hereto have executed this Lease at the place on the dates specified
above to their respective signatures.
<TABLE>
<S> <C>
Executed at Troy MI Executed at Fresno CA
--------------------------------------------- ----------------------------------------------
on 11/22/96 on 11/15/96
------------------------------------------------------- --------------------------------------------------------
by LESSOR: by LESSEE:
Akzo Nobel Coatings, Inc. Horizon High Reach, Inc.
--------------------------------------------------------- ----------------------------------------------------------
----------------------------------------------------------
By /s/ Peter A. Scolaro By /s/ Shaun Flanagan
------------------------------------------------------- --------------------------------------------------------
Name Printed: Peter A. Scolaro Name Printed: Shaun Flanagan
-------------------------------------------- ---------------------------------------------
Title: VP Manf. & Eng. Title: VP
--------------------------------------------------- ----------------------------------------------------
By /s/ [illegible] By
------------------------------------------------------- --------------------------------------------------------
Name Printed: Terrance R. [illegible] Name Printed:
-------------------------------------------- ---------------------------------------------
Title: V.P. Finance Title:
--------------------------------------------------- ----------------------------------------------------
Address: Address:
------------------------------------------------- --------------------------------------------------
-------------------------------------------------------- ----------------------------------------------------------
Tel. No. (810) 637-5273 Fax No. (810) 649-4015 Tel. No.(209) 248-8180 Fax No.(209) 248-8193
-------------- ------------------------ -------------- -------------------------
</TABLE>
PAGE 21
Initials /s/ [illegible]
<PAGE> 22
Addendum to Standard Industrial/Commercial Single Tenant Lease -
Gross
By and Between Akzo Nobel Coatings, Inc. (Lessor) and
Horizon High Reach, Inc. (Lessee)
Dated November 15,1996
________________________________________________________________________________
The promises, covenants, agreements and declarations made and set forth herein
are intended to and shall have the same force and effect as if set forth in the
body of the Lease to which this Addendum is attached (the Lease and this
Addendum are collectively referred to as this "Lease"). References to
Paragraphs in this Addendum shall be to Paragraphs as set forth in the body of
the Lease. To the extent that the provisions of this Addendum are inconsistent
with the terms and conditions of the body of the Lease, the terms of this
Addendum shall control.
1.3 Subject to the termination rights of Lessee and Lessor under Addendum
Paragraph 51 and as otherwise provided in the Lease or Lease Addendum.
3.1 Subject to the termination rights of Lessee and Lessor under Addendum
Paragraph 51 and as otherwise provided in the Lease or Lease Addendum.
6.3 Notwithstanding any provision of this Lease to the contrary, Lessee
shall have no obligation to (i) remedy or cure any instance of noncompliance
with Applicable Laws existing as of the Commencement Date, (ii) make or pay for
(including, without limitation, any amortized portion of the cost of) any
improvements or Alterations to the Premises in order to comply with any
Applicable Laws effective as of the Commencement Date or enacted thereafter,
except to the extent such improvements and alterations are necessitated by
Lessee's particular use of the Premises or Alterations or improvements
requested to be made by Lessee after the Commencement Date, or (iii) remedy,
cure, or comply with any Law relating to the use, storage, or release of
Hazardous Substances unless (a) such use, storage or release results from the
acts or omissions of Lessee or Lessee's invitees, permittees or others on
Premises with Lessee's permission or (b) such use, storage or release could
reasonably have been prevented by a similarly-situated lessee at
similarly-situated premises. Lessee shall have no responsibility for the
migration of Hazardous Substances on to Premises from adjacent properties,
unless Lessee's acts or omissions exacerbated such migration.
7.3(a)(i) which may be granted or withheld in Lessor's good faith
judgment.
7.3(a)(ii) or other structural components do not adversely affect any
building system
7.4(b) Notwithstanding any provision hereof to the contrary, if Lessor has
consented to any Alterations or Utility Installations, Lessee shall not be
required to remove such Alterations or Utility Installations unless at the time
Lessor's consent was granted Lessor has specified in writing that the
Alterations or Utility Installations are required to be removed upon expiration
or prior termination of the Lease.
8.2(a) Lessee shall obtain and keep in force during the term of this Lease a
Worker's Compensation policy of insurance protecting Lessee and Lessor (as an
additional insured) against claims for personal injury to employees of Lessee
occurring on the Premises or any areas appurtenant thereto. Lessee shall also
obtain and keep in force during the term of this Lease an automobile liability
policy of insurance, or an endorsement to the Commercial General Liability
policy of insurance required under this Paragraph 8.2(a), protecting Lessee and
Lessor (as additional insured) against claims for bodily injury, personal
injury and property damage involving Lessee-owned vehicles used in connection
with Lessee's operations at the Premises. Such insurance shall be on an
occurrence basis providing single limit coverage in an amount not less than
$1,000,000 per occurrence.
8.3(a) Lessee shall not be responsible for any Insurance Cost Increases to
the extent such increases are attributable to coverages for risks not insured
by Lessor as of the Commencement Date of the Lease (including, for example,
flood and earthquake coverage if not already carried by Lessor). Lessee shall
be responsible for Insurance Cost Increases to the extent such increases are
attributable to reasonably prudent increases in coverage wherein a similarly
situated Lessor would act likewise with respect to similarly situated premises.
Lessor shall provide notice of such increases to Lessee within thirty (30) days
of the increase.
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<PAGE> 23
8.8 Subject to Lessor's indemnity set forth in Paragraph 57 of the
Addendum,
9.10 LESSEE'S TERMINATION RIGHTS. Notwithstanding any provision of the
Lease to the contrary. within 60 days after the occurrence of any damage to
the Premises arising from a casualty, Lessor shall provide Lessee with a
written notice ("Lessor's Repair Estimate") specifying whether Lessor considers
the damage to constitute Premises Partial Damage or Premises Total Destruction
and, if the former, the time reasonably estimated by Lessor to fully restore
the Premises to their condition existing prior to the casualty. If the damage
constitutes Premises Total Destruction, the Lease shall terminate as of the
date of the casualty. If the damage constitutes Premises Partial Damage and
if, based on Lessor's Repair Estimate, such damage cannot be fully repaired and
the Premises restored to their prior condition within six (6) months after the
occurrence of the casualty, irrespective of whether the same is an Insured
Loss, Lessee shall have the right to terminate this Lease by delivering written
notice thereof to Lessor. In addition, if any Premises Partial Damage is not
actually fully repaired and the Premises restored so as to permit Lessee to
resume normal operations from the Premises within a period not exceeding ninety
(90) days after the date specified in Lessor's Repair Estimate, Lessee may
terminate this Lease upon notice to Lessor.
12.1(b) Notwithstanding any provision hereof to the contrary, Lessee may
assign this Lease at any time, or sublease all or part of the Premises, without
receipt of Lessor's consent, to any entity which acquires all or part of
Lessee, or which is acquired in whole or in part by Lessee, or which is
controlled directly or indirectly by Lessee, or which is under common control
with Lessee, or which entity controls, directly or indirectly, Lessee, or which
acquires substantially all of the assets of Lessee (in each case, an
"Affiliate"), or which owns or is owned by the Affiliate. However, no
assignment, subletting or other transfer to or from an Affiliate or among
Affiliates shall release Lessee (or the surviving corporation if Lessee is
merged into another corporation) from its obligations hereunder.
13.5 In no event shall Lessor be subject to liability arising under or in
relation to this Lease in an amount exceeding the value of the Premises or
Lessor's equity in the Premises existing as of the Commencement Date.
30.1 Lessor represents that the Premises are not, as of the Commencement
Date, subject to any mortgages, deeds of trust, or other security device.
36(a)(i) not previously agreed to by Lessor,
36(a)(ii) Lessor shall provide notice to Lessee of what actions Lessor
has taken or intends to take in considering and responding to Lessee's request.
The following Paragraphs are additional provisions added to the Lease
Agreement.
49. Exhibits. The following Exhibits are attached to and form a part of
this Lease:
Exhibit "A": Site Plan
Exhibit "B": Lessor's Environmental Disclosure
Exhibit "C": Groundwater Monitoring Wells and Treatment System Area
Exhibit "D": Lessee List of Hazardous Substances
Exhibit "E": Memorandum of Lease
Exhibit "F": Quit Claim Deed
50. Rent. In addition to any and all obligations Lessee may have to pay
additional rent or other sums to Lessor hereunder, Lessee shall make monthly
payment to Lessor as base rent for the premises, in advance, on the first day
of each month of the term hereof, as follows:
December 1, 1996-March 31, 1997 RENT FREE
April 1, 1997-October 31, 1997 $9,000.00/Month
November 1, 1997-October 31, 1998 $9,500.00/Month
November 1, 1998-October 31, 1999 $10,000.00/Month
November 1, 1999-October 31, 2000 $10,500.00/Month
November 1, 2000-October 31, 2003 $11,000.00/Month
November 1, 2003-February 28, 2007 $12,000.00/Month
51. Right to Terminate Lease. Beginning on the first day of the 80th
month following the Commencement Date and for a period 120 days thereafter
("Termination Period"), both Lessee and Lessor shall have a right, upon written
notice to the
PAGE 2
<PAGE> 24
other party, to terminate this Lease. Upon timely election of such termination
right, this Lease shall terminate 90 days thereafter subject to those
provisions of the Lease that survive termination, including each of the
parties' indemnification obligations and Lessee's obligations to restore the
Premises. In the event neither party has notified the other of its election to
terminate during the Termination Period, this Lease shall continue in full
force and effect until it expires or is subsequently terminated in accordance
with its terms.
52. Occupancy and Permits. The property is currently zoned (Industrial)
within the City of Brea. Lessee at Lessee's sole discretion shall determine
that Lessee will be able to legally operate its business within the premises
prior to the execution of the Lease documents. Lessee's execution of Lease
shall be evidence of Lessee's satisfaction of this issue. Lessor and Lessor's
broker hereby make no representation or warranties that Lessee's use is in
accordance with the City's zoning ordinance.
53. Additional Insured. The liability insurance policies referred to in
Paragraph 8.2 shall state that Lessor is an "Additional Insured" under said
policies and evidence thereof shall be provided to Lessor throughout the term
of this Lease.
54. Business License. Lessee shall obtain, at Lessee's expense, business
license(s) and use or other approvals from the City and/or other agencies
having jurisdiction over the premises.
55. Reserved.
56. Condition of Premises. Lessor at Lessor's sole cost and expense and
prior to Lessee's occupancy shall make the following improvements to the
premises:
1. Replace electrical service;
2. Clean debris from yard and offices and deliver premises in
brook swept condition;
3. Paint exterior of building; and
4. Repair/replace warehouse and yard lighting to working order.
57. Environmental Condition of the Premises. Lessee acknowledges that
Lessor has disclosed certain environmental conditions relating to the Premises,
including, without limitation, the presence or potential presence of certain
Hazardous Substances on, under, and around the Premises, as reflected in
EXHIBIT B attached hereto and the documents referenced therein (THE "LESSOR'S
ENVIRONMENTAL DISCLOSURE"). Lessee agrees to take possession of the Premises
subject to all existing environmental conditions, including, without
limitation, all conditions identified in the Lessor's Environmental Disclosure.
Subject to all rights reserved by Lessor under this Lease, including, without
limitation, the limitations on Lessee's access pursuant to Section 58 below,
Lessor agrees to indemnify, defend and hold harmless Lessee and Lessee's
agents, employees, lenders, successors, and assigns from and against any
damages, claims, losses, expenses, or liabilities relating to (i) releases of
Hazardous Substances on or under the Premises which have occurred prior to the
date of this Lease, including, without limitation, any such releases identified
in the Lessor's Environmental Disclosure (collectively, "Prior Releases"), or
(ii) any investigations, inspections, testing, remediation, monitoring,
environmental response equipment installed or maintained or removed, or other
activities or responses (including, but not limited to, any Monitoring and
Remediation Activities, defined in Section 58 below) performed on, in, under or
about the Premises related to any Prior Releases (the preceding item "ii" is
hereafter referred to as "RESPONSE ACTIVITIES"). Neither Prior Releases nor
Response Activities shall be deemed to be "under Lessee's control" for the
purposes of Sections 6.2(c) and 7.1(a). Persons conducting Response Activities
shall not be deemed "invitees" of Lessee for the purpose of this Lease. In the
event Lessee purchases the Premises pursuant to Section 59 below, Lessor's
obligations hereunder shall be superseded by the provisions of Section 59(n)
and shall terminate and be of no further force and effect; provided, however,
that if such purchase does not occur, the provisions of this Section 57 shall
survive any termination or expiration of this Lease.
58. Limitations on Lessee's Access to Monitoring Areas. Lessee
acknowledges the following: (i) in connection with various releases of
Hazardous Substances which have occurred prior to the date of this Lease,
Lessor has installed a number of groundwater monitoring wells on the Premises
including, without limitation, those depicted in EXHIBIT C attached hereto
(other than those denominated "GTI"); (ii) Lessor has entered into an Access
Agreement with Union Oil Company of California ("Unocal") pursuant to which
Unocal has installed various additional groundwater monitoring wells within the
Premises, including, without limitation, those denominated "GTI" in EXHIBIT C
attached hereto, and such Access Agreement provides Unocal a right of entry on
the Premises for the purpose of monitoring and maintaining such groundwater
wells and conducting a crude oil baling program; (iii) as a result of the
presence of the groundwater monitoring wells and various efforts which have
been and may be undertaken by Lessor and/or Unocal to monitor, assess, and
remediate the presence of Hazardous Materials within the Premises, Lessor must
maintain access to portions of the Premises, including, without limitation, the
Treatment System Area identified in EXHIBIT B attached hereto (the "Treatment
System Area") throughout the
PAGE 3
<PAGE> 25
term of this Lease. Such access shall include maintaining the various
groundwater monitoring wells and performing such additional investigations,
testing, remediation, and other responses to the potential presence of
Hazardous Substances, including, without limitation, subsurface investigation
and remediation, as Lessor in its sole good faith discretion may deem necessary
or desirable ("Monitoring and Remediation Activities"); and (iv) as a result of
the Monitoring and Remediation Activities, Lessee's possession and access to
portions of the Premises may be limited as provided below. In light of the
foregoing, Lessee agrees as follows:
(a) Subject to subsection (b) below, Lessor and, at Lessor's
request, Unocal, shall have access to any and all portions of the premises
outside of the buildings located on the Premises (collectively, the "Monitoring
Access Area") as necessary or appropriate in Lessor's good faith judgment to
perform the Monitoring and Remediation Activities and Lessor shall be permitted
to undertake such Monitoring and Remediation Activities; provided, however,
that such access and activities shall not unreasonably interfere with Lessee's
access to and use of the buildings located on the Premises (other than any
structures within the Treatment System Area). Nothing contained in this Lease
is intended to confer any rights on Unocal, but rather to give Lessor the right
to provide Unocal such access as Lessor deems necessary or desirable.
(b) Lessee shall not be permitted any access to the Treatment
System Area. Lessor shall be entitled to maintain such security precautions,
including locked gates and fences, as may be necessary or appropriate to
restrict access to this area. Lessor shall be permitted free ingress and
egress to and from the Treatment System Area at all times.
(c) In the event Lessor determines in good faith that the exercise
of the Monitoring and Remediation Activities entail health and safety or other
operational issues such that Lessee's access to the Monitoring Access Area may
need to be temporarily limited, Lessor may limit, in good faith, Lessee's
access or entry thereto, or otherwise condition, in good faith, such access or
entry, upon written notice to Lessee. Such notice shall specifically identify
those portions of the Monitoring Access Area to which such restrictions apply,
and the nature and duration of such restrictions. In no event shall Lessee be
permitted to use, open, modify, or enter into any groundwater monitoring wells
within the Premises nor shall Lessee be permitted to undertake any subsurface
testing, remediation, or other assessment activities without Lessor's prior
written consent, which may be granted or withheld in Lessor's sole and absolute
discretion.
(d) Lessee shall not unreasonably interfere with or otherwise unreasonably
impair Response Activities.
(e) In addition to any rent abatement to which Lessee otherwise is
entitled, if Lessee is prevented from using any substantial portion of the
Premises (including the real property on which the leased building is located)
in a manner that materially impacts Lessee's reasonable use for three (3)
consecutive days (the "Eligibility Period") as a result of the activities of
Lessor, Unocal or any other party acting under the direction of Lessor or
Unocal relating to the monitoring or clean up of Hazardous Substances in, on or
around the Premises, then Lessee's rent shall be abated after expiration of the
Eligibility Period for such time that Lessee continues to be so prevented from
using this substantial portion of the Premises, in the proportion that the
rentable area of the portion of the Premises that Lessee is prevented from
using bears to the total rentable area of the Premises. However, in the event
that Lessee is prevented from so conducting its business in this substantial
portion of the Premises for a period in excess of the Eligibility Period, and
the remaining portion of the Premises is not sufficient to allow Lessee to
effectively conduct its business therein, then for such time after expiration
of the Eligibility Period during which Lessee is so prevented from effectively
conducting its business therein, the rent for the entire Premises shall be
abated; provided, however, if Lessee reoccupies and conducts its business from
any portion of the Premises during such period, then rent allocable to such
reoccupied portion, based on the proportion that the rentable area of such
reoccupied portion of the Premises bears to the total rentable area of the
Premises, shall be payable by Lessee from the date such business operations
commence.
59. Lessee's Option to Purchase.
(a) Lessor hereby grants to Lessee the exclusive right and option
to purchase the Premises upon the terms and conditions hereinafter set forth
(the "Purchase Option").
(b) The term of the Purchase Option shall commence on the
Commencement Date and shall expire upon the earlier to occur of November 1,
2006 and the date this Lease otherwise expires or terminates in accordance with
the terms hereof (the "Option Period"). Lessee may exercise the Purchase
Option at any time during the Option Period by (i) giving Lessor written notice
of Lessee's exercise thereof ("Option Notice"); and (ii) depositing with the
Title Company (as hereinafter defined) $10,000 in immediately available funds
(the "Deposit"). On the date when the Option Notice is given to Lessor, the
provisions of this Section 59 shall automatically become and be deemed a
contract for the purchase and sale of the Premises, and subject to the terms
and conditions hereof Lessee shall be bound to purchase, and Lessor shall be
bound to sell, the Premises on and subject to the terms and conditions set
forth herein. In the event the Purchase Option is not
PAGE 4
<PAGE> 26
timely exercised by Lessee, such Purchase Option shall lapse and Lessee shall
have no further rights to acquire the Premises or any portion thereof.
(c) The purchase price for the Premises ("Purchase Price") shall
be determined pursuant to the following procedures. Following Lessor's receipt
of the Option Notice, Lessor and Lessee shall meet and confer in an effort to
attempt to reach agreement on the Purchase Price. In the event the parties do
not reach agreement within 10 days after the date the Option Notice is
delivered, each party shall select an MAI appraiser who has not less than ten
years experience appraising commercial and industrial properties in Southern
California, which appraiser shall not be controlled (as that term is defined in
Section 12.1 above), or otherwise affiliated with either party (a "Qualified
Appraiser"). The two Qualified Appraisers so selected shall in turn select a
third Qualified Appraiser (the "Third Appraiser"). The three Qualified
Appraisers shall then proceed to determine the fair market value of the
Premises based upon its highest and best use, which shall be determined as if
the Premises were not encumbered by the Lease. All three appraisals shall be
completed within 45 days after selection of the Third Appraiser. In the event
the appraisals submitted by the Qualified Appraisers selected by Lessor and
Lessee (respectively the "Lessor Appraisal" and "Lessee Appraisal") identify a
fair market value within five percent (5%) of the lower of the two valuations,
the Purchase Price shall be the average of those two appraisals. In the event
the difference between the fair market value of the Lessor's Appraisal and the
Lessee's Appraisal is greater than five percent (5%) of the lower of the two
valuations, the Purchase Price shall be the fair market value of the appraisal
closest to the valuation determined by the Third Appraiser. Each party shall
bear the costs of its respective Qualified Appraiser and shall pay one-half of
the costs of the Third Appraiser.
(d) The sale of the Premises shall close on the date 30 days after
the Purchase Price is determined in accordance with Section 59(c) above, or on
such earlier date as may be mutually agreed to by Lessor and Lessee in writing
(the "Closing Date").
(e) In the event Lessee timely exercises the Purchase Option, the
purchase and sale transaction contemplated hereby shall be consummated through
an escrow (the "Escrow") at Chicago Title Insurance Company (the "Title
Company"). The provisions of this Section 59 shall serve as the instructions
to Title Company, as the escrow holder, for consummation of the purchase and
sale contemplated hereby and, upon exercise of the Purchase Option, a copy of
the Lease, along with the Deposit, shall be promptly delivered to Title
Company. Title Company shall hold the Deposit in an interest bearing account
with such interest to accrue for the benefit of the party entitled to retain
the Deposit. At Closing, the Deposit (plus any accrued interest) shall be
applied against the Purchase Price. Lessor and Lessee agree to execute such
additional and supplementary escrow instructions as may be appropriate to
enable the Title Company to comply with the terms of this Lease; provided,
however, that in the event of any conflict between the provisions of this Lease
and any supplementary escrow instructions, the terms of this Lease shall
control.
(f) The Closing hereunder shall be held and delivery of all items
to be made at the Closing under the terms of this Agreement shall be made at
the offices of the Title Company or such other place as Lessor and Lessee may
mutually agree in writing. The Closing Date may not be extended without the
prior written approval of both Lessor and Lessee. In the event the Closing
does not occur on or before the Closing Date, the Title Company shall, unless
it is notified by both parties within five (5) days after the Closing Date that
the Closing Date has been extended, (i) deliver the Deposit to Lessor (unless
the failure to effect the Closing is the result of the sole and unilateral
default of Lessor), and (ii) return to the depositor thereof all other items
which may have been deposited hereunder.
(g) On or before the Closing Date, Lessor shall deliver or cause
to be deposited into Escrow for delivery to Lessee at Closing the following:
(1) A duly executed and acknowledged Grant Deed on the
Title Company's standard form;
(2) A non-foreign person certificate in accordance with
Section 1445(e) of the Internal Revenue Code;
(3) A California Form 590 in accordance with applicable
provisions of the California Revenue and Taxation Code.
(h) On or before the Closing Date, Lessee shall deliver or cause
to be delivered into Escrow for delivery to Lessor at Closing immediately
available funds in the amount of the Purchase Price less the Deposit (the
"Remaining Purchase Price").
(i) Lessor and Lessee shall each deposit such other instruments as
are reasonably required by the Title Company to consummate the purchase of the
Premises in accordance with the terms hereof. Lessee shall be entitled to
record a Memorandum of this Lease in the form attached hereto as EXHIBIT E;
provided, however, that prior to recordation Lessee
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<PAGE> 27
shall execute and deliver to Seller a Quit Claim Deed in the form attached
hereto as EXHIBIT F, and Lessee hereby irrevocably authorizes Seller to record
such instrument in the event this Lease expires or terminates prior to Lessee's
purchase of the Premises, or Lessee's option to purchase the Premises otherwise
lapses in accordance with the terms of this Lease.
(j) Real property taxes and assessments, and any water, sewer and
utility charges which are not already Lessee's responsibility under the terms
of this Lease shall be prorated as of 12:01 a.m. on the Closing Date, on the
basis of a 365 day year. Lessee agrees that it shall take title subject to any
and all easements, conditions, and other encumbrances of record as of the date
of this Lease and any other Permitted Encumbrances (as hereinafter defined).
Without Lessee's prior written consent, Lessor shall not further encumber the
Premises from and after the date the Purchase Option is exercised. Lessor
shall pay the premium for an Owner's Policy of Title Insurance to the extent
such premium does not exceed that for a CLTA standard coverage title insurance
policy. Lessee shall pay any and all other title premiums and charges,
including, without limitation, any premiums charged should Lessee elect to
obtain additional or extended coverage or any title insurance endorsements.
Lessor shall pay all sums and costs required to discharge any monetary liens
affecting the Premises. Lessor and Lessee shall each pay one half of any
transfer taxes applicable to the sale, recording fees, and escrow charges.
(k) Within ten (10) days after Lessor's receipt of the Option
Notice, Lessor shall deliver to Lessee a preliminary title report issued by
Title Company, accompanied by copies of all documents referred to in the
report. Within fifteen (15) days after actual receipt of such materials,
Lessee shall advise Lessor, in writing, what exceptions to title, if any, are
not acceptable to Lessee. In the event Lessee fails to respond within such 15
day period, Lessee shall be deemed to have approved title to the Premises and
to take the Premises subject to all exceptions shown or reflected on the
aforesaid preliminary title report. Upon Lessor's timely receipt of Lessee's
objections, if any, Lessor shall have ten (10) days to give Lessee notice: (i)
that Lessor will remove any objectionable exceptions from title and provide
Lessee with evidence satisfactory to Lessee of such removal, or provide Lessee
with evidence satisfactory to Lessee that said exceptions will be removed on or
before the Closing Date; or (ii) that Lessor elects not to cause such
exceptions to be removed. Failure of Lessor to give such notice within said
(10) day period shall be deemed an election by Lessor not to cause such
exceptions to be removed. If Lessor gives Lessee notice under clause (ii),
Lessee shall have five (5) days to proceed with the purchase and take the
Premises subject to such exceptions, or to terminate the purchase. If Lessor
shall give notice pursuant to clause (i) and shall fail to remove any such
objectionable exceptions from title prior to the Closing Date, then Lessee may,
at its sole option, either (i) terminate the purchase, or (ii) proceed to close
the purchase of the Premises but receive a credit against the Purchase Price at
Closing in an amount equal to the cost required to remove said exception, as
determined in good faith by Lessee. If Lessee elects to terminate the purchase
as provide above, Lessee shall receive back its Deposit plus all interest
accrued thereon while the Deposit was held in Escrow.
(l) Upon receipt of the items described in Section 59(g) and (h)
above, the Title Company shall consummate the close of escrow by: recording the
Grant Deed in the Official Records of Orange County, California, delivering the
Remaining Purchase Price, the Option Deposit and all accrued interest thereon
to Lessor, after deduction of Lessor's share of escrow, title and closing costs
in accordance with Section 59(j) above; and delivering to Lessee all other
documents delivered by Lessor in accordance with Section 59(g) (the "Closing").
(m) THE PARTIES HAVE AGREED THAT IF FOR ANY REASON OTHER THAN A
MATERIAL DEFAULT BY LESSOR IN ITS OBLIGATIONS TO SELL THE PREMISES OR FAILURE
OF AN EXPRESS CONDITION PRECEDENT OF CLOSING BENEFITING LESSEE, THE PURCHASE
TRANSACTION CONTEMPLATED HEREBY IS NOT CONSUMMATED, LESSOR'S ACTUAL DAMAGES
WOULD BE EXTREMELY DIFFICULT OR IMPRACTICABLE TO DETERMINE. THEREFORE, BY
PLACING THEIR INITIALS BELOW, THE PARTIES ACKNOWLEDGE THAT THE DEPOSIT AND ANY
ACCRUED INTEREST THEREON HAVE BEEN AGREED UPON, AFTER NEGOTIATION, AS THE
PARTIES' REASONABLE ESTIMATE OF LESSOR'S DAMAGES AGAINST LESSEE IN THE EVENT
LESSEE FAILS TO CONSUMMATE THE PURCHASE TRANSACTION IN ACCORDANCE WITH THIS
AGREEMENT.
INITIALS: Lessor: /s/ [illegible] Lessee: /s/ [illegible]
(n) At the time the Closing occurs, this Lease shall terminate;
provided, however, that any provisions contained herein which specifically
provide that they will survive the termination, including, without limitation,
the parties' indemnification obligations and the provisions of Section 60,
shall survive the Closing and the termination of the Lease.
(o) Lessor agrees that from and after the Closing Lessor shall
indemnify, defend, and hold harmless Lessee from and against any and all
damages, claims, losses, expenses, or liabilities relating to any release of
Hazardous Substances from the Premises during Lessor's period of ownership as
identified in the Lessor's Environmental Disclosure. Lessee
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agrees and acknowledges that from and after the Closing, and other than as set
forth in this Section 59(n), Lessor shall have no obligation whatsoever to
indemnify, contribute to, reimburse, defend, or hold harmless Lessee under this
Lease or otherwise with respect to the presence or the alleged presence of any
Hazardous Substances on, under, or about the Premises.
60. Lessee's As-Is Acknowledgment. Lessee specifically agrees to lease,
and if it exercises its Purchase Option, purchase the Premises "as-is" and
"with all faults" and acknowledges reliance solely on its own examination and
inspection of the Premises and all related matters and not on any
representations, warranties or information from Lessor. Lessor expressly
disclaims any and all representations and warranties concerning the Premises.
If any facts, conditions or circumstances change or turn out differently from
what Lessee believed, or if Lessee is unable to obtain financing or otherwise
use or deal with the Premises in any respect, Lessee's obligations hereunder
and under any instruments or documents delivered by Lessee to Lessor at Closing
shall remain in full force and effect with no right to delay or terminate and
no right of offset. Except as otherwise stated in this Lease, Lessee agrees to
take the Premises subject to its then existing condition. The provisions of
this Section 60 shall survive the Closing and any termination of this
Agreement.
61. Lessee's Obligations Concerning Compliance With The American With
Disabilities Act. In the event Lessee undertakes any alteration or
modification of the Premises, it shall be solely responsible for complying with
any and all applicable provisions of the American With Disabilities Act
("ADA"), and Lessee agrees to indemnify, defend, and hold harmless Lessor from
and against any and all damages, costs, expenses, claims, and liabilities in
connection therewith. The provisions of this Section 61 shall survive the
Closing and shall not in any way limit Lessee's obligations under Section 7.3
of this Lease, including its obligations to obtain the consent of the Lessor
before making any Alterations or Utility Installations.
62. Hazardous Substances.
(a) Reportable Uses Require Consent. The term "Hazardous
Substance" as used in this Lease shall mean any product, substance, chemical,
material or waste (x) defined or treated as "hazardous" or "toxic" under
Federal, State, or local laws; or (y) whose presence, nature, quantity and/or
intensity of existence, use, manufacture, disposal, transportation, spill,
release or effect, either by itself or in combination with other materials
expected to be on the Premises, is either: (i) potentially injurious to the
public health, safety or welfare, the environment or the Premises, (ii)
regulated or monitored by any governmental authority, or (iii) a basis for
liability of Lessor to any governmental agency or third party under any
applicable statute or common law theory. Hazardous Substance shall include,
but not be limited to, hydrocarbons, petroleum, gasoline, crude oil or any
products, by-products or fractions thereof. Lessee shall not engage in,
permit, or suffer to exist any activity in, on or about the Premises which
constitutes a Reportable Use (as hereinafter defined) of Hazardous Substances
without the express prior written consent of Lessor, which may be granted or
withheld in Lessor's sole discretion, and compliance in a timely manner (at
Lessee's sole cost and expense) with all Applicable Law (as defined in
Paragraph 6.3). "Reportable Use" shall mean (i) the installation or use of any
above or below ground storage tank other than as described in EXHIBIT D, (ii)
the generation, possession, storage, use, transportation, release or disposal
of a Hazardous Substance, other than those Hazardous Substances described in
EXHIBIT D; provided, however, that "Reportable Use" shall not include any
Hazardous Substances present on the Premises prior to the date of this Lease.
In addition, Lessor may (but without any obligation to do so) condition its
consent to the use or presence of any Hazardous Substance, activity or storage
tank by Lessee upon Lessee's giving Lessor such additional assurances as
Lessor, in its reasonable discretion, deems necessary to protect itself, the
public, the Premises and the environment against damage, contamination or
injury and/or liability therefrom or therefor, including, but not limited to,
the installation (and removal on or before Lease expiration or earlier
termination of reasonably necessary protective modifications to the Premises
(such as [illegible]) and/or the deposit of an additional Security Deposit
under Paragraph 5 hereof.
Lessor /s/ [illegible] Lessee /s/ [illegible]
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EXHIBIT 10.8
COMMERCIAL LEASE
THIS LEASE, made as of the _ day of January, 1997 by and between MORRIS
RAGONA and JOAN RAGONA, ("Owners") hereinafter collectively referred to as
"Landlord" and HORIZON HIGH REACH, INCORPORATED, a Delaware Corporation having
its Principal Place of Business in California, hereinafter called "Tenant",
ARTICLE I - BASIC TERMS
1.01 Basic Terms: Premises accepted "as is" as of this date
A. Address of Landlord:
MORRIS RAGONA
634 N. Michigan Street
Elmhurst, Illinois 60148
With Copy to:
Glenn R. Haas, Atty.
25 East Park Blvd., P.O. Box 327
Villa Park, IL 60181
or such other address as may from time to time be designated by Landlord in
writing.
B. Address of Tenant:
HORIZON HIGH REACH, Incorporated
1540 E. Shaw- Suite #123
Fresno, CA 93710
or such other address as may from time to time be designated by Tenant in
writing.
C. Premises: (Stipulated to be exactly) 9,000 square feet of space in
the Building, plus use of the yard area, per "site plan" attached hereto as
Exhibit "A".
D. Building: The Building in which the Premises is located, the common
address of which is 554-60 N. Michigan, Elmhurst, IL 60126, together with the
land, and any parking areas, walkways, landscaped areas and other improvements
appurtenant thereto per the aforesaid site plan. The legal description of the
parcel on which the Building is situated is (or may hereafter be) attached
hereto as Exhibit "B".
E. Personal Guarantor(s): NONE
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F. Term: The period of time commencing March 1, 1997 and expiring
February 28, 2002 (with one 5 year option thereafter as set forth in paragraph
21.04 below), unless sooner terminated as set forth herein.
G. Rent: All sums, moneys or payments required to be paid by Tenant to
Landlord pursuant to this Lease, including both "Base Rent" and all "Additional
Rent".
H. Base Rent: Assuming 9,000 square feet (per stipulation of parties),
the base rent herein shall be $312.750.00 for the 60 month Term hereof, payable
as follows:
- $29.250.00 (based on $6.50/sq. ft. per annum) payable in
advance in 6 equal monthly installments of $4.875.00 each,
plus all Additional Rent (as hereinafter defined) for the
period March 1, 1997 thru August 31, 1997.
- $283,500.00 (based on $7.00/sq. ft. per annum) payable in
advance in 54 equal monthly installments of $5.250.00 each,
plus all Additional Rent (as hereinafter defined) for the
period September 1, 1997 thru February 28, 2002.
I. Additional Rent (Real Estate Taxes): In addition to the base rent,
commencing with the 37th installment of the base rent as set forth above, (i.e.,
after 3 years) Tenant shall thereafter also pay 100% of any increase over the
amount of the 1996 base year of, as and for all Real Estate Taxes allocable to
the leased premises, as more fully set forth in paragraph 5.02 herein.
J. Security Deposit: $10.500.00 (2 months final base rent), payable
upon execution of Lease.
K. Permitted Uses: Sales, Service & Rental of Aerial Work Platforms.
L. Broker(s):
Ms. Leigh Schane
Re/Max East West, Realtors
575-2 West St. Charles Road
Elmhurst, IL 60126
M. Exhibits:
A. Site Plan of Premises
B. Legal Description of Premises
1.02 Effect of Reference to Basic Terms: Each reference in this Lease
to any of the Basic Terms contained in Section 1.01 shall be construed to
incorporate into such reference all of the definitions set forth in Section
1.01.
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ARTICLE II - GRANT AND TERM
2.01 In consideration of the rents, covenants, agreements and
conditions hereinafter provided to be paid, kept, performed and observed,
Landlord leases to Tenant and Tenant hereby hires from Landlord the Premises
described in Section 1.01(C).
2.02 Tenant shall have and hold the Premises for and during the Lease
Term described in Section 1.01(F), subject to the payment of the Rent and to the
full and timely performance by Tenant of the covenants and conditions
herein-after set forth.
2.03 In the event Tenant takes possession of the Premises prior to the
beginning of the Term hereof with Landlord's consent, all the provisions of this
Lease shall be in full force and effect upon Tenant's so taking possession.
ARTICLE III - RESERVATIONS BY LANDLORD
3.01 Landlord excepts and reserves the roof, exterior walls and Common
Areas of the Building as described in Article XV below, and further reserves the
right to place, install, maintain, carry through, repair and replace such
utility lines, pipes, wires, appliances, tunneling and the like in, over,
through and upon the Premises as may be reasonably necessary or advisable for
the servicing of the Premises or any other portions of the Building.
3.02 Notwithstanding any provision in this Lease to the contrary, it is
agreed that Landlord reserves the right, without invalidating this lease or
modifying any provision thereof, at any time, and from time to time, (i) to make
alterations, changes and additions to the Building, (ii) to add additional areas
to the Building and/or to exclude areas therefrom, and (iii) to construct
additional buildings and other improvements. It is further understood that the
existing layout of the Building, and any appurtenant walks, roadways, parking
areas, entrances, exits, and other improvements shall not be deemed to be a
warranty, representation or agreement on the part of the Landlord that same will
remain exactly as presently built.
ARTICLE IV - USE
4.01 The Premises hereby leased shall be used by and/or at the
sufferance of Tenant only for the purposes set forth in Section 1.01(K) above
and for no other purposes. Tenant shall, at Tenant's expense, promptly comply
with all applicable statutes, ordinances, rules, regulations, orders and
requirements in effect during the term or any part of the term hereof regulating
the use by Tenant of the Premises. Tenant shall not use or permit the use of the
Premises in any manner that will tend to create waste or a nuisance, or will
tend to unreasonably disturb other tenants in or (in the event that Tenant is
occupying the entire Building) in the immediate vicinity of the Building and
shall keep its mechanical apparatus free of noise and vibration which may be
transmitted beyond the confines of the Premises. Tenant, its employees and all
persons visiting or doing business with the Tenant in the Premises shall be
bound by and shall observe such reasonable rules and regulations made
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hereafter by Landlord relating to the Premises of which notice in writing shall
be given to the Tenant, and all such rules and regulations shall be deemed to be
incorporated into and form a part of this Lease.
4.02 Tenant covenants throughout the Lease Term, at Tenant's sole cost
and expense, promptly to comply with all laws and ordinances and the orders,
rules and regulations and requirements of all federal, state and municipal
governments and appropriate departments, commissions, boards, and officers
thereof, and the orders, rules and regulations of the Board of Fire Underwriters
where the Premises are situated, or any other body now or hereafter constituted
exercising similar functions, foreseen or unforeseen, ordinary as well as
extraordinary, and whether or not the same require structural repairs or
alterations, which may be applicable to the Premises, or the use or manner of
use of the Premises. Tenant will likewise observe and comply with the
requirements of all policies of public liability, fire and all other policies of
insurance at any time in force with respect to the buildings and improvements on
the Premises and the equipment thereof.
ARTICLE V - RENT
5.01 Base Rent: Tenant covenants to pay without notice, deduction,
set-off or abatement to Landlord the Base Rent specified in Section 1.01(H) in
lawful money of the United States in equal consecutive monthly installments in
advance on the first day of each month during the Lease Term. Rent for any
partial month shall be prorated on a per diem basis. Rent shall be payable to
Landlord at Landlord's address shown at Section 1.01(A) above or such other
place as Landlord may designate from time to time in writing. Tenant shall pay
the first full month's Base Rent upon execution of this Lease.
5.02 Real Estate Taxes: Commencing with the 37th month of this Lease,
and during the remaining term of the Lease or any extensions or holding over,
Tenant shall pay to Landlord, as Additional Rent, 100% of the Real Estate Taxes
levied against the Building in excess of the Real Estate Taxes levied against
the Building for the year 1996 (the base year).
"Real Estate Taxes" shall mean: (a) all ad valorem Real Estate Taxes on
the Project (adjusted after protest or litigation, if any) for any part of the
term of this Lease, exclusive of penalties, (b) any taxes which shall be levied
in lieu of any such ad valorem real estate taxes, (c) any special assessments
for benefits on or to the Building paid in annual installments by Landlord, (d)
occupational taxes or excise taxes levied on rentals derived from the operation
of the Building or the privilege of leasing property, and (e) the expense of
protesting, negotiating or contesting the amount or validity of any such taxes,
charges or assessments, such expense to be applicable to the period of the item
contested, protested or negotiation.
If the term of the Lease shall end during a tax calendar year (tax
calendar year shall mean each annual period for which ad valorem real estate
taxes are assessed and levied) of which part only is included in the Term
hereof, the amount of such Additional Rent shall be prorated on a per diem basis
and shall be paid on or before the last day of the Term. If the Term ends in any
tax calendar year before the amount to be payable by Tenant has been
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determined under the provisions of this Section, an amount payable for the
portion of the Lease Term during the tax calendar year shall be reasonably
estimated by the Landlord and the estimated amount shall be promptly paid by
Tenant. As soon as the amount properly payable by the Tenant for the partial
period has finally been determined, the amount shall be adjusted between
Landlord and Tenant.
5.03 Heating Ventilation and Air Conditioning Maintenance: Landlord
shall cause the HVAC system to be delivered to Tenant in good operating
condition as of the beginning of the date and time of the initial occupancy by
Tenant. Thereafter, Tenant shall be responsible for all minor repairs (defined
as any repair up to $500.00) relative to the HVAC system. Landlord shall pay any
repairs or replacement costs for items in excess of $500.00 per item (such as
compressors).
5.04 Service Charge: Tenant's failure to make any monetary payment
required of Tenant hereunder within ten (10) days of the due date therefor shall
result in the imposition of a service charge for such late payment in the amount
of ten percent (10%) of the amount due. In addition, any sum not paid within
thirty (30) days of the due date therefor shall bear interest at the rate of
eighteen percent (18%) per annum (or such lesser percentage as may be the
maximum amount permitted by law) from the date due until paid.
ARTICLE VI - UTILITIES AND SERVICES
6.01 Tenant shall contract in its own name and timely pay for all
charges for electricity, gas, water, fuel, sewer charges, telephone, trash
hauling, and any other services or utilities used in, servicing or assessed
against the Premises, unless otherwise herein expressly provided.
ARTICLE VII - QUIET ENJOYMENT
7.01 Landlord covenants that Tenant, on paying the Rents herein
provided and keeping, performing and observing the covenants, agreements and
conditions herein required of Tenant, shall peaceably and quietly hold and enjoy
the Premises for the term aforesaid, subject, however, to the terms of this
Lease.
ARTICLE VIII - ASSIGNMENT AND SUBLETTING
8.01 Tenant shall not assign or hypothecate this Lease nor sublet or
otherwise transfer its interest in all or any part of the Premises without the
prior written consent of Landlord. If Tenant wishes to assign this Lease or
sublet all or any part of the Premises it shall give notice in writing (by
certified mail or by personal delivery) of such intention to Landlord,
furnishing Landlord with a copy of the proposed assignment or sublease document
and full information as to the identity and financial status of the proposed
assignee or subtenant. Thereupon, Landlord shall have, within ten (10) days of
receipt of such notice, the right to approve or
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reject such assignment or subletting for reasonable cause by written notice to
Tenant. If no such response is given, Landlord shall be deemed to have elected
to approve the assignment or subletting. Notwithstanding any assignment or
sublease, Tenant shall remain liable hereunder and shall not be released without
the express written agreement of Landlord to such release.
ARTICLE IX - DAMAGE OR DESTRUCTION
9.01 If the Premises or the Building or any part thereof is damaged by
fire or other casualty, cause or condition whatsoever as to be substantially
untenantable and the Landlord shall determine not to restore same, Landlord may,
by written notice to the tenant given within ten (10) days after such damage,
terminate this Lease as of the date of the damage. If this Lease is not
terminated as above provided and if the Premises are made partially or wholly
untenantable as aforesaid, Landlord, at its expense shall restore the same with
reasonable promptness to the condition in which Landlord furnished the Premises
to Tenant at the commencement of the term of this Lease but only as to those
items that were provided at Landlord's expense without any reimbursement by
Tenant. Landlord shall be under no obligation to restore any alterations,
improvements or additions to the Premises made by Tenant or paid for by Tenant,
including, but not limited to, any of the initial tenant finish done or paid for
by Tenant or any subsequent changes, alterations or additions made by Tenant.
9.02 If, as a result of fire or other casualty, cause or condition
whatsoever the Premises are made partially or wholly untenantable and, if
Landlord has not given the ten (10) day notice above provided for and falls
within sixty (60) days after such damage occurs to eliminate substantial
interference with Tenant's use of the Premises or substantially to restore same,
Tenant may terminate this Lease as of the end of said sixty (60) days by notice
to Landlord given not later than five (5) days after expiration of said sixty
(60) day period, if the Premises are rendered totally untenantable but this
Lease is not terminated, all rent shall abate from the date of the fire or other
relevant cause or condition until the Premises are ready for occupancy and
reasonably accessible to Tenant. If a portion of the Premises is untenantable,
rent shall be prorated on a per diem basis and apportioned in accordance with
the portion of the Premises which is usable by the Tenant until the damaged part
is ready for the Tenant's occupancy. In all cases, due allowance shall be made
for reasonable delay caused by adjustment of insurance loss, strikes, labor
difficulties or any cause beyond Landlord's reasonable control. For the purposes
of this Lease, the Premises shall be considered tenantable so long as and to the
extent that the Premises are occupied. In any event, Tenant shall be responsible
for the removal, of restoration, when applicable, of all its damaged property
and debris from the Premises, upon request by Landlord or reimburse Landlord for
the cost of removal.
ARTICLE X - LANDLORD'S RIGHTS
10.01 Landlord reserves the following rights:
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(A) To exhibit the Premises to others and to display "For
Lease" signs on the Premises during the last six months of the term or
any extension thereof;
(B) To remove abandoned or unlicensed vehicles and vehicles
that are unreasonably interfering with the use of the parking lot by
others and to charge the responsible tenant for the expense of removing
said vehicles;
(C) To take any and all measures, including making inspection,
repairs, alterations, additions and improvements to the Premises or to
the Building as may be necessary or desirable for the safety,
protection or preservation of the Premises or the Building or
Landlord's interests, or as may be necessary or desirable in the
operation thereof.
Landlord may enter upon the Premises at any reasonable time for the purpose of
exercising any or all of the foregoing rights hereby reserved without being
deemed guilty of an eviction or disturbance of Tenant's use or possession and
without being liable in any manner to Tenant.
ARTICLE XI - HOLDING OVER
11.01 Tenant shall pay to Landlord the Base Rent and Additional Rent
computed on a per month basis for each month or part thereof (without reduction
for any such partial month) Tenant retains possession of the Premises or any
part thereof after the expiration of the Term, by lapse of time or otherwise, at
double the amount such rents then required by the terms hereof for the last
monthly period prior to the date of such expiration (including both Base Rent
and Additional Rent); and also pay all damages, direct or indirect, sustained by
Landlord by reason of such retention by Tenant. Acceptance by Landlord of any
rent or other payment from Tenant after such expiration shall not constitute a
renewal or extension nor waive Landlord's right of re-entry or any other right
of Landlord.
ARTICLE XII - SIGNS AND ADVERTISEMENTS
12.01 All signage erected by tenant shall be in conformity with local
building codes.
ARTICLE XIII - EMINENT DOMAIN
13.01 If the Premises or such substantial part thereof as reasonably
renders the remainder unfit for the intended uses shall be taken by any
competent authority under the power of eminent domain or be acquired for any
public or quasi-public use or purpose, the Term of this Lease shall cease and
terminate upon the date when the possession of said Premises or the part thereof
so taken shall be required for such use or purpose and without apportionment of
the award and Tenant shall have no claim against Landlord for the value of
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any unexpired Term of this Lease. If any condemnation proceeding shall be
instituted in which it is sought to take any part of the Building or change the
grade of any street or alley adjacent to the Building and such taking or change
of grade makes it necessary or desirable to remodel the Building to conform to
the changed grade, Landlord shall have the right to terminate this Lease after
having give written notice of termination to Tenant not less than ninety (90)
days prior to the date of termination designated in the notice. In either of
said events, rent at the then current rate shall be apportioned as of the date
of the termination. No money or other consideration shall be payable by the
Landlord to the Tenant for the right of termination and the Tenant shall have no
right to share in the condemnation award or in any judgment for damages caused
by the taking or the change of grade. Nothing in this paragraph shall preclude
an award being made to Tenant for loss of business or depreciation to and cost
of removal of equipment or fixtures.
ARTICLE XIV - LANDLORD'S INABILITY TO PERFORM
14.01 If by reason of inability to obtain and utilize labor, materials
or supplies; circumstances directly or indirectly the result of a state of war
or national or local emergency; any laws, rules, orders, regulations or
requirements of any governmental authority now or hereafter in force; strikes or
riots; accident in, damage to or the making or repairs, replacements, or
improvements to the Premises or any of the equipment thereof; or by reason of
any other cause beyond the reasonable control of Landlord, Landlord shall be
unable to perform or shall be delayed in the performance of any covenant to
supply any service, such nonperformance or delay in performance shall not render
Landlord liable in any respect for damages to either person or property,
constitute a total or partial eviction, constructive or other-wise, work an
abatement of rent or relieve Tenant from the fulfillment of any covenant or
agreement contained in this Lease.
ARTICLE XV - COMMON AREAS
15.01 The term "Common Areas" means all the areas and facilities of the
Building not intended for renting and, instead, designed for the common use and
benefit of Landlord and all or substantially all of the Tenants, their
employees, agents, customers and invitees. The Common Areas include, but not by
way of limitation, parking lots, rail spurs, truck courts, landscaped and vacant
areas, driveways, walks and curbs with facilities appurtenant to each as such
areas may exist from time to time.
ARTICLE XVI - ACCEPTANCE OF PREMISES, MAINTENANCE AND CARE
16.01 Completion and Acceptance: Tenant acknowledges that it will
examine the Premises before taking possession hereunder. Unless Tenant furnishes
Landlord with a notice in writing specifying any defect in the construction of
the Premises within ten (10) days after taking possession, such taking of
possession shall be conclusive evidence as against Tenant that at the time
thereof the Premises were in good order and satisfactory condition.
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16.02 Maintenance and Repair by Tenant: Tenant shall be responsible for
all maintenance, repair and replacement to the Premises of whatsoever kind or
nature that is not hereinafter set forth specifically as the obligation of
Landlord. Tenant shall take good care of the Premises and fixtures, and keep
them in good repair and free from filth, overloading, danger of fire or any pest
or nuisance, and repair and/or replacement any damage or breakage done by Tenant
or Tenant's agents, employees or invitees, including damage done to the Building
by Tenant's equipment or installations. Tenant shall be responsible for the
repair and replacement of all glass and plate glass on the Premises. Tenant
shall furnish and pay for the upkeep, maintenance, repair, replacement and
periodic servicing of the heating, ventilation and air conditioning system
servicing the Premises. At the end of the term of this Lease or any renewal
hereof, Tenant shall quit and surrender the Premises broom clean in as good
condition as when received by Tenant, normal wear and tear excepted. In the
event Tenant fails to maintain the Premises as provided for herein Landlord
shall have the right, but not the obligation, to perform such maintenance,
repair and replacement as is required of Tenant in which event Tenant shall
promptly reimburse Landlord for its costs in providing such maintenance or
repairs together with a ten percent (10%) charge for Landlord's overhead. There
shall be no overhead charged in connection with the servicing of the heating,
air conditioning and ventilation equipment if Landlord has elected to provide
such service under this paragraph.
16.03 Maintenance and Repair by Landlord: During the term of this
Lease, Landlord shall keep and maintain the roof, exterior walls (excluding
glass or plate glass), gutters and downspouts of the Building in good condition
and repair at no further cost to Tenant. Landlord shall be under no obligation
and shall not be liable for any failure to make repairs that are Landlord's
responsibility herein until and unless Tenant notifies Landlord in writing of
the necessity therefor, in which event Landlord shall have a reasonable time
thereafter to make such repairs. Landlord reserves the right to the exclusive
use of the roof and exterior walls of the Building which Landlord is so
obligated to maintain and repair. If any portion of the Premises which Landlord
is obligated to maintain or repair is damaged by the negligence of Tenant, its
agents, employees or invitees, then repairs necessitated by such damage shall be
paid for by Tenant.
ARTICLE XVII - ALTERATIONS AND ADDITIONS, MECHANICS' LIENS
17.01 Alterations and Additions: Tenant shall not make any alterations,
improvements, or additions to the Premises without the prior written consent and
approval of plans therefor by Landlord. Alterations, improvements or additions
so made by either of the parties upon the Premises, except moveable furniture
and equipment placed in the Premises at the expense of Tenant, shall be and
become the property of Landlord and shall remain upon and be surrendered with
the Premises as a part thereof at the termination of this Lease, without
disturbance, molestation, injury or damage, unless Landlord elects to require
Tenant to remove such alterations or improvements from the Premises. In the
event damage to the Premises or the Building shall be caused by moving said
furniture and equipment in or out of the Premises, said damage shall be promptly
repaired at the cost of Tenant.
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<PAGE> 10
17.02 Mechanic's Liens: Tenant shall not cause nor permit any
mechanic's liens or other liens to be placed upon the Premises or the Building
and in case of the filing of any such lien or claim therefor, Tenant shall
promptly discharge same; provided, however, that Tenant shall have the right to
contest the validity or amount of any such lien upon its prior posting of
security with Landlord, which security, in Landlord's sole reasonable judgment,
must be adequate to pay and discharge any such lien in full plus Landlord's
reasonable estimate of its legal fees. Tenant agrees to pay all legal fees and
other costs incurred by Landlord because of any mechanic's or other liens
attributable to Tenant being placed upon the Premises or the Building.
ARTICLE XVIII - INSURANCE
18.01 Public Liability, Property Damage Insurance: Tenant covenants and
agrees to maintain on the Premises at all times during the term of this Lease,
or any renewal thereof, a policy or policies of comprehensive public liability
and property damage insurance with not less than $1,000,000.00 combined single
limit for both bodily injury and property damage which policy or policies shall
name Owner, Morris Ragona and Joan Ragona, and their Property Manager all as
additional insured.
18.02 Fire and Extended Coverage Insurance: Landlord shall, throughout
the term of this Lease, or any extension thereof, maintain fire and extended
coverage insurance on the property owned by Landlord located in and about the
Premises in such amounts and with such deductibles as Landlord shall determine.
Landlord shall not be obligated in any way or manner to insure any property of
Tenant or any property that may be in the Premises but not owned by Landlord.
18.03 Indemnification of Landlord: Tenant indemnifies and shall hold
Landlord, Morris Ragona and Joan Ragona, and their respective affiliates,
partners, representatives, directors, trustees, officers, employees, lenders,
successors and assigns (collectively, "the Affiliates") and its property manager
harmless from and defend Landlord, Morris Ragona and Joan Ragona, and the
Affiliates and its property manager against any and all claims or liabilities
for any injury or death to any person or damage to any property whatsoever.
A. Either (i) occurring in, on, or about the Premises, or (ii)
occurring in, on, or about any facilities including, without
limitation, passageways or hallways, the use of which Tenant may have
in conjunction with other tenants of the Building, when such injury,
death or damage shall be caused in part or in whole by the act, neglect
or fault of, or omission of any duty with respect to the same by
Tenant, its agents, employees, contractors, invitees, licensees,
tenants, or assignees;
B. Arising from any work or thing whatsoever done by or
benefiting the Tenant in or about the Premises or from transactions of
the Tenant concerning the Premises;
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<PAGE> 11
C. Arising from any breach or default on the part of the
Tenant in the performance of any covenant or agreement on the part of
the Tenant to be performed pursuant to the terms of this Lease; or
D. Otherwise arising from any act or neglect of the Tenant, or
any of its agents, employees, contractors, invitees, licensees, tenants
or assignees; and
E. From and against all costs, expenses, counsel fees, and
court costs incurred or assessed in connection with any or all of the
foregoing.
Furthermore, in case any action or proceeding be brought against Landlord,
Morris Ragona and Joan Ragona, or the Affiliates and/or its property manager by
reason of any claims or liability, Tenant agrees to cause such action or
proceeding to be defended at Tenant's sole expense by counsel reasonably
satisfactory to Landlord. The provisions of this Lease with respect to any
claims or liability occurring or caused prior to any expiration or termination
of this Lease shall survive expiration or termination
ARTICLE XIX - DEFAULT AND REMEDIES
19.01 In the event:
A. Tenant shall at any time fail to pay any item of Rent
within ten (10) days after written notice thereof has been mailed by
Landlord to Tenant after date due; or
B. Tenant shall fail to keep, perform or observe any other
covenant, agreement, condition or undertaking hereunder and shall fail
to remedy such default within ten (10) days after written notice
thereof has been mailed by Landlord to Tenant; or if such default is
one that will take longer than ten (10) days to remedy, Tenant fails to
commence curing such default within ten (10) days and/or fails
diligently to pursue such cure to completion; or
C. The Premises shall be vacated by Tenant for any period for
which Tenant has not paid its Rent;
Landlord shall have the right, without further notice to or demand, to re-enter
and take exclusive possession of the Premises, with legal process, and to refuse
to allow Tenant to enter the same or have possession thereof; to change the
locks on the doors to the Premises; take possession of any furniture or other
property in or upon the Premises (Tenant hereby waiving the benefit of all
exemptions by law), sell the same at public or private sale and apply the
proceeds thereof to the costs of sale, payment of damages and payment of the
rent due under this Lease; and
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<PAGE> 12
(1) As agent of Tenant to relet the Premises for the balance
of the Lease Term or for a shorter or longer term and receive the rents
therefor, applying them first to the payment of damages suffered to the
Premises and rents due and to become due under this Lease Tenant
remaining liable for and hereby agreeing to pay Landlord any
deficiency; or
(2) To cancel and terminate the remaining term of this Lease,
re-enter and take possession of the Premises free of this Lease and
thereafter this Lease shall be null and void and the rents in such case
shall be apportioned and paid on and up to the date of such entry.
Thereafter both parties shall be released and relieved from any of any
and all obligations thereafter to accrue hereunder. Tenant shall be
liable for all loss and damage resulting from such breach or default;
or
(3) To treat such default as an anticipatory breach of this
Lease and, as liquidated damages for such default, be entitled to the
difference, if any, between the sum which, at the time of such
termination for anticipatory breach represents the then present worth
(computed at seven percent per year) of the excess aggregate rents and
additional rents payable hereunder that would have accrued over the
balance of the Lease Term including extensions, had such term not been
prematurely terminated, over the aggregate market rental value of the
Premises over the term (including extensions) that the Lease would have
run had it not been prematurely terminated.
19.02 Landlord's Right to Cure: Landlord may, but shall not be
obligated to, cure any default by Tenant (specifically including, but not by way
of limitation, Tenant's failure to obtain insurance, make repairs, or satisfy
lien claims); and whenever Landlord so elects, all costs and expenses paid by
Landlord in curing such default, including without limitation reasonable
attorneys' fees, shall be so much Additional Rent due on the next rent date
after such payment, together with interest (except in the case of said
attorneys' fees) at the highest rate then payable by Tenant in the state in
which the Leased Premises are located or in the absence of such a maximum rate
at the rate of eighteen percent (18%) per annum, from the date of the advance to
the date of repayment by Tenant to Landlord.
19.03 Remedies Cumulative: All rights and remedies provided in this
Lease for Landlord's protection shall be cumulative and in addition to any other
rights and remedies provided by law. Landlord shall be entitled to recover from
Tenant its reasonable attorneys' fees incurred in enforcing its rights
hereunder.
19.04 No Waiver: A waiver by Landlord of a breach or default by Tenant
under the terms and conditions of this Lease shall not be construed to be a
waiver of any subsequent breach or default nor of any other term or condition of
this Lease, and the failure of Landlord to assert any breach or to declare a
default by Tenant shall not be construed to constitute a waiver thereof so long
as such breach or default continues unremedied.
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<PAGE> 13
19.05 No Reinstatement: No receipt of money by Landlord from Tenant
after the expiration or termination of this lease or after the service of any
notice or after the commencement of any suit, or after final judgment for
possession of the Premises shall reinstate continue or extend the Term of this
Lease or affect any such notice, demand or suit.
19.06 Default Under Other Leases: A default under this Lease shall, at
Landlord's option, be deemed a default under any other leases between Landlord
and Tenant for space in the Building. Likewise, a default under any other such
lease between Landlord and Tenant shall, at Landlord's option, be deemed a
default under this Lease.
ARTICLE XX - SECURITY DEPOSIT
20.01 Tenant herewith deposits with Landlord the sum set forth in
Section 1.01(I) as security for the performance by Tenant of every covenant and
condition of this Lease. Said deposit may be commingled with other funds of
Landlord and shall bear no interest. If Tenant shall default with respect to any
covenant or condition of this Lease, Landlord may apply the whole or any part of
such security deposit to the payment of any sum in default or any sum which
Landlord may be required to spend by reason of Tenant's default. This includes,
but is not limited to, applying the security deposit first to any restoration
and/or cleanup costs necessary over and above normal wear and tear of the
vacated space. It is understood that the security deposit is not to be
considered as the last month's rent under the Lease. Should Tenant comply with
all of the covenants and conditions of this Lease, the security deposit or any
balance thereof shall be returned to Tenant at the expiration of the Term
hereof.
ARTICLE XXI - MISCELLANEOUS
21.01 Persons Bound: The agreements, covenants and conditions of this
Lease shall be binding upon and inure to the benefit of the heirs, legal
representatives, successors and assigns of each of the parties hereto, except
that no assignment, encumbrance or subletting by Lessee, unless permitted by the
provisions of this Lease, shall vest any right in the assignee, encumbrances or
subleases of Tenant, if there be more than one Tenant herein named, the
provisions of the Lease shall be applicable to and binding upon such Tenant
jointly and severally, as well as their heirs, legal representatives, successors
and assigns.
21.02 Partial Invalidity: If any term, covenant, condition or provision
of this Lease or the application thereof to any person or circumstance shall, to
any extent be invalid, unenforceable or violate a party's legal rights, then
such term, covenant, condition or provision shall be deemed to be null and void
and unenforceable, however, all other provisions of this Lease, or the
application of such term or provision to persons or circumstances other than
those to which are hold invalid, unenforceable or violative of legal rights,
shall not be affected thereby, and each and every other term, condition,
covenant and provision of this Lease shall be valid and be enforced to the
fullest extent permitted by law.
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<PAGE> 14
21.03 Captions: The headings and captions used throughout this Lease
are for convenience and reference only and shall in no way be held to explain,
modify, amplify, or aid in the interpretation, construction or meaning of any
provisions in this Lease. The words "Landlord" and "Tenant" wherever used in
this Lease shall be construed to mean plural where necessary, and the necessary
grammatical changes required to make the provisions hereof apply either to
corporation, partnerships, or individuals, men or women, shall in all cases be
assured as though in each case fully expressed.
21.04 One Option to Renew: Tenant shall have one (1) option to renew
for a five (5) year term at a base rent equal to the total base rent payable
under this present lease multiplied by a factor determined by using the C.P.I.
as of March 1, 2002 as its numerator and the C.P.I. as of March 1, 1997 as its
denominator.
21.05 Brokers: Tenant represents that it has dealt directly with and
only with the broker or brokers set forth at Section 1.01(P) above, and that
Tenant knows of no other broker who negotiated this Lease or is entitled to any
commission in connection herewith. Tenant agrees to indemnify, defend and hold
harmless Landlord from and against any commissions or claims by any other broker
or brokers pertaining to Tenant's having entered into this Lease.
21.06 Applicable Law: This Lease, its interpretation and enforcement
shall be governed by the laws of the state in which the Premises are located.
21.07 Tenant's Compliance with Laws and Ordinances: Tenant covenants
throughout the Lease Term, at Tenant's sole cost and expense, promptly to comply
with all laws and ordinances and the orders, rules and regulations and
requirements of all federal, state and municipal governments and appropriate
departments, commissions, boards, and officers thereof, and the orders, rules
and regulations of the Board of Fire Underwriters where the Premises are
situated, or any other body now or hereafter constituted exercising similar
functions, foreseen or unforeseen, ordinary as well as extraordinary, and
whether or not the same require structural repairs or alterations, which may be
applicable to the Premises, or the use or manner of use of the Premises. Tenant
will likewise observe and comply with the requirements of all policies of public
liability, fire and all other policies of insurance at any time in force with
respect to the buildings and improvements on the Premises and the equipment
thereof.
21.08 Waiver of Jury: Landlord and Tenant agree that, to the extent
permitted by law, each shall and hereby does waive trial by jury in any action,
proceeding or counterclaim brought by either against the other on any matter
whatsoever arising out of or in any way connected with this Lease.
21.09 Allocation of Rent: Landlord and Tenant agree that no portion of
the Base Rent paid by Tenant during the portion of the term of this Lease
occurring after the expiration of any period during which such rent was abated
shall be allocated by Landlord or Tenant to such rent abatement period, nor is
such rent intended by the parties to be allocable to any abatement period.
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<PAGE> 15
ARTICLE XXII - HAZARDOUS SUBSTANCES AND MATERIALS
22.01 A. During the term of this Lease, Tenant shall not suffer, allow,
permit or cause:
1. The installation of any underground storage tanks for the
purpose of holding petroleum products or hazardous substances either on
the Premises or at any other location in the Building or the Building
site.
2. The accumulation of tires, spent batteries, debris or other
solid wastes either on the Premises or any other part of the Building
or the Building site except rubbish placed in designated containers
scheduled for normal, scheduled disposal in accordance with all
applicable law;
3. The generation, accumulation, storage, possession, release
or threat of release of "hazardous substances", "pollutants",
"hazardous waste", or "toxic materials", as those terms are used in the
Comprehensive Environmental Response Compensation and Liability Act of
1980 ("CERCLA"), 42 U.S.C. 9601, et seq., as amended, the Resource
Conservation and Recovery Act of 1976, 42 U.S.C. 6901, et. seq., as
amended, the Toxic Substance Control Act (or any regulations
promulgated under the foregoing) or any other present or future
federal, state or local law, ordinance, rule or regulation, including
extremely flammable substances, explosives, radioactive materials and
petroleum/petroleum products (collectively, "Hazardous Substances";
provided, however, the foregoing prohibition shall not be applicable to
(i) Hazardous Substances which are present at the leased premises prior
to the date hereof, (ii) normal and reasonable amounts of cleaning and
pest control supplies reasonably necessary for maintenance of the
premises so long as such materials are properly, safely, and lawfully
stored and used by Tenant and the quantity of same does not equal or
exceed a "reportable quantity" as defined under 40 C.F.R. 302 and 305,
as amended, or (iii) de minimis amounts of leaked or spilled petroleum
products from the normal operation of motor vehicles; and
4. The use of the leased Premises for industrial,
manufacturing or landfill purposes, except as may be provided for
herein.
B. Tenant acknowledges that the use, maintenance or storage of
chlorofluorocarbons (including but not limited to freon and other so-called
CFC'S) may hereafter be prohibited or limited by law. In the event use,
maintenance or storage of chlorofluorocarbons is hereafter prohibited or
limited.
1. After the use or maintenance of chlorofluorocarbons is
prohibited or limited, Tenant shall not thereafter allow, cause, suffer
or permit any chlorofluorocarbons to be either placed, stored,
maintained, used or kept within the Premises or at any other part of
the Building or Building site which
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<PAGE> 16
is within or subject to Tenant's right to control or use, except or in
compliance with all applicable laws, regulations, rules and ordinances;
2. Tenant shall forthwith contain or otherwise abate (as
required by applicable law) all chlorofluorocarbons placed in the
Premises after the date of the Lease and Tenant shall pay its pro rate
share of the cost to contain or abate chlorofluorocarbons placed or
present in the common areas at the time or after Tenant took possession
of the Premises;
3. Landlord shall have the right to abate any
chlorofluorocarbons placed in the Premises prior to the date on which
Tenant first took possession of the Premises. Landlord shall have no
obligation to so abate unless required by law. In conjunction
therewith, Landlord shall have no obligation to so abate unless
required by law. In conjunction therewith, Landlord shall be entitled
to access the Premises for the purposes of performing any necessary
containment or abatement in accordance with applicable law.
Furthermore, Tenant shall not be entitled to terminate this Lease or to
receive any rent abatement or to hold Landlord liable for any
incidental or consequential damages (such as, but not limited to,
damages for business interruption) arising by reason of the fact that
any chlorofluorocarbons are present in the Premises at the date of this
Lease so long as Landlord performs its obligations under this
subparagraph within a reasonable time after the effective date of any
law which prohibits further use, storage or maintenance of
chlorofluorocarbons within the Premises; and
4. In addition to the foregoing, Tenant agrees that Tenant
shall, at the end of the Lease term or sooner termination thereof,
remove all chloro-fluorocarbons which have been placed in the Premises
during the Lease term (regardless of whether the use, storage or
maintenance of chlorofluorocarbons is prohibited with the Premises at
the end of the lease term) unless requested not to do so by Landlord.
C. Tenant shall notify Landlord immediately upon learning that any duty
of Tenant described in paragraph A of this Article has been violated, that there
has been a release, discharge or disposal of any Hazardous Substances on a part
of the Premises or the Building or Building site, that radon gas or urea
formaldehyde has been detected on or in the Premises, or that the Premises are
subject to any third party claim or action, or threat thereof, because of any
environmental condition in or originating from the Premises or arising in
connection with Tenant's operations at the Premises or at the Building or
Building site. Tenant shall promptly provide Landlord with copies of all
correspondence to or from third parties regarding such claims or actions or
regarding environmental conditions in or originating from Tenant's operations in
the Premises or at the Building or Building site.
D. In the event of a release, leaking, spilling or deposit
(collectively "Leak") of any Hazardous Substances on, in or from the Premises,
Tenant shall immediately cause complete remediation of such leak and restore the
Premises to the condition that existed prior to commencement of this Lease or
the date Tenant took possession of the Premises,
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<PAGE> 17
whichever is earlier. Landlord shall have the right, but not the obligation, to
enter the Premises and remediate any environmental condition on the Premises to
comply with all laws, regulations and ordinances during which time Tenant shall
not be entitled to any abatement of rent.
E. Tenant shall indemnify and hold harmless Landlord (as well as
Landlord's officers, directors, shareholder, employees, partners, servants and
agents including the property manager) (the "Indemnified Parties") of and from
any and all liabilities (including strict liabilities), penalties, demands,
actions, costs and expenses (including without limitation legal fees),
remediation and response costs, remediation plan preparation costs and any
continuing monitoring or closure costs, incurred or suffered by the Indemnified
Parties, or asserted by a third party against the Indemnified Parties, directly
or indirectly arising due to the breach of Tenant's obligations set forth in
this Article. Such indemnification shall survive expiration or earlier
termination of this Lease.
F. At the expiration or sooner termination hereof, Tenant shall return
the Premises to Landlord in substantially the same condition as existed on the
date of commencement hereof or the date Tenant took possession of the Premises,
whichever is earlier, free of any leaked Hazardous Substances in, on or from the
leased Premises.
ARTICLE XXIII - ENTIRE AGREEMENT
23.01 This Lease contains the entire agreement between the parties and
no modification of this Lease shall be binding upon the parties unless evidenced
by an agreement in writing signed by the Landlord and the Tenant after the date
hereof. If there be more than one Tenant named herein, the provisions of this
Lease shall be applicable to and binding upon such tenants jointly and
severally.
ARTICLE XXIV - EXHIBITS
24.01 Reference is made to the Exhibits listed at Section 1.01(M)
above, which exhibits are attached hereto and Incorporated herein by reference.
ARTICLE XXV - HAZARDOUS MATERIALS
25.01 Hazardous Material: Tenant shall comply with all Laws
(hereinafter defined) relating to the storage, use and disposal of Hazardous
Materials (hereinafter defined). No Hazardous Materials shall be disposed of on
the Premises. For purposes of this Section, "Hazardous Materials" means and
includes any hazardous, toxic or dangerous waste, substance or material defined
as such in (or for purposes of the Comprehensive Environmental Response,
Compensation, and Liability Act, any so-called "Superfund" or "Superlien" law,
or any federal, state or local statute, law, ordinance, code, rule, regulation,
order or decree (collectively "Laws") regulating, relating to, or imposing
liability or standards of
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<PAGE> 18
conduct concerning, any hazardous, toxic or dangerous waste, substance or
material, as now or at any time hereafter in effect.
To the extent Landlord or any prior Tenant or Owner did not contribute
to same, Tenant shall be solely responsible for and shall indemnify, defend and
hold Landlord and its subsidiaries, directors, officers, employees, servants and
agents (collectively "Agents") harmless from any and all claims, judgments,
losses, demands, causes of action, proceedings or hearings relating to the
storage, placement or use of Hazardous Materials (hereinafter collectively
referred to as "Claims") by Tenant, its Agents or invitees on or about the
Premises including, without limitation, Claims resulting from the contamination
of subterranean water beneath, adjoining or in the vicinity of the Premises.
Tenant shall reimburse Landlord for: (i) losses in or reductions to rental
income resulting from Tenant's use, storage and disposal of Hazardous Materials;
(ii) all costs of refitting or other alterations to the Leased Premises
necessitated by Tenant's use, storage, or disposal of Hazardous Materials
including, without limitation, alterations required to accommodate an alternate
use of the Premises; and (iii) any diminution in the fair market value of the
Premises caused by Tenant's use, storage or disposal of Hazardous Materials.
Tenant agrees to defend all such Claims on behalf of Landlord with counsel
acceptable to Landlord, and to pay all fees, costs, damages or expenses relating
to or arising out of any such Claim including attorney's fees and costs. Tenant
shall further agree to be solely responsible for and shall indemnify, defend and
hold Landlord and its Agents harmless from and against all Claims, including
reasonable attorney's fees and costs arising out of or in connection with any
removal, clean-up or restoration work which is required by any government agency
having jurisdiction and which arises from Tenant's storage, use or disposal of
Hazardous Materials on the Premises during its occupancy of the Premises.
Likewise, Landlord agrees to indemnify Tenant as to any losses to Tenant caused
by Landlord or any prior Tenant or Owner of subject premises. LANDLORD WARRANTS
THAT, TO HIS KNOWLEDGE, THE LEASED PREMISES ARE PRESENTLY FREE AND CLEAR OF ANY
AND ALL OF THE ABOVE MENTIONED MATERIALS.
From time to time during the Term of the Lease or any extension thereof
and not more than ninety (90) days after the expiration or earlier termination
of this Lease, including any extension thereof, Landlord may, in its sole
discretion conduct tests of the Premises to determine the presence of Hazardous
Materials. Results of said tests will be provided to Tenant at Tenant's request.
In the event such tests indicate the presence of Hazardous Materials due to the
activities of Tenant, and Tenant's confirming tests reach the same conclusion,
Tenant shall, in addition to its other obligations hereunder, reimburse Landlord
for the cost of such test or tests and shall immediately commence procedures to
remove such Hazardous Materials from the Premises. Tenant's reimbursement to
Landlord of its tests shall not constitute a final acceptance of the tests by
Tenant or a waiver by Tenant to contest the results of the tests.
Notwithstanding anything herein to the contrary, Tenant shall have no obligation
to clean up, to comply with any Law regarding, or to reimburse release,
indemnify, or defend Landlord with respect to any Hazardous Materials which
Tenant or its agents did not store, use, dispose of or transport in or on the
Premises. This Section shall survive the expiration or sooner termination of
this Lease.
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<PAGE> 19
IN WITNESS WHEREOF, the parties have signed duplicate counterparts
hereof as of the date and year hereinabove set forth.
TENANT: LANDLORD:
Horizon High Reach Incorporated
by:
/s/ Morris Ragona
- ---------------------------------- ----------------------------------
(Shaun Flanagan), Vice President (Morris Ragona)
Attest:
/s/ Joan Ragona
- ---------------------------------- ----------------------------------
Secretary (Joan Ragona)
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<PAGE> 1
Exhibit 10.9
LEASE
THIS AGREEMENT OF LEASE made this 26th day of January, 1995, by and
between RICHARD V. GUNNER and GEORGE ANDROS, herein called Lessor, and HORIZON
HIGH REACH, INC., A DELAWARE CORPORATION, herein called Lessee, both without
regard to number or gender,
WITNESSETH
Lessor agrees to, and does make and enter into, the following lease as
hereinafter set forth:
1. LEASED PREMISES: Lessor does hereby lease unto Lessee and Lessee does
hereby hire and take from Lessor the following described premises, situate in
the City of Fresno, County of Fresno, State of California; to wit:
1540 East Shaw Avenue
Suite 123
(3,168 square feet as shown
on Exhibit "A" attached hereto)
subject to liens, encumbrances, building occupancy and other restrictions of
record, ordinances and regulations now or hereafter lawfully imposed thereon by
any government of agency thereof or in accordance with the terms of this lease:
2. TERM: To have and to hold said premises for a term of five (5) years,
commencing on the first day of September, 1995, and ending on the twenty-first
day of August, 2000:
3. RENTAL: Lessee promises and agrees to pay to Lessor, at such place or
places as may from time to time be designated by Lessor, monthly rental in the
following amounts for the following months of the term:
<TABLE>
<CAPTION>
Period Monthly Rental
------ --------------
<S> <C>
Months 01 - 12 $3,960.00
Months 13 - 48 $4,118.40
Months 49 - 60 $4,435.20
</TABLE>
4. USE OF PREMISES: The above described premises are leased for the
purpose of conducting thereupon general office uses and for no other purpose or
purposes, and Lessee promises and agrees that he will, during the entire term
hereof, use the same for conducting thereupon the aforesaid business and will
occupy all said premises and cause the same to be open for business in the usual
and customary manner of similar businesses during the entire term hereof; and
will not permit the same to become vacant or unoccupied; and will not use, or
permit to be used, said premises or any part thereof for any sale by auction in
such manner as will increase the existing rate of insurance upon the building of
which these premises are a part, nor cause any cancellation of any insurance
policy covering said building (and said Lessee will pay any additional insurance
premium so caused as additional rent); nor hall Lessee sell, keep, use or permit
to be sold, kept, or used in or about said premises any article which may be
prohibited in the standard form of fire insurance policies. Lessee shall, at his
sole cost and expense, comply with any and all requirements, pertaining to said
premises, of any insurance organization or company, necessary for the
maintenance of reasonable fire and public liability insurance, covering said
building and appurtenances. Lessor reserves the right to the use of all exterior
walls and the roof of the
<PAGE> 2
demised premises and Lessee shall not inscribe, paint of affix any signs,
advertisements, placards or awnings upon the exterior walls or roof thereof or
upon the stairs, hallways, entrances, vestibules, marquees or windows thereof
without written consent of Lessor first hand and obtained therefor, and upon any
violation hereof Lessor may, in addition to all other remedies and claims for
damages, enter said premises and remove such signs, except Lessee may place upon
the front of said demised premises and upon the front windows thereof, such
signs as are customarily used in the conduct of like business, but such signs
shall not project from the front of said building.
5. COMPLIANCE WITH LAW: Lessee agrees that he will not use or permit said
premises to be sued for any unlawful purpose or for any purpose which will
injure the reputation of the same or the building of which these premises are a
part, nor will be disturb the other tenants of such building or neighborhood,
and he will, at his own expense, promptly observe and comply with all laws,
orders, regulations, rules, ordinances and requirements of Federal, State, and
County and City governments, or other lawful governmental bodies, or any of
their departments, bureaus or offices, and will effect all alterations or other
requirements exacted, directed or deemed necessary on account of Lessee's use of
said premises; and agrees to pay, at his own cost and expense, all claims,
fines, penalties and damages that may in any manner arise out of, or be imposed
because of, the failure of Lessee to comply with this covenant, and will save
Lessor harmless from any damage, injury, loss or claim, lawfully imposed or
recovered by reason of any breach of this agreement. The commencement or
pendency in any Court, whether State or Federal, of any abatement proceedings
effecting the use of said premises shall, at the option of Lessor, be deemed a
breach of this lease.
6. CONDITION OF PREMISES: By entry hereunder, Lessee acknowledges that
said premises and each and every part thereof, all window glass and other
glazing, electric globes, plumbing, heating and lighting fixtures, electric
wiring and the sewage system in and about said premises on the date of entry are
in good order, condition and repair and on the last day of the term hereof, or
on any sooner termination of this lease, Lessee will peaceably and quietly
surrender and yield up said premises to Lessor with all appurtenances and
fixtures in good order, condition and repair, reasonable use, wear, tear and
damage by the elements excepted, and in this behalf Lessee waives all statutory
rights imposing obligations upon Lessor to repair, and particularly waives the
provisions of Sections 1941 and 1942 of the Civil Code of the State of
California.
7. REPAIRS:
(A) LESSOR OBLIGATIONS: Lessor agrees that he will keep the roof and
exterior walls of the building of which these premises are a part in good order,
condition and repair and will maintain the sewer line from the demised premises
to the line of the property, on which the demised premises are situate, in good
order and repair, and maintain and repair any damage to said premises caused by
termites, other insects, fungus or rot, but shall not be liable to Lessee for
any damage occasioned by Lessor's failure to keep said premises in such repair
unless Lessee has notified Lessor of such failure to repair and Lessor has
failed to attempt to remedy such default, nor for any damage arising from any
acts or neglect of co-tenants or other occupants of said building or the owners
or occupants of any adjacent or contiguous property, and Lessee shall not be
entitled to any rebate from Lessor therefor.
(B) LESSOR OBLIGATIONS: Lessor promises, at his own cost, to keep said
demised premises in good and substantial order and repair in all respects other
than provided in Paragraph (A) hereof, including, but not limited to, floors,
vaults, windows and other glazing, plumbing, gas, water and sewer piping,
adjacent sidewalks, electric fixtures, pipe, wire conduits and all other
appurtenances in, on or connected with and used for the benefit or service of
the demised premises; and further agrees to replace and renew with like kind and
quality, any and all of said things that become too worn to be repaired, so that
at all times said premises and appurtenances shall be in good order, condition,
and repair.
<PAGE> 3
(C) ALTERATIONS: Lessee promises and agrees that he will not make or cause
to be made any alterations or improvements upon said premises, except upon the
written consent of Lessor first had and obtained. All alterations or
improvements to said premises shall remain for the benefit of Lessor and shall
not be removed unless otherwise expressly agreed in writing and shall be
presumed to become an integral part of said premises. Upon any termination of
this lease, any alterations or improvements theretofor made by Lessee, with or
without the consent of Lessor, which in the opinion of Lessor tend to detract
from the usability of said premises, shall upon written notice by Lessor be
removed by Lessee and said premises shall be restored, at Lessee's expense, to
the condition in which they were prior to the said alterations or improvements.
The above restrictions shall not include or apply to trade fixtures so
long as Lessee fully complies with each and every term, condition and covenant
herein contained and so long as said trade fixtures may be installed and removed
without damage or injury to said premises or any improvements thereof. Upon the
termination of this lease, provided all the conditions, covenants and agreements
herein have been fully complied with on the part of Lessee, all such trade
fixtures may be removed so long as such removal shall not in any way injure or
impair the condition of said premises. In no event shall Lessee have any power
or authority to do any act, or make or execute any contract or agreement that
may create or become the basis for any lien upon the present or other estate or
reversion of Lessor, and should any claim of such lien be made or filed, Lessee
shall cause the same to be discharged within ten days after the imposition
thereof.
8. UTILITY CHARGES AND TAXES: Lessor covenants and agrees to pay all
utility and municipal service charges levied, taxed, or charged against said
premises during the term of this lease. The Lessor shall be liable for all taxes
levied against personal property and trade fixtures placed by Lessor in, on or
about the herein demised premises (including, but without prejudice to the
generality of the foregoing, vaults, vault doors, wall safes, partitions,
machinery, and atmospheric coolers and/or heaters).
9. INJURY OR DAMAGE ON PREMISES: Lessee hereby assumes all risk for damage
to goods, wares and merchandise, in or upon said premises, during the term
hereof, from every source, and for injuries to persons in or about said premises
from any cause; and, as a material part of the consideration to be rendered to
Lessor, agrees to hold Lessor harmless from any and all claims, suits, actions,
damages or causes of action, all costs, counsel fees and expenses, including
costs of any investigations and the defense of any proceeding or action brought
thereon for injury to persons or damage to property, or loss of life, sustained
in, on or about said premises or the buildings or appurtenances thereto, or upon
the adjacent sidewalks, excepting only such damage, injury or claim as shall
result from the willful act or omission of Lessor; and agrees to further save
harmless the said Lessor from any orders, judgments or decrees that may be
entered in any such suit or action and, in this respect, Lessee promises and
agrees that he will secure, carry and maintain, at all times during the term of
this lease, at his cost, public liability insurance for the joint and several
protection and indemnity of Lessor and Lessee, in the principal sum of Five
Hundred Thousand Dollars ($500,000.00), combined single limits; provided,
however, that during the term said public liability insurance is in full force
and effect protecting Lessor fully from the above enumerated risks, the
provisions requiring Lessee to hold harmless are, to that extent, waived.
10. INSURANCE: Whenever Lessee is hereby required to insure against any
risk, said insurance shall be in an insurance company approved by the Lessor and
a copy of said policy or certificate of insurance shall be delivered to Lessor
with a commitment from the insurance carrier endorsed thereon to the effect that
said policy shall remain in full force and effect until Lessor is notified in
writing of any change thereof.
11. DESTRUCTION OF PREMISES: In the event said premises or the building of
which they are a part is completely destroyed from any cause, or is entirely
taken for public or quasi-public use by eminent domain or condemnation
proceedings (an agreed sale to a public or quasi-public
<PAGE> 4
corporation or utility after threat of condemnation shall constitute a public
taking as used herein), this lease shall thereupon cease; provided, however,
that if said premises can be repaired under the laws and regulations of all
governmental agencies thereunto applicable, using the same type of construction
within sixty (60) working days, then Lessor shall forthwith repair the same, in
which event such destruction or taking shall in nowise annul or void this lease,
but Lessee shall be entitled only to a proportionate reduction of rent from the
day of such destruction until said repairs are completed. If such repairs cannot
be made within said sixty (60) days or in the event such repairs cannot be made
using the same type of construction, under the laws and regulations of any
governmental agency thereunto applicable, this lease shall then terminate. In
respect to any partial destruction of said premises, the provisions of
Subdivision 2 of Section 1932, Subdivision 4 of Section 1933, and Section 1942
of the Civil Code of the State of California are hereby waived by Lessee.
In the event said building, of which the demised premises are a part, be
destroyed by act of God, fire or the elements, or taken for public or
quasi-public use by eminent domain or condemnation, to the extent of not less
than one-third (1/3) of the replacement cost thereof, Lessor may elect to
terminate this lease, whether the demised premises be injured thereby or not.
If said demised premises, in part or in whole, be taken or condemned for
public use, all compensation awarded upon such condemnation or taking shall be
directly paid to Lessor and Lessee shall have no claim thereto. Lessee does
hereby irrevocably assign and transfer to Lessor all rights and claim of Lessee
to compensation or damages to which he may become entitled during the term
hereof by reason of any condemnation. Upon any such condemnation title shall
vest in the condemnor, free and clear of this lease, the same terminating as to
the part so taken, and if, upon the completion of the repair thereof, the leased
premises are not equal to the premises as originally leased, then the rent
payable hereunder shall be adjusted in the proportion to which the same
interferes with the conduct of the business of Lessee upon said premises.
In the event of any dispute between Lessor and Lessee, relative in the
provisions of this paragraph, they shall each select an arbitrator, who shall
select a third arbitrator, and the three so chosen shall hear and determine the
dispute and any award made by any two of the three arbitrators so chosen shall
be conclusive and binding upon the parties hereto, who shall bear equally the
cost of such arbitration.
12. ASSIGNMENT: Lessee shall not assign or hypothecate this lease nor any
right granted him hereunder, nor sublet the demised premises or any part thereof
without the prior written consent of Lessor; such consent not to be unreasonably
withheld or delayed. No consent to any assignment of this or any subletting of
said premises shall be construed to be a waiver of the provisions hereof, except
only as to the specific instance covered by such consent; nor shall this lease
or any interest herein be assignable by operation of law.
Lessee agrees he will not file during the term hereof a petition in
bankruptcy or for extension or arrangement of his debts or composition with his
creditors, nor make an assignment for the benefit of his creditors, nor permit
his interest in the demised premises to become subject to any proceeding,
whether in Federal or State courts, wherein a receiver, custodian, conservator
or other officer is appointed to hold, conserve, manage or operate Lessee's
business; and any assignment by operation of law or the filing of any petition
in bankruptcy, or for extension or arrangement of his debts or composition with
his creditors, whether voluntary or involuntary, or the appointment of any
receiver, custodian, or other officer in any proceeding in any court wherein the
possession, management or control of premises herein demised is in any person
other than Lessee, shall terminate this lease and any and all rights which
Lessee may have by reason hereof, and Lessor shall bc entitled to recover, in
addition to possession of said premises, damages in a sum equal to all expenses
to which Lessor may be put in regaining possession of said premises and the
amount of the rent reserved for the remainder of the term hereof, less the fair
rental value for the remainder of said term.
<PAGE> 5
13. DEFAULT: The occurrence of any of the following shall constitute a
default by Lessee:
1. Failure to pay rent when due, if the failure continues for ten (10)
days after notice thereof has been given to Lessee.
2. Abandonment and vacation of the Premises (failure to occupy and operate
the Premises for sixty (60) consecutive days shall be considered an abandonment
and vacation).
3. Failure to perform any other provision of this Lease if the failure to
perform is not cured within thirty (30) days after notice thereof has been given
to Lessee. If the default cannot reasonably be cured within thirty (30) days,
Lessee shall not be in default of this Lease if Lessee commences to cure the
default within the thirty (30) days period and diligently and in good faith
continues to cure the default.
The purpose of the notice requirement set forth in this Section is to
extend the notice requirements of the unlawful detainer statute of California by
substituting the above time periods for the statutory time period.
Notice given under this paragraph shall specify the alleged default and
the applicable lease provisions of this Lease and demand that Lessee cure the
default or pay the rent that is in arrears, as the case may be, within the
applicable period of time, or quit the Premises. No such notice shall be deemed
a forfeiture or a termination of this Lease unless Lessor so elects in the
notice.
14. LESSOR'S REMEDIES: Lessor shall have the following remedies if Lessee
commits a default. These remedies are not exclusive; they are cumulative in
addition to any remedies now or later allowed by law.
A. Lessor can continue this Lease in full force and effect, and the lease
will continue in effect as long as Lessor does not terminate Lessee's right to
possession, and Lessor shall have the right to collect rent when due. During the
period Lessee is in default, Lessor can enter the Premises and relet them, or
any part of them, to third parties for Lessee's account. Lessee shall be liable
immediately to Lessor for all reasonable costs Lessor incurs in reletting the
Premises, including, without limitation, broker's commissions, expenses of
remodeling the Premises required by the reletting, and like costs. Reletting can
be for a period shorter or longer than the remaining term of this Lease. Lessee
shall pay to Lessor the rent due under this Lease on the dates the rent is due,
less the rent Lessor receives from any reletting. No act by Lessor allowed by
this paragraph shall terminate this Lease unless Lessor notifies Lessee that
Lessor elects to terminate this Lease.
If Lessor elects to relet the premises as provided in the paragraph, rent
that Lessor receives from reletting shall be applied to the payment of:
First, any indebtedness from Lessee to Lessor other than rent due from
Lessee;
Second, all reasonable costs, including for maintenance, incurred by
Lessor in reletting;
Third, rent due and unpaid under this Lease. After deducting the payments
referred to in this paragraph, any sum remaining from the rent Lessor receives
from reletting shall be held by Lessor and applied in payment of future rent as
rent becomes due under this Lease. In no event shall Lessee be entitled to any
excess rent received by Lessor. If, on the date rent is due under this lease,
the rent received from the reletting is less than the rent due on that date,
Lessee shall pay to Lessor, in addition to the remaining rent due all costs,
including for maintenance, Lessor incurred in reletting that remain after
applying the rent received from the reletting as provided in this Section.
B. Lessor can terminate Lessee's right to possession of the premises at
any time. No act by Lessor other than giving notice to Lessee shall terminate
this Lease. Acts of maintenance, efforts to relet the Premises, or the
appointment of a receiver on Lessor's initiative to protect Lessor's interest
under this Lease shall not constitute a termination of Lessee's right to
possession. On termination, Lessor has the right to recover from Lessee:
1. The worth, at the time of the award of the unpaid rent that had been
earned at the time of termination of this Lease.
2. The worth, at the time of the award of the amount by which the unpaid
rent that would have been earned after the date of termination of this Lease
until the time of award exceeds the amount of the loss of rent that Lessee
proves could have been reasonably avoided;
3. The worth, at the time of the award of the amount by which the unpaid
rent for the balance of the term after the time of award exceeds the
<PAGE> 6
[PAGE MISSING FROM ORIGINAL]
<PAGE> 7
20. WAIVER: Time is agreed to be the essence of this agreement and any
waiver by Lessor of the prompt and punctual performance of any term, condition,
or covenant hereof shall not be construed to be a waiver of the prompt and
punctual performance of the same or any other term, condition or covenant
subsequently when due.
21. MERGER. The voluntary or other surrender of this lease by Lessee, or a
mutual cancellation hereof shall not work a merger, and shall, at the option of
the Lessor, terminate all or any existing sub-leases or subtenancies or shall
operate as an assignment to him of such sub-leases or subtenancies.
22. SUCCESSION: This lease and each of its terms, subject to the
provisions relating to assignments, shall apply to and bind the heirs,
successors, executors, administrators and assigns of the parties hereto and all
parties hereto shall be jointly and severally liable hereunder.
23. QUIET ENJOYMENT: Lessor covenants with Lessee that upon Lessee's entry
into said premises and his performance of each of the terms of the lease, on his
part to be performed, Lessee shall have full freedom and use of said premises in
accordance with the terms hereof and quietly enjoy the same without lawful claim
on the part of any person.
24. HOLDING OVER: Any holding over after the expiration of the term hereof
with the consent of Lessor shall be a tenancy from month to month, terminable
only upon thirty (30) days' written notice from either party to the other, upon
each and every of the other terms, conditions and covenants herein insofar as
the same may be applicable. Rent shall be at the then current rate per month,
payable in advance.
25. PLATE GLASS: Lessee shall carry plate glass insurance at the full
insurable value thereof on all exterior plate glass.
26. TAX ACCELERATION: Lessee agrees to pay to Lessor when due, that
portion of any increase of Real Property Taxes over the present 1994-1995 taxes
assessed against the entire premises owned by Lessor (being the subject building
and its parking lot) as the total square footage leased hereunder bears to the
total square footage of the entire premises.
27. OPERATING COSTS: Lessee agrees to pay the Lessor as additional rent
any increase in recurring building operating costs (including but not limited to
utilities, fuel, building supplies, janitorial and insurance) paid by Lessor
during any year of the lease over and above such operating costs paid by Lessor
in the 1995 calendar year in proportion that the space Lessee occupies bears to
the total space in the complex.
28. SUBSTITUTE TAXES: Tenant shall not be required to pay any municipal,
county, state, or federal income or franchise taxes of Landlord, or any
municipal, county, state, or federal estate, succession, inheritance, or
transfer taxes of Landlord. If at any time during the term the laws concerning
the methods of real property taxation prevailing at the commencement of the term
are changed so that a tax or excise on rents or any other such tax, however
described, is levied or assessed against Landlord as a direct substitution in
whole or in part for any real property taxes. Tenant shall pay before
delinquency (but only to the extent that it can be ascertained that there has
been a substitution and that as a result Tenant has been relieved from the
payment of real property taxes it would otherwise have been obliged to pay) the
substitute tax or excise on rents. Tenant's share of any tax or excise on rent
shall be substantially the same as, and a substitute for, the payment of such
real property taxes as provided in this lease.
29. TENANT IMPROVEMENTS: As soon as reasonably practical but no later than
August 31, 1995, Lessor, at its sole cost and expense shall remodel the premises
in accordance with the plan attached hereto as Exhibit A. In addition, Lessor
will recarpet and repaint the 1,152 easterly square feet to match the carpet and
paint in the westerly portion of the premises. Lessor shall construct such
interior improvements with as little interference with Lessee's business
operations as possible.
<PAGE> 8
30. EXISTING SUBLEASE: It is acknowledged that Lessee currently occupies
the westerly 2,106 square feet of the premises under a Sublease dated June 16,
1993, which expires on April 30, 1995. Until Lessor's work under Section 29 is
completed, lessee shall be allowed to continue to occupy this area of the
premises at the rental set forth in said Sublease of $2,016,000 per month. The
rent due hereunder will not commence until all of Lessor's work is completed and
the entire premises are available for Lessee's occupancy.
IN WITNESS WHEREOF, the parties hereto have executed this agreement in duplicate
the day and year first above written.
ADDRESS OF LESSOR: 555 West Shaw Avenue, Suite B-4
Fresno, California 93704
/s/ Richard V. Gunner /s/ George Andros
- -------------------------------------- --------------------------------------
RICHARD V. GUNNER, LESSOR GEORGE ANDROS, LESSOR
ADDRESS OF LESSEE: 1540 East Shaw Avenue, Suite 123
Fresno, CA 93710
HORIZON HIGH REACH, INC.
By: /s/ Randall Fortel
----------------------------------
Its: CHIEF FINANCIAL OFFICER
----------------------------------
<PAGE> 1
EXHIBIT 10.10
NET COMMERCIAL LEASE AGREEMENT
STATE OF TEXAS
COUNTY OF DALLAS
THIS LEASE AGREEMENT made and entered into by and between TRUSSEL
ELECTRIC, INC., a Texas Corporation hereinafter referred to as "Landlord," and
UP-RIGHT, INC. hereinafter referred to as "Tenant."
WITNESSETH:
Landlord hereby leases to Tenant, and Tenant hereby takes from
Landlord the following described premises (hereinafter referred to as the
"demised premises") situated within the County of Dallas, State of Texas:
See Exhibit "A" attached hereto and made a part hereof.
together with all rights, privileges, easements and appurtenances belonging to
or in any way pertaining to the demised premises and together with the building
and other improvements now situated or to be erected upon the demised premises.
TO HAVE AND TO HOLD the same for a term of Three (3) years beginning
on January 1, 1990,1 upon the following terms, conditions and covenants:
1. RENT: Tenant agrees to pay the Landlord rent for the demised
premises at the rate of Four Thousand Five Hundred Eighty-Three and 33/100
Dollars ($4,583.33) "base rent" per month in advance. One such monthly
installment shall be due and payable on or before the beginning date of this
lease, and a like monthly installment shall be due and payable on or before the
first day of each succeeding calendar month during the term hereof; provided
that, in the event the term hereof shall commence or end during a calendar
month, the rent for any fractional calendar month following the commencement or
preceding the end of the term of this lease shall be pro rated by days. (If
percentage rent is to be payable to Landlord, refer to Exhibit A attached to
this lease. In such case Exhibit A shall be incorporated into and become a
part of this lease when physically attached hereto.)
Tenant has deposited with landlord, upon delivery of this lease, Nine
Thousand One Hundred Sixty-Six and 66/100 Dollars ($9,166.66) to be applied as
follows:
(a) $4,583.33 for rent for the month of January, 1990.
(b) $4,583.33 as a security deposit. Such security deposit shall
be held by Landlord without interest as security for the performance by Tenant
of Tenant's covenants and obligations under this lease. The security deposit
is not an advance payment of rental or the full measure of liquidated damages
in case of default by Tenant. Upon the occurrence of any event of default,
Landlord may, from time to time, without prejudice to any other remedy provided
herein or provided by law, use the security deposit to the extent necessary to
make good any arrears of rent and any other damage, injury, expense or
liability caused to Landlord by such event of default. Following any such
- ----------------
1 Landlord agrees to use its best efforts to vacate the demised premises by
December 15, 1989. If Landlord vacates the demised premises early, the
commencement date of the lease shall be the sooner of the date Tenant occupies
the demised premises or five days after Landlord gives Tenant written notice it
may occupy the demised premises. Notwithstanding the above, provided that
Tenant [illegible].
-1-
<PAGE> 2
application of the security deposit, Tenant shall pay to Landlord, on demand,
the amount so applied in order to restore the security deposit to its original
amount. If Tenant is not in default, hereunder, any remaining balance of such
deposit shall be returned by Landlord to Tenant upon expiration or termination
of this lease.
2. ACCEPTANCE OF PREMISES:
Tenant acknowledges that it has fully inspected the demised premises
and accepts the demised premises, and any buildings and improvements situated
thereon, as suitable for the purposes for which the same are leased in their
present condition, except Tenant, at Tenant's expense, may convert the office
space outlined in red as shown on Exhibit "B" attached hereto and made a part
hereof into additional warehouse space; and if so, Tenant may remove only the
interior walls, doors, door frames, ceiling, light fixtures, carpet in such
manner that Landlord will be able to reuse such material at the end of this
lease. Tenant shall notify Landlord in writing when such items have been
removed and Landlord shall arrange for the storage of such equipment within 15
days after receipt of such notice. (If this lease provides for a building to be
constructed for Tenant, refer to Exhibit B attached to this lease. In such
case this paragraph 2 shall become inapplicable, and Exhibit B shall be
incorporated into and become a part of this lease when physically attached
hereto.)
3. USE OF PREMISES:
The demised premises shall be used and occupied only for the purpose
of leasing and maintaining scaffolding and construction equipment, and not
otherwise. Tenant shall at its own expense obtain any and all governmental
licenses and permits necessary for such use.
4. COMPLIANCE OF LAW:
Tenant shall comply with all governmental laws, ordinances and
regulations applicable to the use of the demised premises, and shall promptly
comply with all governmental orders and directives for the correction,
prevention and abatement of nuisances in or upon, or connected with the demised
premises, all at Tenant's sole expense. Tenant shall not have on the demised
premises any hazardous materials.
5. REAL ESTATE TAXES:
See Special Provisions on Exhibit "C" attached hereto and made a part
hereof.
6. REPAIRS AND MAINTENANCE:
(a) Tenant shall at its own cost and expense keep, maintain and
take good care of the premises and make all necessary repairs thereto, interior
and exterior, non-structural, ordinary and extraordinary, and shall suffer no
waste or nuisance, provided at the end of the term or other termination of this
lease, Tenant shall deliver the premises with all improvements thereon in good
repair and condition, reasonable wear and tear only excepted. The air
conditioning and heating systems shall be in operable condition.
(b) Tenant shall at its own cost and expense care for the grounds
around the buildings on the premises, including the regular mowing of grass,
care of shrubs and general landscaping, and maintenance of the parking areas,
driveways, alleys and shall maintain the whole of the premises in a clean and
sanitary condition.
(c) Tenant shall enter into maintenance contracts for the heating
and air conditioning system and for lawn and landscaping which shall be subject
to
-2-
<PAGE> 3
Landlord's reasonable approval and shall be furnished to Landlord within 30
days after lease commencement. Renewals shall be timely furnished.
(d) In the event Tenant shall fail to maintain the demised
premises or any paving, landscaping or railroad siding in accordance with this
paragraph 6, Landlord shall have the right (but not the obligation) to cause
all repairs or other maintenance to be made and the reasonable costs therefor
expended by Landlord shall be paid by Tenant on written demand.
7. ALTERATIONS, ADDITIONS AND IMPROVEMENTS:
Tenant shall not create any openings in the roof or exterior walls, or
make any alterations, additions or improvements to the demised premises without
prior written consent of Landlord. Consent for non-structural alterations,
additions or improvements shall not be unreasonably withheld by Landlord.
Tenant shall have the right to erect or install shelves, bins, machinery,
air-conditioning or heating equipment and trade fixtures, provided that Tenant
complies with all applicable governmental laws, ordinances and regulations. At
the expiration or termination of this lease, Tenant shall have the right to
remove such items so installed, provided Tenant is not in default at the time
of such removal and provided further that Tenant shall, at the time of removal
of such items, repair in a good and workmanlike manner any damage caused by
installation or removal thereof.
Tenant shall pay for all costs incurred or arising out of alterations,
additions or improvements in or to the demised premises and shall not permit a
mechanic's or materialman's lien to be asserted against the demised premises.
Upon request by Landlord, Tenant shall deliver to Landlord proof of payment
reasonably satisfactory to Landlord of all costs incurred or arising out of any
such alterations, additions or improvements, and lien waivers.
All alterations, additions or improvements in or to the demised
premises shall become the property of Landlord at the expiration or termination
of this lease, however, Landlord may direct the removal of alterations,
additions or improvements by giving written notice to Tenant prior to the
expiration or termination of this lease. At the direction of Landlord, Tenant
shall promptly remove all alterations, additions and improvements and any other
property placed in the demised premises by Tenant and Tenant shall repair in a
good and workmanlike manner any damage caused by such removal.
8. SIGNS:
Tenant shall not place or affix any signs or other objects upon or to
the roof or exterior walls of the demised premises or paint or otherwise deface
the exterior walls of the demised premises without the prior written consent of
Landlord. Any signs installed by Tenant shall conform with applicable laws and
deed and other restrictions. Tenant shall remove all signs at the termination
of this lease and shall repair any damage and close any holes caused or
revealed by such removal.
9. INSURANCE, FIRE AND CASUALTY DAMAGE:
See Special Provisions on Exhibit "C" attached hereto and made a part
hereof.
(a) Landlord agrees to maintain insurance covering the building of
which the demised premises are a part in an amount not less than 80% (or such
greater percentage as may be necessary to comply with the provisions of any
co-insurance clauses of the policy) of the "replacement cost" thereof as such
term is defined in the Replacement Cost Endorsement to be attached thereto,
insuring against the perils of Fire, Lightning, Extended Coverage, Vandalism
and Malicious Mischief, extended by Special Extended Coverage Endorsement to
insure against all other Risks of Direct Physical Loss, such coverages and
endorsements to be as defined, provided and limited in the standard bureau
-3-
<PAGE> 4
forms prescribed by the insurance regulatory authority for the State in which
the demised premises are situated for use by insurance companies admitted in
such state for the writing of such insurance on risks located within such
state. Subject to the provisions of subparagraphs 9(b) and 9(e) below, such
insurance shall be for the sole benefit of Landlord and under its sole control.
Tenant agrees to any Landlord's cost of maintaining such insurance on said
building. Said payments shall be made to Landlord per Exhibit "C".
(b) If the buildings situated upon the premises should be damaged
or destroyed by any peril covered by the insurance to be provided by Landlord
under subparagraph 9(a) above, Tenant shall give immediate notice thereof to
Landlord if the holder of any deed of trust covering the demised premises does
not require that the insurance proceeds payable on account of such casualty be
applied to reduce the indebtedness secured thereby, and Landlord shall at its
sole cost and expense thereupon proceed with reasonable diligence to rebuild
and repair such buildings to substantially the condition in which they existed
prior to such damage or destruction, except that Landlord shall not be required
to rebuild, repair or replace any part of the partitions, fixtures, additions
or other improvements which may have been placed in, on or about the premises
by Tenant and except that Tenant shall pay to Landlord upon demand any
applicable deductible amounts specified under Landlord's insurance. The rent
payable hereunder shall in no event abate by reason of any damage or
destruction.
(c) If the buildings situated upon the premises should be damaged
or destroyed by a casualty other than a peril covered by the insurance to be
provided by Landlord under subparagraph 9(a) above, or if any other
improvements situated on the demised premises should be in any manner damaged
or destroyed, Tenant shall at its sole cost and expense thereupon proceed with
reasonable diligence to rebuild and repair such buildings and/or improvements
to substantially the condition in which they existed prior to such damage or
destruction, subject to Landlord's approval of the plans and specifications for
such rebuilding and repairing, which approval shall not be unreasonably
withheld. Tenant's obligation hereunder shall not include destruction of the
premises by war, riot, civil disobedience, or flood.
(d) Tenant covenants and agrees to maintain insurance on all
alterations, additions, partitions and improvements erected by, or on behalf
of, Tenant in, on or about the demised premises in an amount not less than 90%
(or such greater percentage as may necessary to comply with the provisions of
any co-insurance clause of the policy) of the "replacement cost" thereof as
such term is defined in the Replacement Cost Endorsement to be attached hereto.
Such insurance shall insure against the perils and be in form, including
stipulated endorsements, as provided in subparagraph 9(b) hereof. Such
insurance shall be for the sole benefit of Tenant and under its sole control.
All such policies shall be procured by Tenant from responsible insurance
companies satisfactory to Landlord. Certified copies of policies of such
insurance, together with receipt evidencing payment of premiums therefor shall
be delivered to Landlord prior to the commencement date of this lease. Not
less than fifteen (15) days prior to the expiration date of any such policies,
certified copies of renewals thereof (bearing notations evidencing the payment
of renewal premiums) shall be delivered to Landlord. Such policies shall
further provide that not less than thirty (30) days' written notice shall be
given to Landlord before such policy may be cancelled or changed to reduce
insurance provided thereby.
(e) Notwithstanding anything herein to the contrary, in the event
the holder of any indebtedness secured by a manager or deed of trust covering
the premises required that the insurance proceeds be applied to such
indebtedness then the Landlord shall have the right to terminate this lease by
delivering written notice of termination to Tenant within fifteen (15) days
after such requirement is made by any such holder, whereupon all rights and
obligations hereunder shall cease and terminate.
-4-
<PAGE> 5
10. WAIVER OF SUBROGATION:
Each party hereto waives any and every claim which arises or may arise
in its favor against the other party hereto during the term of this lease or
any renewal or extension thereof for any and all loss of, or damage to, any of
its property located within or upon, or constituting a part of, the demised
premises, which loss or damage is covered by valid and collectible fire and
extended coverage insurance policies, to the extent that such loss or damage is
recoverable under such insurance policies. Such mutual waivers shall be in
addition to, and not in limitation or derogation of, any other waiver or
release contained in this lease with respect to any loss of, or damage to,
property of the parties hereto. Inasmuch as such mutual waivers will preclude
the assignment of any aforesaid claim by way of subrogation or otherwise to an
insurance company (or any other person), each party hereby agrees immediately
to give to each insurance company which has issued to its policies of fire and
extended coverage insurance, written notice of the terms of such mutual
waivers, and to cause such insurance policies to be properly endorsed, if
necessary, to prevent the invalidation of such insurance coverages by reason of
such waivers.
Landlord and its authorized agents shall have the right, during normal
business hours, to enter the demised premises (a) to inspect the general
condition and state of repair thereof, (b) to make repairs required or
permitted under this lease, (c) to show the premises to any prospective tenant
or purchaser or insurance agent or inspector or (d) for any other reasonable
purpose.
During the final 150 days of the lease term, Landlord and its
authorized agents shall have the right to erect and maintain on or about the
demised premises customary signs advertising the property for lease or for
sale.
11. [No section 11.]
12. UTILITY SERVICES:
Tenant shall pay the cost of all utility services, including but not
limited to initial connection charges, all charges for gas, water and
electricity used on the demised premises, and for all electric lights, lamps
and tubes.
13. ASSIGNMENT AND SUBLEASING:
See Special Provisions on Exhibit "C" attached hereto and made a part
hereof.
14. INDEMNITY AND PUBLIC LIABILITY INSURANCE:
(a) Landlord shall not be liable to Tenant or Tenant's employees,
agents, patrons or visitors, or to any other person whomsoever, for any injury
to person or damage to property on or about the premises, caused by the
negligence or misconduct of Tenant, its agents, servants or employees, or of
any other person entering upon the premises under express or implied invitation
of Tenant, or caused by the buildings and improvements located on the premises
becoming out of repair, or caused by leakage of gas, oil, water or steam or by
electricity emanating from the premises, or due to any cause whatsoever,
whether Tenant is the sole, concurrent, joint, or proximate cause, and Tenant
agrees to indemnify Landlord and hold it harmless from any loss, expenses or
claims including attorney's fees, arising out of any such damage or injury,
except injury in persons or damage to property the sole cause of which is the
negligence of the Landlord.
(b) Tenant shall procure and maintain throughout the term of this
lease a policy or policies of insurance, at its sole cost and expense, insuring
both Landlord and Tenant against all claims, demands, or actions arising out of
or
-5-
<PAGE> 6
in connection with: (i) the premises; (ii) the condition of the premises, the
limits of such policy or policies to be in the amount of not less than $300,000
per person and $1,000,000 per occurrence in respect of injury to persons
(including death), and in the amount of not less than $50,000 per occurrence in
respect to property damage or destruction, including loss of use thereof. All
such policies shall be procured by Tenant from responsible insurance companies
satisfactory to Landlord. Certified copies of such policies, together with
receipt evidencing payment of premiums therefor, shall be delivered to Landlord
prior to the commencement date of this lease. Not less than fifteen (15) days
prior to the expiration date of any such policies, certified copies of the
renewals thereof (bearing notations evidencing the payment of renewal premiums)
shall be delivered to Landlord. Such policies shall further provide that not
less than thirty (30) days' written notice shall be given to Landlord before
such policy may be cancelled or changed to reduce insurance provided thereby.
(c) If Tenant should fail to comply with the foregoing
requirements relating to insurance, Landlord may obtain such insurance, and
Tenant shall pay to Landlord on demand, as additional rental hereunder, the
premium cost thereof plus interest at the rate of ten percent (10%) per annum
from the date of payment by Landlord until repaid by Tenant.
15. CONDEMNATION:
A. If, during the term of this lease or any execution or renewal
thereof, all or a substantial part of the demised premises should be taken for
any public or quasi-public use under any governmental law, ordinance regulation
or by right of eminent domain, or should be sold to the condemnity authority
under threat of condemnation, this lease shall terminate and the rent shall be
abated during the unexpired portion of this lease, effective from the date of
taking of the demised premises by the condemnity authority.
B. If less than a substantial part of the demised premises is
taken for public or quasi-public use under any governmental law, ordinance or
regulation, or by right of eminent domain, or is sold to the condemnity
authority under threat of condemnation, Landlord, at its option, may by written
notice terminate this lease or shall forthwith at its sole expense restore and
reconstruct the buildings and improvements (other than leasehold improvements
made by tenant or any assignee, subtenant or other occupant of the demised
premises) situated on the demised premises in order to make the same reasonably
tenantable and suitable for the uses for which the demised premises are leased
as defined in paragraph 3. The rent payable hereunder during the unexpired
portion of this lease shall be adjusted equitable.
C. Landlord and Tenant shall be entitled to receive and retain
such separate awards and portions of lump sum awards as may be allocated to
their respective interests in any condemnation proceedings. The termination of
this lease shall not affect the rights of the respective parties to such
awards.
16. HOLDING OVER.
Should Tenant, or any of its successors in interest fail to surrender
the demised premises, or any part thereof, on the expiration of the term of
this lease, such holding over shall constitute a tenancy from month to month,
at a monthly rental equal to 125% of the rent paid for the last month of the
term of this lease unless otherwise agreed in writing.
17. DEFAULT BY TENANT:
The following events shall be deemed to be events of default under
this lease;
-6-
<PAGE> 7
A. Failure of Tenant to pay any installment of the rent or other sum
payable to Landlord hereunder on the date that same is due in which event a 10%
late charge on such amount shall also be due.
B. Failure of Tenant to comply with any term, condition or covenant
of this lease, other than the payment of rent or other sum of money, and such
failure shall not be cured within the lesser of the time reasonably necessary to
cure such default or 30 days after written notice thereof to Tenant.
C. Insolvency, the making of a transfer in fraud of creditors, or the
making of an assignment for the benefit of creditors by Tenant or any guarantor
of Tenant's obligations.
D. Filing of a petition under any section or chapter of the National
Bankruptcy Act, as amended, or under any similar law or statute of the United
States or any State thereof by Tenant or any guarantor of Tenant's obligations
or adjudication as a bankrupt or insolvent in proceedings filed against Tenant
or such guarantor.
E. Appointment of a receiver or trustee for all or substantially all
of the assets of Tenant or any guarantor of Tenant's obligation hereunder.
F. Abandonment by Tenant of any substantial portion of the demised
premises or cessation of the use of the demised premises for the purpose
leased.
18. REMEDIES OF LANDLORD.
Upon the occurrence of any of the events of default listed in Section
19, Landlord shall have the option to pursue any one or more of the following
remedies without any notice or demand whatsoever.
A. Terminate this lease, in which event Tenant shall immediately
surrender the demised premises to Landlord. If Tenant fails to so surrender
such premises, Landlord may, without prejudice to any order remedy which it may
have for possession of the demised premises or arrearages in rent, enter upon
and take possession of the demised premises and expel or remove Tenant and any
other person who may be occupying such premises or any part thereof, by force
if necessary, without being liable for prosecution or any claim for damages
therefor. Tenant shall pay to Landlord on demand the amount of all loss and
damage which Landlord may suffer by reason of such termination, whether through
inability to relet the demised premises on satisfactory terms or otherwise.
B. Enter upon and take possession of the demised premises, by force
if necessary, without terminating this lease and without being liable for
prosecution or for any claim for damages therefor, and expel or remove Tenant
and any other person who may be occupying such premises or any part thereof.
Landlord may relet the demised premises and receive the rent therefor. Tenant
agrees to pay to Landlord monthly or on demand from time to time any deficiency
that may arise by reason of any such reletting. In determining the amount of
such deficiency, the brokerage commission, attorney's fees, remodeling expenses
and other costs of reletting shall be subtracted from the amount of rent
received under such reletting.
C. Enter upon the demised premises, by force, if necessary, without
terminating this lease and without being liable for any prosecution for any
claim for damages therefor, and do whatever Tenant is obligated to do under the
terms of this lease. Tenant agrees to pay Landlord on demand for expenses
which Landlord may incur in this effecting compliance with Tenant's obligations
under this lease, together with interest thereon at the rate of 10% per annum
from the date expended until paid. Landlord shall not be liable for any
damages resulting to the Tenant from such action, whether caused by negligence
of Landlord or otherwise.
-7-
<PAGE> 8
Pursuit of any of the foregoing remedies shall not preclude pursuit of
any of the other remedies herein provided or any other remedies provided by
law, nor shall pursuit of any remedy herein provided constitute a forfeiture or
waiver of any rent due to Landlord hereunder or of any damages accruing to
Landlord by reason of the violation of any of the terms, conditions and
covenants herein contained.
19. ATTORNEY'S FEES:
If, on account of any breach or default by Landlord or Tenant of their
respective obligations under this lease, it shall become necessary for the
other to employ an attorney to enforce or defend any of its rights or remedies
hereunder, and should such party prevail, it shall be entitled to any
reasonable attorney's fees incurred in such connection.
20. QUIET ENJOYMENT:
Landlord warrants that it has full right and power to execute and
perform this lease and to grant the estate demised herein and that Tenant, on
payment of rent and performing the covenants herein contained, shall peaceably
and quietly have, hold and enjoy the demised premises during the full term of
this lease and any extension or renewal hereof; provided, however, that Tenant
accepts this lease subject and subordinate to any recorded mortgage, deed of
trust or other lien presently existing upon the demised premises. Landlord is
hereby irrevocably vested with full power and authority to subordinate Tenant's
interest hereunder to any mortgage, deed of trust or other lien hereafter
placed on the demised premises, and Tenant agrees upon demand to execute such
further instruments subordinating this lease as Landlord may request, provided
such further subordination shall be upon the express condition that this lease
shall be recognized by the mortgagee and that the rights of Tenant shall remain
in full force and effect during the term of this lease so long as Tenant shall
continue to perform all of the covenants of this lease.
22. WAIVER OF DEFAULT:
No waiver by the parties hereto of any default or breach of any term,
condition or covenant of this lease shall be deemed to be waiver of any
subsequent default or breach of the same or any other term, condition or
covenant contained herein.
23. REALTORS COMMISSIONS: If a real estate commission is due
hereunder, Landlord shall pay same.
24. CERTIFICATE OF OCCUPANCY:
Tenant may, prior to the commencement of the term of this lease, apply
for a Certificate of Occupancy to be issued by the municipality in which the
demised premises are located, but this lease shall not be contingent upon
issuance thereof. Nothing herein contained shall obligate Landlord to install
any additional electrical wiring, plumbing or plumbing fixtures which are not
presently existing in the demised premises, or which have not been expressly
agreed upon by Landlord in writing.
25. FORCE MAJEURE:
In the event performance by Landlord of any term, condition or
covenant in this lease is delayed or prevented by any Act of God, strike,
lockout, shortage of material or labor restriction by any governmental
authority, civil riot, flood, and any other cause not within the control of
Landlord, the period for performance of such term, condition or covenant shall
be extended for a period equal to the period Landlord is so delayed or
hindered.
-8-
<PAGE> 9
26. EXHIBITS:
All exhibits, attachments, annexed instruments and addenda referred to
herein shall be considered a part hereof for all purposes with the same force
and effect as if copied at full length herein.
27. USE OF LANGUAGE:
Words of any gender used in this lease shall be held and construed to
include any other gender and words in the singular shall be held to include the
plural unless the context otherwise requires.
28. CAPTIONS:
The captions or headings of paragraphs in this lease are inserted for
convenience only, and shall not be considered in construing the provisions
hereof if any question of intent should arise.
29. SUCCESSORS:
The terms, conditions and covenants contained in this lease shall
apply to, insure to the benefit of, and be binding upon the parties hereto and
their respective successors in interest and legal representatives except as
otherwise herein expressly provided. All rights, powers, privileges,
immunities and duties of Landlord under this lease, including, but not limited
to, any notices required or permitted to be delivered by Landlord to Tenant
hereunder, may, at Landlord's option, be executed or performed by Landlord's
agent or attorney.
30. [PROVISION DELETED]
31. SEVERABILITY:
If any provision in this lease should be held to be invalid or
unenforceable, the validity and enforceability of the remaining provisions of
this lease shall not be affected thereby.
32. NOTICES:
Any notice or document required or permitted to be delivered hereunder
may be delivered in person or shall be deemed to be delivered, whether actually
received or not, when deposited in the United States mail, postage prepaid,
registered or certified mail, return receipt requested, addressed to the
parties at the address indicated below, or at such other address as may have
theretofore been specified by written notice delivered in accordance herewith.
LANDLORD: Trussell Electric, Inc. TENANT: Up-Right, Inc.
10525 Wire Way 10525 Wire Way
Dallas, TX 75220 Dallas, TX 75220
Executed the 10th day of November, 1989.
Attest: Landlord: Trussell Electric, Inc.
/s/ Sandy Owens /s/ Donald L. Trussell
- ----------------------- ---------------------------------
By: Donald L. Trussell
Title: President
Attest: Tenant: Up-Right, Inc.
/s/ James Dillon
- ----------------------- ---------------------------------
By: James Dillon
Title: Vice President
-9-
<PAGE> 10
EXHIBIT "A"
BEING a tract of land situated in the Eli Merrill Survey, Abstract No. 930 and
being part of Block B/6489 of the Lombardy Business Park, an addition to the
City of Dallas as recorded in Volume 85045, Page 7565, Deed Records, Dallas
County, Texas and being more particularly described as follows:
COMMENCING at a point situated on the Northerly line of Lombardy Lane (a
variable width R.O.W.) and the West line of Wire Way (a 56 foot R.O.W.);
THENCE along the West line of Wire Way the following:
North 10 degrees 52 minutes 58 seconds East a distance of 62.00 feet
to a point of curvature to the left;
Along said curve having a central angle of 10 degrees 39 minutes 59
seconds, a radius of 307.00 feet, and an arc length of 57.15 feet to a
point;
North 00 degrees 13 minutes 00 seconds East a distance of 113.35 feet
to an iron rod set for corner and being the POINT OF BEGINNING;
THENCE North 89 degrees 47 minutes 00 seconds West departing said Wire Way a
distance of 303.96 feet to an iron rod set for corner;
THENCE North 10 degrees 54 minutes 08 seconds East a distance of 152.65 feet to
an iron rod found for corner;
THENCE South 89 degrees 47 minutes 00 seconds East a distance of 275.66 fee to
an iron rod found for corner situated in the West line of said Wire Way (a 56
foot R.O.W.);
THENCE South 00 degrees 13 minutes 00 seconds West a distance of 150.00 feet to
the POINT OF BEGINNING and continuing 43,472 square feet or 0.998 acres of
land, more or less.
<PAGE> 11
EXHIBIT "B"
[SITE PLAN]
Tenant may extend the chain link fence, but not beyond the front of the
building. Before tenant washes any equipment, Tenant shall construct a
concrete slab and a sand trap behind the building on the West side of the
property for washing Tenant's equipment and catching any substances used to
wash the equipment and residue from the equipment.
<PAGE> 12
EXHIBIT "C"
Special Provisions.
1. Taxes and Insurance Costs
(a) In addition to the base rent, Tenant shall pay Landlord for real
estate taxes and insurance. Tenant's charges for the calendar year in which
the commencement of this lease occurs is estimated at a monthly charge of
$421.00 for taxes and $95.00 for insurance, payable by Tenant to Landlord on
the date the monthly base rent is due.
(b) For each calendar year during the lease term following the calendar
year in which the commencement of this lease occurs, Tenant shall pay to
Landlord on the date the monthly base rent is due 1/12 of the estimated taxes,
and insurance for the current year which Landlord may have given Tenant for the
current year, or, if none have been estimated by Landlord, then 1/12 of the
actual charges for the immediately preceding calendar year. Upon Tenant's
receipt from Landlord of a statement of the actual charges for such year, or at
Landlord's option, for the preceding 6 months, Tenant shall pay to Landlord the
amount of the excess if any, between Tenant's share of the actual taxes and
insurance over the estimated charges paid by Tenant for such period. If
Tenant's payment for the taxes and insurance for any calendar year during the
lease term for which Tenant has made payment to Landlord is less than the
estimated charges paid by Tenant for such year such excess charges paid by
Tenant shall (i) be credited against the next maturing installments due from
Tenant to Landlord for Tenant's share of such charges, or (ii) if paid for the
last year of the lease term, be refunded by Landlord to Tenant upon lease
termination.
2. Assignment and Subletting
(a) Tenant may not, without the prior written consent of Landlord, assign
this lease, sublet the whole or any part of the demised premises, sell,
encumber, pledge or otherwise transfer all or any part of Tenant's leasehold
estate hereunder, or permit the demised premises to be occupied by anyone other
than Tenant or Tenant's employees and any unauthorized assignment or sublease
shall, at Landlord's option, constitute a non-curable default of Tenant. If
Landlord's withholding of consent is found to be wrongful by any court of
competent jurisdiction, Tenant's sole remedy shall be to have the proposed
assignment or subletting declared valid as if Landlord's consent had been
given.
(b) Any assignment or subletting shall be subject to all the terms and
conditions of this lease, including the provisions of the paragraph relating to
the use of the demised premises. If Landlord shall consent to a sublease or an
assignment of this lease, no further sublease or assignment may be made without
the prior written consent of landlord.
(c) If Landlord shall consent to a sublease or assignment hereunder,
Tenant shall pay Landlord for all attorney's fees and expenses reasonably
incurred in connection with the processing of documents incident to giving such
consent.
(d) Notwithstanding any such assignment or subletting, Tenant shall at all
times remain fully liable for all their obligations under this lease.
(e) As a condition precedent to any subletting or assignment by tenant
hereunder, Tenant agrees to furnish Landlord with a copy of the proposed
assignment or sublease, together with a description of the business to be
conducted at the demised premises by such proposed assignee or subtenant,
current financial statements of such proposed assignee or subtenant, and such
other information as Landlord may request (collectively "transfer documents"),
at least 30 days prior to the date on which it is to be executed. If Landlord
<PAGE> 13
consents to such assignment or subletting, Tenant shall furnish Landlord with
an executed copy of such assignment or sublease at the time such instrument is
executed.
(f) If any rents or sums received by Tenant under any sublease are in
excess of the rent and other sums payable by Tenant hereunder (prorated if the
sublease is for less than 100% of the demised premises) or if any additional
consideration is paid to Tenant by any assignee, such excess rents under any
sublease or such additional consideration for an assignment shall be paid by
Tenant to Landlord within 10 days after receipt by Tenant.
(g) Landlord may assign its rights under this Lease. all of Landlord's
personal liability under this Lease accruing after conveyance shall terminate
upon conveyance of the demised premises, provided that the obligations of
Landlord under this Lease are covenants running with the land and the purchaser
of Landlord's interest shall acquire such interest subject to the covenants
herein contained.
3. Financial Statements
[Provision Deleted]
4. Right of First Refusal
(a) Landlord shall not, at any time prior to the expiration of the term of
this lease, or the renewal term thereof (if exercised), sell the demised
premises, or any interest therein, without first giving written notice thereof
to Tenant, which notice is hereinafter referred to as the "Notice of Sale".
(b) The Notice of Sale shall include the exact and complete terms of the
proposed sale and shall have attached thereto a photocopy of bona fide offer
and counteroffer, if any, duly executed by both Landlord and the prospective
purchaser.
(c) For a period of ten (10) business days after receipt by Tenant of the
Notice of Sale, Tenant shall have the right to give written notice to Landlord
of Tenant's exercise of Tenant's right to purchase the demised premises, or the
interest proposed to be sold, on the same terms and conditions as set forth in
the Notice of Sale. In the event that Landlord does not receive written notice
of Tenant's exercise of the right herein granted within said ten (10) day
period, there shall be a conclusive presumption that Tenant has elected not to
exercise Tenant's right hereunder; and Tenant may sell the demised premises, or
the interest proposed to be sold, on substantially the same terms set forth in
the Notice of Sale.
(d) In the event that Tenant declines to exercise its right of first
refusal after receipt of the Notice of Sale, and, thereafter Landlord and the
prospective purchaser modify by more than 5%, (i) the sales price, (ii) the
amount of the down payment, or (iii) interest charged, or in the event that the
sale is not consummated within 160 days of the date of the Notice of Sale, then
Tenant's right of first refusal shall reapply to said transaction as of the
occurrence of any of the aforementioned events.
(e) Tenant's right of first refusal shall expire if the demised premises
is sold pursuant hereto by Landlord.
5. Sale of the Property
If the demised premises is ever sold during the renewal term, Landlord shall
have the right to cancel the lease upon no less than 120 days' written notice
to Tenant.
<PAGE> 14
EXHIBIT "D"
RENEWAL OPTION: Provided that at the end of the primary term of this
lease Tenant not be in default of any term, condition or covenant contained in
this lease, Tenant (but not any assignee of subtenant) shall have the right and
option to renew this lease, by written notice delivered to Landlord with a copy
to the Landlord no later than 180 days prior to the expiration of the primary
term, for the additional term of Two ( 2 ) years under the same
terms, conditions, and covenants contained herein, except:
A. Tenant shall have no further renewal options unless expressly
granted by Landlord in writing; and
B. The rental for the renewal term shall be based on the then
prevailing rental rates for properties of equivalent quality, size, utility and
location, with the length of the lease term, and credit standing of the Tenant
herein, to be taken into account.
C. Upon notification from Tenant of the exercise of this renewal
option, Landlord shall within 15 days thereafter notify Tenant in writing of
the proposed rental for the renewal term; Tenant shall within 15 days following
receipt of same notify Landlord in writing of the acceptance or rejection of
the proposed rental provided that the rental rate shall not exceed 107% of the
primary term rental rate nor shall the renewal rate be less than the rental
during the primary term.
- ------------------------
INITIALED:
LANDLORD
----------------------------
TENANT /s/ James Dillon
----------------------------
Vice President
Up-Right, Inc.
<PAGE> 15
LEASE EXTENSION AGREEMENT
This LEASE EXTENSION AGREEMENT is to be attached to and form a part of
the Net Commercial Lease Agreement dated November 10, 1989, (which together
with any amendments, modifications and extensions thereof is hereinafter called
the "Lease").
Between TRUSSELL ELECTRIC, INC. "Landlord"
and
HORIZON HIGH REACH "Tenant"
(formerly Upright, Inc.)
Witnesseth that the Lease is hereby renewed and extended for a further
term of thirty-six (36) months to commence on the 1st day of January, 1995 and
to end of the first day of January, 1998, on condition that Landlord and Tenant
comply with all the provisions of the covenants and agreements contained in the
Lease. All terms of the Lease shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have signed this Lease
Extension Agreement this 28th day of February, 1994.
LANDLORD: TRUSSELL ELECTRIC, INC.
By: /s/ Donald L. Trussell
-------------------------------
Donald L. Trussell, President
TENANT: HORIZON HIGH REACH
(Formerly Up-Right, Inc.)
By: /s/ Shaun Flanagan
-------------------------------
Name: Shaun Flanagan
Title: Vice President
LEASE EXTENSION AGREEMENT - Page 1 of 2
<PAGE> 16
[Page 2 of Lease Extension Agreement Unavailable.]
<PAGE> 17
LEASE MODIFICATION
This LEASE MODIFICATION is to be attached to and form a part of the
Net Commercial Lease Agreement dated November 10, 1989, (which together with
any amendments, modifications and extensions thereof is hereinafter called the
"Lease").
TRUSSELL ELECTRIC, INC. ("Landlord") agrees that upon execution of the
Lease Extension Agreement by Horizon High Reach (formerly Up-Right, Inc.)
("Tenant"), Landlord will mudjack the interior slab floor and replace the
carpet in the office hall.
IN WITNESS WHEREOF, this 26th day of January, 1994.
LANDLORD: TRUSSELL ELECTRIC, INC.
By: /s/ Donald L. Trussell
------------------------------
Donald L. Trussell, President
STATE OF TEXAS (
COUNTY OF DALLAS (
BEFORE ME, the undersigned authority in and for said county and state,
on this day personally appeared Donald L. Trussell, known to me to be the
person whose name is subscribed to the foregoing instrument, and in his
capacity as President for Trussell Electric, Inc., acknowledged to me that the
same was the act and deed of said corporation, and that he executed the same
for the purposes and consideration therein expressed, and in the capacity
therein stated.
GIVEN UNDER MY HAND AND SEAL this 26th day of January, 1994.
/s/ Martha Meyer
----------------------------------
Notary Public in and for the State
of Texas.
[seal]
My Commission expires: 10/13/95
LEASE MODIFICATION AGREEMENT - Page 1 of 1
<PAGE> 18
NOTICE OF OPTION TO RENEW
Up-Right, Inc. hereby exercises its right and option to renew that
certain Net Commercial Lease Agreement ("Lease") dated November 10, 1989
between Trussell Electric, Inc., Landlord, and Up-Right, Inc., Tenant, for the
premises located at 10525 Wire Way, Dallas, Texas. Pursuant to Exhibit "D" of
such Lease, the term of such renewal option will commence for a period of two
years beginning January 1, 1993.
All terms and conditions contained in such Lease shall remain in full
force and effect.
DATED this 7th day of May, 1992.
TENANT: UP-RIGHT, INC.
/s/ Luke Viguers
-----------------------------
By: Luke Viguers
Title: G.M.
Subscribed and sworn to before
me this 7th day of May, 1992.
My Commission expires
10/14/95.
Attest: [seal]
/s/ Jennifer L. Mathis
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<PAGE> 1
EXHIBIT 10.11
LEASE AGREEMENT
THE STATE OF TEXAS |
| KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF HARRIS |
This Lease Agreement, made and entered into by and between T. T.
TEMPLIN, an individual and citizen of the State of Texas with his offices in
Houston, Texas, hereinafter referred to as "Lessor", and Horizon High Reach &
Equipment Company, a California Corporation, whose address is 1540 East Shaw
Ave. Suite 123, Fresno, California, 93710, hereinafter referred to as "Lessee";
W I T N E S E T H:
Lessor hereby leases to Lessee, and Lessee hereby takes from Lessor;
the following described premises, to-wit:
Consisting of approximately Four thousand (4,000) square feet of
office space and Nine thousand (9,000) square feet of warehouse space
of a building located at 9000 Emmott Road, Building 1, Suite A,
Houston, Texas 77040. Also, approximately Thirty-Three thousand
(33,000) square feet of outside hard surface storage. Mailing address
will be 9000 Emmott Road, Suite A, Houston, Texas 77040. Address for
utility purposes is 9000 Emmott Road, Suite A, Houston, Texas 77040.
TO HAVE AND TO HOLD the same for an initial term of Thirty-Six (36)
months, commencing on November 1, 1995, and ending on October 31, 1998, upon
the following covenants, terms and conditions.
l.a. Rent. Lessee agrees to pay Lessor rent for said premises at
the rate of Fifty-four Thousand and Nine Hundred Dollars ($54.900.00) per year,
payable in monthly installments of Four thousand five hundred seventy-five
($4.575.00) each for Thirty-Six (36) months. The first month's rent shall be
due and payable at the execution hereof and a like monthly installment shall be
due and payable at the execution hereof and a like monthly installment shall be
due and payable on or before the first of each succeeding calendar month during
the term hereof.
l.b. Late Fee. If received after the third day of the month a
Twenty-five Dollar ($25.00) late charge will apply and must be paid with the
base rent no later than the tenth day of the month.
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<PAGE> 2
1.c. Maintenance Fee. A maintenance fee of Zero Dollars ($00.00)
a month is assessed to all tenants in addition to the above rent and is to be
paid at the same time as the rent.
2. Use. The demised premises shall be used and occupied only for
the following purpose and not otherwise:
General offices and storage of related equipment rental and sales
purposes.
Lessee shall at its own cost and expense obtain any and all licenses
and permits necessary for such use.
3. Additional Rent. Lessee agrees to pay as additional rent its
proportionate share of the amount by which the Real Estate Taxes payable with
respect to the Leased Premises are increased for any reason whatsoever during
the term of this Lease over those Real Estate Taxes with respect to the Leased
Premises payable the year prior. Lessor shall submit to Lessee within a
reasonable time after payment of the Real Estate Taxes the amount owed by the
Lessee pursuant to the terms of this Paragraph, and the Lessee shall thereupon
pay such amounts to the Lessor.
4. Compliance with Laws. Lessee shall comply with all
governmental laws, ordinances, and regulations applicable to the use of the
demised premises, and shall promptly comply with all governmental orders and
directives for the correction, prevention, and abatement of nuisances in or
upon or connected with the demised premises, all at Lessee's sole expense. If,
however, existing laws change and prohibit Lessee from performing the use
outlined in Paragraph 2, lease will terminate with no addition cost to Lessee.
5.a. Utilities. Lessee agrees to pay for all electric current and
other utilities used or consumed in or on demised property when due and
payable.
5.b. Sewer. Lessee is hereby notified that the premises are
serviced by a septic system, and therefore, no contaminants shall be disposed
of in the system or stored on the premises which are harmful to the
environment.
5.c. Water. Lessor is providing water for cleaning and sanitary
purposes only. Drinking water is the Lessee's responsibility.
6. Lessee's Maintenance. Lessee shall throughout the term of
this Lease, or any renewal or extension thereof, take
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<PAGE> 3
good care of the building and other improvements located upon the demised
premises, and keep them free from waste or nuisance of any kind. Lessee shall
keep the building and other improvements located on the demised premises in
good condition. In the event repairs become necessary, including but not
limited to, repairs of all glass, and special store front, windows, doors,
heating system, plumbing work, pipes and fixtures, air conditioning equipment,
and the interior of the building generally and other improvements on the
premises outside the building, Lessee shall give immediate written notice
thereof to Lessor and Lessor shall proceed promptly to repair such damage at
Lessee's expense. Lessee agrees to care for the grounds around the building
including the mowing of grass, if applicable. Lessee will be responsible for
maintaining the parking surface in good condition. In this connection, Lessee
shall not be obligated to repair any damage caused by fire, tornado or other
casualty covered by the Texas standard form of extended coverage insurance
policy. Lessor agrees to afford to Lessee the Benefit of any guaranties or
warranties of third parties which may be applicable to air conditioning
equipment and other machinery and equipment installed by Lessor in the demised
premises. At the end or other termination of this Lease, Lessee shall deliver
up the demised premises with all improvements located thereon, in good repair
and condition, reasonable wear and tear and damage by fire, tornado and other
casualty only expected.
7. Changes and Alterations. Lessee shall not create any openings
in the roof or exterior walls, nor shall Lessee make any alterations,
additions, or improvements to the demised premises without the prior written
consent of Lessor (such consent not to be unreasonably withheld). All
fixtures, alterations, additions and improvements (except trade fixtures) put
in at the expense of Lessee shall be the property of Lessor and shall remain
upon and be surrendered with the demised premises as a part thereof at the
termination of this Lease. All air-conditioning equipment and heating
equipment put in by Lessee shall remain the property of Lessor at the
termination of the Lease. All burglar alarm equipment shall remain with the
premises.
8. Signs. Lessor shall erect and maintain signs; provided that
the lettering materials if changed, shall be at the expense of the Lessee. At
the termination of the Lease, Lessor may remove said signs without the consent
of Lessee.
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<PAGE> 4
9. Compliance with Insurance Requirements and Insurance
Escalation. Lessor will maintain insurance coverage on the building proper.
Lessee will maintain insurance in amounts outlined in Paragraph 11. Lessee
will not permit the demised premises to be used for any purpose which would
render the insurance thereon void or the insurance risk more hazardous or cause
the rate to be increased. Lessee agrees to pay, its pro-rate share, as
additional rent, any increase in insurance premiums for the insurance carried
by Lessor covering the demised premises after the first lease year, which
payment shall be due thirty (30) days after Lessee pays such increase amount.
10. Indemnity and Hold Harmless. Lessee hereby covenants as
follows: to indemnify and save harmless the Lessor of and from any and all
fines, suits, claims, demands and actions of any kind by reason of any breach,
violation or non-performance of any condition hereof on the part of Lessee;
Lessor shall not be liable for any injury or damage to person or property
happening in or about the demised premises, and Lessee agrees to indemnify and
save harmless Lessor from any and all damages, claims and liability therefore
and Lessee shall indemnify and hold harmless Lessor of and from any and all
damages, claims or liability for anything arising from or out of the condition
of the demised premises or the occupancy thereof by Lessee. At all times after
taking possession of the demised premises, Lessee shall carry liability and
property damage insurance for the protection and indemnification and defense of
itself and Lessor against any and all liability claims, demands and causes of
action that may be asserted against it or arising from the use, maintenance and
operation of the demised premises during the term of this Lease or any renewal
or extension hereof.
11. Insurance. Lessee obligates itself to have the company or
agency issuing such policy certify to Lessor as to the policy and its coverage
of Lessor, as well as its expiration date. The policy limits shall not be less
than $300,000.00 for injury to more than one person in any one accident, and
not less than $50,000.00 for damage to property in any one accident.
12. Assignment and Subletting. Lessee shall not assign this Lease
or sublet the whole or any part of the demised premises, without the prior
written consent of Lessor, which consent will not be reasonably withheld. Any
such assignment or subletting shall be subject to all of the terms and
provisions of this Lease, including the provisions of Paragraph 2 relating to
the use of the demised premises. Notwithstanding any such assignment or
subletting, Lessee shall at all times remain fully responsible and liable for
the payment of the rent herein specified and for compliance with all of its
other obligations under
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<PAGE> 5
the terms, provisions, and covenants of this Lease. If an "event of default"
as hereinafter defined, should occur while the demised premises or any part
thereof are then assigned or sublet, Lessor, in addition to any remedies herein
provided by law, may at its option collect directly from such assignee or
sub-lessee all rents becoming due to Lessee under such assignment or sub-lease
and apply such rent against any sums due to Lessor by Lessee hereunder. No
direct collection by Lessor from any such assignee or sub-lessee shall be
construed to constitute a novation or release of Lessee from the further
performance of its obligations hereunder.
13. Taxes. Lessor agrees to pay before they become delinquent all
real estate taxes and special assessments lawfully levied or assessed against
the above described premises or any part thereof owned by Lessor, provided
however, Lessor may, at its sole cost and expense dispute and contest the same,
and in such case, such disputed item need not be paid until finally adjudged to
be valid.
14. Lessor's Maintenance. Lessor shall at all times at its sole
cost and expense keep the roof, foundation and exterior walls (excluding all
windows and doors) of the building of which the demised premises forms a part
in good repair and condition, except for reasonable wear and tear. In the
event any damage is caused by the negligence of Lessee or its agents, servants,
employees, customers or invitees, Lessee shall give immediate written notice
thereof to Lessor, and same shall be promptly repaired by Lessor at Lessee's
expense. In the event that the aforesaid building should become in need of
structural repairs (for reason other than the negligence of Lessee as stated
above), Lessee shall give immediate written notice thereof to Lessor, and
Lessor shall proceed promptly to make such repairs at its own expense.
15. Lessor's Right of Entry. Lessor and Lessor's agents and
representatives shall have the right to enter and inspect the demised premises
at any time, normally during business hours, for the purpose of ascertaining
the condition of the demised premises or in order to make such repairs as may
be required to be made by Lessor under the terms of this Lease.
16. Fire and Casualty Damage. In the event the demised premises
or the building of which the same is a part, shall be partially damaged by fire
or the elements, through no fault of Lessee or its agents, servants, employees,
customers or invitees, Lessee shall give immediate notice thereof to Lessor,
and the same shall be repaired at the expense of the Lessor as soon as
reasonably possible. In this connection, due allowance
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<PAGE> 6
shall be made for any delay arising in connection with the adjustment of
insurance losses, labor disputes, material shortages, or other causes beyond
the reasonable control of Lessor. Further, if such damage is caused through no
fault of Lessee or its agents, servants, employees, customers or invitees,
Lessee shall receive an abatement of rent proportionate to the damage to the
demised premises, and in the event that the damage shall be so extensive as to
render the demised premises untenable, the rent shall cease until such time as
the demised premises shall again be put in repair. In the event the building
is damaged by fire or otherwise, without fault or neglect of Lessee or its
agents, servants, employees, customers or invitees, to such an extent as to
render it necessary in the sole judgment of Lessor to rebuild the same (and
whether or not the demised premises be affected) then Lessor, at its option,
and upon notice to Lessee within thirty (30) days after such damage, may
either: (1) cancel and terminate this Lease and apportion the rental to the
date of such damage; or (b) rebuild the demised premises and continue the Lease
during the balance of the term, abating the rent until such time as the demised
premises shall be tenable.
17. Holding Over by Lessee. It is agreed and understood that any
holding over by Lessee of the hereby demised premises at the expiration of this
Lease shall operate and be construed as a tenancy from month-to-month at a
rental of double the amount stipulated for the last month of the Lease, unless
Lessor and Lessee agree in writing otherwise, Lessee shall be liable to Lessor
for all loss or damage on account of any such holding over against Lessor's
will after the termination of this Lease, whether such loss or damage may be
contemplated at this time or not.
18. Condemnation. If the demised premises shall be taken or
condemned in whole or in part for public purposes, and such condemnation
affects that portion of the premises which Lessee occupies rendering it
impossible for Lessee to carry on its uses then this Lease shall be considered
terminated and Lessor shall receive the entire award for the portion condemned.
19. Remedies. The following events shall be deemed to be events
of default by Lessee under this Lease:
(1) Lessee shall fail to pay promptly any installment of the
rent hereby reserved and such failure shall continue for a period of ten (10)
days.
(2) Lessee shall fail to comply with any term, provision, or
covenant of this Lease, other than the payment of
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<PAGE> 7
rent, and shall not cure any failure within thirty (30) days after written
notice thereof to Lessee.
(3) Lessee shall become insolvent, or shall make a transfer in
fraud of creditors, or shall make an assignment for the benefit of creditors.
(4) Lessee shall file a petition under any section or chapter
of the National Bankruptcy Act, as amended, or under any similar law or statute
of the United States or any State thereof; or Lessee shall be adjudged bankrupt
or insolvent in proceedings filed against Lessee thereunder.
(5) A receiver or trustee shall be appointed for all or
substantially all of the assets of Lessee.
(6) Lessee shall desert or vacate any substantial portion of
the demised premises.
Upon the occurrence of any of such events or default, Lessor shall have the
option to pursue any one or more of the following remedies without any notice
or demand whatsoever:
A. Terminate the Lease, in which event Lessee shall immediately
surrender the demised premises to Lessor, and if Lessee fails so to do, Lessor
may, without prejudice to any other remedy which he may have for possession or
arrearages in rent, enter upon and take possession of the demised premises and
expel or remove Lessee and any other person who may be occupying the demised
premises or any part thereof, by force if necessary, without being liable for
prosecution or any claim of damages therefor; and Lessee agrees to pay to
Lessor on demand the amount of all loss and damage which Lessor may suffer by
reason of such termination, whether through inability to relet the demised
premises on satisfactory terms or otherwise.
B. Enter upon and take possession of the demised premises and
expel or remove Lessee and any other person who may be occupying the demised
premises or any part thereof, by force if necessary, without being liable for
prosecution or any claim for damages therefor and relet the premises and
receive the rent therefor; and Lessee agrees to pay to Lessor on demand any
deficiency that may arise by reason of such reletting.
C. Enter upon the demised premises by force if necessary without
being liable for prosecution or any claim for damages therefor and do whatever
Lessee is obligated to do under the terms of this Lease, and Lessee agrees to
reimburse Lessor on demand for any expenses which Lessor may incur in thus
effecting
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<PAGE> 8
compliance with Lessee's obligations under this Lease, and Lessee further
agrees that Lessor shall not be liable for any damages resulting to the Lessee
from such action, whether caused by the negligence of Lessor or otherwise.
Pursuit of any of the foregoing remedies shall not preclude pursuit of any of
the other remedies herein provided or any other remedies provided by law, nor
shall pursuit of any remedy herein provided constitute a forfeiture or waiver
of any rent due to Lessor hereunder or of any damages occurring to Lessor by
reason of the violation of any of the terms, provisions and covenants herein
contained. Failure by Lessor to enforce one or more of the remedies herein
provided upon an event of default shall not be deemed or construed to
constitute a waiver of such default, or of any other violation or breach of any
of the terms, provisions, and covenants herein contained.
20. Attorney's Fees. If on account of any breach of default by
Lessee in Lessee's obligations under the terms and conditions of this Lease, it
shall be come necessary for Lessor to employ an attorney to enforce or defend
any of Lessor's rights or remedies hereunder, Lessee agrees to pay any
reasonable attorney's fees incurred by Lessor in such connection. Should there
be a default on the part of Lessor, Lessee has the rights as Lessor herein
stated.
21. Warranty of Peaceful Possession and Subordination. Lessor
covenants, warrants and represents that it has full right and power to execute
and perform this Lease and to grant the estate demised herein and that Lessee,
on payment of the rent herein reserved and performing the covenants and
agreements herein contained, shall peaceably and quietly have, hold and enjoy
the demised premises during the full term of this Lease and any extension or
renewal hereof; provided, however, that Lessee accepts this Lease subject and
subordinate to any mortgage, deed of trust, or other lien presently existing
upon the demised premises. Lessor is hereby irrevocably vested with the full
power and authority in subordinate Lessee's interest hereunder to any recorded
mortgage, deed of trust, or other lien hereafter placed on the demised
premises, and Lessee agrees upon demand to execute such further instruments
subordinating this Lease as Lessor may request, provided such further
subordination shall be upon the express condition that this Lease shall be
recognized by the mortgagee or lienholder and that the rights of Lessee shall
remain in full force and effect during the term of the Lease so long as Lessee
shall continue to perform all of the covenants and conditions of this Lease.
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<PAGE> 9
22. Interest and Costs. In the event that the Lessor shall make
any expenditures for which the Lessee is responsible, or which the Lessee
should make then the amount thereof together with the interest at the rate of
twelve percent (12%) per annum, and costs, may at the Lessor's election, be
added to and be deemed a part of the installment of rent next falling due.
23. Use and Care of Premises. Lessee agrees that it and all
employees employed by it and associated with its business shall use only the
area designated on Exhibit "A" attached hereto or as designated by Lessor.
Lessee shall see that all trash and refuse be deposited in neat and adequate
containers, or in a neat and orderly manner where containers are impracticable
and removed frequently.
24. Security Deposit. As addition security to Lessor for
performance by Lessee of the terms, conditions and covenants herein contained,
Lessee is concurrently with the execution of this Lease, depositing with the
Lessor the sum of Three thousand three hundred ($3,300.00). It is expressly
agreed however, that upon the occurrence of any event of default hereunder, any
or all of such deposit may be applied by Lessor to the satisfaction of any
amounts owed to Lessor by reason of such event of default, whereupon Lessee
agrees to immediately pay to Lessor such amount so paid by Lessor in order to
have a deposit at all times an amount equal to the security deposit stated
above.
25. Notice. Each provision of this instrument or of any
applicable governmental laws, ordinance, regulations and other requirements
with reference to the sending, mailing or delivery of any notice or with
reference to the making of any payment by Lessee to Lessor shall be assumed to
be complied with when and if the following steps are taken:
A. All rent and other payments required to be made by Lessee to
Lessor hereunder shall be payable to Lessor at the Lessor's principal office at
9103 Emmott Road, Houston, Texas 77040.
B. Any notice or document required or permitted to be delivered
hereunder shall be deemed to be delivered whether actually received or not when
deposited in the United States mail, proper postage prepaid, certified mail,
return receipt requested, addressed to the parties hereto at the respective
addresses set out opposite their names below or at such other address as they
have heretofore specified by written notice delivered in accordance
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<PAGE> 10
LESSOR: LESSEE:
T. T. Templin Horizon High Reach & Equipment Company
9103 Emmott Road 1540 East Shaw Avenue, Suite 123
Houston, Texas Fresno, California 93710
(209) 248-8174
26. Personal Pronouns. Words of any gender used in this Lease
shall be held and construed to include any other gender, and words in the
singular number shall be held to include the plural, unless the context
otherwise requires.
27. Effect of Lease. The terms, provisions and covenants and
conditions contained in this Lease shall apply to, inure to the benefit of, and
be binding upon the parties hereto and their respective heirs, executors,
administrators, successors in interest, assigns and legal representatives
except as otherwise herein expressly provided. All rights, powers, privileges,
immunities and duties of Lessor under this Lease, including but not limited to
any notices required or permitted to be delivered by Lessor to Lessee
hereunder, may at Lessor's option, be exercised or performed by Lessor's agent
or attorney.
28. Option to Renew Lease. Lessee has the option to renew this
lease for like period upon giving Lessor ninety (90) days written notice. Such
option shall be accepted by Lessor with thirty (30) days of receiving notice or
be subject to negotiation
29. Pets. No pets will be allowed without prior approval from
"Lessor".
30. Special Provisions. Paragraph 11 must be complied with.
IN WITNESS WHEREOF the parties have executed the foregoing Lease
Contract in duplicate, each signed copy of which shall be
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<PAGE> 11
deemed to be an original for all purposes, on this the _________ day _________
of _______________, 19____.
WITNESS the signatures and seals of the above parties the day and year
first written.
LESSEE: LESSOR:
- ----------------------------------- -----------------------------------
Horizon High Reach & Equipment T. T. Templin
Company
- -----------------------------------
President
___________________________________
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<PAGE> 12
Schedule "A"
[siteplan]
9000 Emmott, Building 1___, Suite A __, Houston, Texas 77040
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<PAGE> 1
EXHIBIT 10.12
AGREEMENT OF LEASE
THIS AGREEMENT OF LEASE, entered into by and between
ROBERT I. SELSKY
hereinafter referred to as the "LANDLORD", and
UP-RIGHT AERIAL PLATFORMS
hereinafter referred to as the "TENANT".
1.1 Premises. Landlord does hereby lease to Tenant and Tenant does
hereby lease from Landlord, upon the following terms and conditions, the
premises described as follows:
The building known as 11250 Somerset Avenue, Beltsville, Prince
George's County, Maryland, containing approximately 9,200 square feet of gross
floor area, situate on and together with approximately 61,139 square feet of
land described as part of Lots 10, 11, 12, 13, 20 and 21 and Lots 22, 23 and 24,
Block 03, Section 56, in the "Beltsville" subdivision, as shown on the site plan
which is attached hereto and incorporated herein as Exhibit "I", zoned Heavy
Industrial (I-2), said land and all improvements thereon being hereinafter
referred to as the "Premises."
1.2 Term. The term of this Lease shall be for Five (5) years,
commencing on the first day of March, 1993, and ending on the last day of
February, 1998.
Notwithstanding the foregoing, provided this Lease is fully executed,
Tenant shall have the right to use and occupy the Premises for the period
November 1, 1992, through February 28, 1993. Tenant shall not be required to pay
rent for such period, however, Tenant shall pay all utilities and other charges
and additional rents pursuant to this Lease, and shall carry public liability
insurance as provided in Section 3.7 hereof.
If Tenant holds over and is in possession of the Premises at the end of
the term or any renewal of this Lease, then the tenancy under this Lease shall
become month-to-month upon all of the same terms and conditions contained in
this Lease, at the rental rate then in effect and such tenancy shall be
terminable by either party upon Thirty (30) days written notice to the other
party.
Provided the Tenant is not then in default under this Lease, Tenant
shall have the right to renew this Lease for Three (3) additional terms of Five
(5) years each by giving written notice to Landlord exercising this option to
renew not later
<PAGE> 2
than 120 days prior to expiration of the preceding term or renewal hereof. Any
renewal of this Lease shall be upon the same terms and conditions herein
provided, except that the rent payable by the Tenant during each year of the
renewal period shall be adjusted as provided in Section 1.3 hereof.
1.3 Rent. Rent for the period March 1, 1993, through February 28, 1994,
shall be the sum of SIXTY-NINE THOUSAND AND NO/100 DOLLARS ($69,000.00) per
annum ("Base Annual Rent"), payable to the Landlord in equal monthly
installments of FIVE THOUSAND SEVEN HUNDRED FIFTY AND NO/100 DOLLARS ($5,750.00)
("Base Monthly Rent"). Base Annual Rent for the period March 1, 1994, through
February 28, 1998, shall be increased annually effective on March 1st of each
year by adding to the Base Annual Rent payable during the immediately preceding
Lease year (the "Previous Annual Rent") an amount equal to the product obtained
by multiplying the Previous Annual Rent by Four Per Cent (4%). The Base Annual
Rent as increased yearly shall be payable to Landlord in equal monthly
installments.
Provided Tenant properly exercises its option to renew as set forth in
Section 1.2 hereof, Base Annual Rent for the first year of the first renewal
period shall be the sum of EIGHTY THOUSAND SIX HUNDRED EIGHTY-FIVE AND NO/100
DOLLARS ($80,685.00), payable in equal monthly installments of SIX THOUSAND
SEVEN HUNDRED TWENTY-THREE AND 76/100 DOLLARS ($6,723.76). Thereafter, Base
Annual Rent for each year of each renewal period shall be increased annually
effective on March 1st of each year by adding to the Previous Annual Rent an
amount equal to the product obtained by multiplying the Previous Annual Rent by
Four and One-Half Per Cent (4.5%). The Base Annual Rent as increased yearly
shall be payable to Landlord in equal monthly installments.
The rent shall be payable in advance on the first day of each month
without demand, setoff or abatement, to Robert I. Selsky, at 12119 Indian Creek
Court, Beltsville, Maryland 20705, or such other place as may be designated by
Landlord in writing. Tenant shall pay the Base Monthly Rent for the first full
month hereof promptly upon execution of this Lease.
Tenant agrees to pay to Landlord a late fee equal to the sum of Five
Per Cent (5%) of any monthly rent installment which is not paid to Landlord
within Ten (10) business days of the date on which said monthly installment of
rent is due and payable.
It is mutually agreed that payments made by check which do not clear
the bank cause additional expenses for bookkeeping and clerical services. Tenant
agrees that any such check issued for payments due hereunder which is returned
without payment for any reason whatsoever, shall carry a charge of TWENTY-FIVE
AND NO/100 DOLLARS ($25.00) for each time said check is returned, which sum
shall be considered as additional rent hereunder, and
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<PAGE> 3
shall be paid by Tenant to Landlord immediately upon notice thereof.
2.1 Security Deposit. Tenant shall deposit with Landlord upon execution
of this Lease, the sum of FIVE THOUSAND SEVEN HUNDRED FIFTY AND NO/100 DOLLARS
($5,750.00) as a security deposit for the faithful performance of Tenant's
obligations under this Lease, and Landlord may apply all or any part of said
security deposit to cure any failure by Tenant to faithfully perform Tenant's
obligations under this Lease. The security deposit shall not be considered an
advance payment of rent or a measure of Landlord's damages in the event of
default by Tenant.
2.2 Utilities. Tenant shall arrange for all utilities to be in Tenant's
name and Tenant shall promptly pay to the utility companies all bills for
electricity, gas, fuel oil, telephone, water and sewer service used in the
Premises. Tenant shall maintain a level of heat in the Premises which shall
insure that the pipes and plumbing fixtures will not freeze and break, and
Tenant shall be responsible for any repairs and replacements to said pipes and
fixtures and any damage to the Premises and any personal property arising from
freezing pipes and fixtures. In the event Tenant fails to pay such utility
bills, Landlord may, but shall not be obligated to pay same, and proceed to
collect all amounts so paid from Tenant as additional rent.
2.3 Real Estate Taxes. Tenant shall pay to Landlord, as additional
rent, 100% of any increase in the real estate taxes payable by Landlord for the
entire property and building of which the Premises are a part, over and above
the taxes payable for the tax year ending June, 1993. A tax bill shall be
sufficient evidence of the amount of the taxes imposed on the property, and
taxes shall include any front foot benefit charges, refuse collection charges,
State, County, WSSC, M-NCPPC, and School Board taxes. Tenant shall pay its share
of any increases, whether attributable to an increase in the rate, a new tax,
reassessment of the property or any other reason. Tenant's share of the taxes
shall be paid as additional rent within Ten (10) days after demand by Landlord.
2.4 Fire and Extended Coverage Insurance. During the entire term and
any renewal of this Lease, Tenant shall pay to Landlord, as additional rent,
100% of all increases in the premium for fire and extended coverage insurance on
the Premises pursuant to insurance policies to be obtained by Landlord in an
amount and upon terms satisfactory to Landlord. Tenant's share of any increases
in the fire and extended coverage insurance premiums shall be paid as additional
rent within Ten (10) days after demand by Landlord.
2.5 Use. Tenant shall use the Premises solely for the purpose of
office/warehouse use. Tenant shall comply with all ordinances, statutes, laws,
orders, rules and regulations now in effect or which may hereafter be enacted,
by the municipal,
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county, state and federal governments. Tenant will not use, permit or suffer to
be used, the Premises for any disorderly or unlawful purpose. Tenant shall
operate and maintain the Premises and all real and personal property therein in
good, safe and sanitary condition. No part of the Premises shall be used as a
residence, and no animals of any kind shall be kept on the Premises.
Immediately upon final execution hereof by Landlord and Tenant, Tenant
shall apply to Prince George's County, Maryland, for a Use & Occupancy Permit.
The cost of application and processing said permit shall be paid by Tenant.
Tenant shall diligently pursue issuance of said Permit at the earliest possible
date. In the event that any repairs, improvements or alterations are required by
governmental authorities as conditions to issuance of said Use & Occupancy
Permit, Landlord shall make repairs, alterations and improvements with respect
to improvements performed by Landlord pursuant to Section 2.6 hereof at
Landlord's sole cost and expense. In no event shall Landlord have any liability
whatsoever for any failure to obtain a Use & Occupancy Permit or for any
consequences resulting from such failure. In the event said Use & Occupancy
Permit is not issued within Ninety (90) days following the date of final
execution of this Lease, provided Tenant has diligently pursued issuance of said
Permit, Tenant may, at Tenant's option, terminate this Lease by written notice
to Landlord within said Ninety (90) day period, whereupon all monies deposited
with Landlord shall be returned to the Tenant, and the parties shall be relieved
of any further liability hereunder.
2.6 Repairs and Improvements. On or before November 1, 1992, Landlord
shall, at Landlord's expense, make improvements to the Premises as set forth on
Exhibit "II" which is attached hereto and incorporated herein. Landlord shall
deliver the Premises with all mechanical, electrical and plumbing systems and
equipment in good working order.
Landlord shall be responsible for maintenance and repair of the roof,
exterior walls, foundation, downspouts, gutters and structural elements of the
building of which the Premises are a part, unless such repair or maintenance is
necessitated by any act or neglect of Tenant or anyone acting by, through or
under Tenant.
Except as provided in the preceding paragraph, Tenant shall promptly
repair at Tenant's expense any damage to the Premises and to any equipment,
systems and facilities therein, and will make all replacements thereto, whether
such repairs and replacements be necessitated by ordinary wear and tear or other
event of any kind, except a Casualty as provided in Section 3.2 hereof. Without
limiting the generality of the foregoing, Tenant's maintenance, repair and
replacement responsibilities shall include the interior of the Premises, all
doors, windows, and loading docks, if any, and all electrical, mechanical,
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plumbing, heating, ventilating, air conditioning, security, fire prevention and
sprinkler systems and equipment, if any, presently or hereafter installed in the
Premises. Tenant has had an opportunity to inspect the Premises and is leasing
the Premises "AS IS", without any representation, warranty or covenant by the
Landlord or Agent respecting the suitability of the Premises for Tenant's use
thereof or the condition of the Premises or any element thereof.
Tenant shall pay all expenses of operating and maintaining the
Premises, including, but not limited to, expenses for refuse removal, janitorial
services, carpet cleaning, and painting. Upon vacating the Premises, Tenant
shall surrender the Premises in as good condition as the same were at the
commencement of Tenant's original tenancy, excepting normal wear and tear and
damage caused by a Casualty as provided in Section 3.2 hereof, unless such
Casualty is caused by the negligence or intentional acts of Tenant or anyone
acting by, through or under Tenant.
Tenant shall not make any structural changes or alterations to the
Premises or install any equipment which may necessitate any changes or addition
to, or overload or require the extraordinary use of, any utilities or any
electrical, plumbing, or mechanical systems serving the Premises, without first
obtaining the written consent of Landlord, which consent shall not be
unreasonably withheld. Unless otherwise agreed in writing, at the conclusion of
Tenant's occupancy of the Premises, any alterations, improvements and fixtures
installed by Tenant in the Premises, at Landlord's option, shall either become
the property of Landlord or be removed at Tenant's expense, in which event the
Premises shall be restored by Tenant to their condition existing at commencement
of this Lease.
Landlord agrees to indemnify and hold harmless the Tenant from any
pre-existing or current condition on the property of which the Premises are a
part concerning the presence of (i) any "Hazardous Waste Substance" as defined
by the Resource Conservation and Recovery Act of 1976 (or regulations
thereunder) as later amended, (ii) any "Hazardous Substance" as defined in the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980
(or regulations thereunder) as later amended, (iii) any "Hazardous Substance" as
defined in the Maryland Health Environmental Code, Title 7, Subtitle 2 (or
regulations thereunder) as later amended, and (iv) any "Substance" (including
asbestos) the presence, maintenance or storage of which on the Premises is
prohibited by law.
Tenant shall not allow, permit, or cause the generation, use,
accumulation, storage, treatment, transportation, disposal, release or threat of
release of "Hazardous Waste Substance" as defined in the preceding paragraph and
agrees to indemnify and hold harmless the Landlord from any such condition
during the term and any renewals of this Lease.
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2.7 Parking. Tenant shall have the exclusive use of the parking area
serving the Premises, provided that any such use shall be at the sole risk of
Tenant and Tenant hereby agrees to indemnify and hold harmless Landlord from and
against any and all claims, actions, damages and liability in connection with
such use by Tenant and anyone acting by, through or under Tenant. Tenant shall
keep clean and promptly remove all snow and ice from said parking areas and the
sidewalks in front of the Premises. Tenant shall maintain at Tenant's expense
any grass and landscaping appurtenant to the Premises and to the parking area
serving the Premises.
2.8 Notices. All notices hereunder shall be made in writing and shall
be hand delivered or mailed by Registered or Certified U.S. Mail, Return Receipt
Requested, First Class, postage prepaid, to the parties hereto at their
respective addresses set forth below, or at such other address of which either
party shall notify the other in accordance with the provisions hereof. Any
notice required to be given hereunder on or before a specified date shall be
deemed to have been duly and timely given if hand delivered before 5:00 P.M. on
such date, or when given by mail as aforesaid, if postmarked before Midnight on
such date. Notices given by mail shall be addressed:
IF TO LANDLORD: WITH A COPY TO:
Robert I. Selsky David H. Michael, Allen Cornell
12119 Indian Creek Court and Christopher Kelly
Beltsville, Maryland 20705 The Michael Companies, Inc.
9658 Baltimore Ave., Ste. 400
College Park, Maryland 20740
IF TO TENANT:
Up-Right Aerial Platforms
11250 Somerset Avenue
Beltsville, Maryland 20705
2.9 Brokerage. Landlord recognizes the firm of The Michael Companies,
Inc. (herein referred to as the "Agent") as the procuring cause of the Tenant
and this Lease. In consideration of Agent's services in procuring the Tenant,
Landlord agrees to pay Agent, its successors and assigns a leasing commission of
Five Per Cent (5%) of all base rent due and payable, or any assignee or
subtenant of Tenant, during the full term of this Lease, and any renewals and
extensions hereof, including any renewals or extensions on a month to month
basis, for the Premises and any additional space later leased by Landlord to
Tenant upon the same or any other terms, whether in the same building or any
other location. Said leasing commission shall be payable 50% upon occupancy by
the Tenant and 50% on the Commencement Date for the original term and payable in
full upon commencement of any renewal, extension or expansion term, or a new
lease between the parties. Furthermore, in the
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event of a sale by the Landlord to the Tenant of the Premises or the whole or
any part of the building of which the Premises are a part, or any other
property, the Landlord agrees to pay to the Agent as a sales commission for
services rendered in procuring the Tenant an amount equal to Five Per Cent (5%)
of the total sale price, payable at settlement.
Landlord and Tenant warrant and represent each to the other that
neither has engaged or dealt with any other broker, agent or finder in
connection with this Lease and each agrees to indemnify and hold harmless the
other and the Agent against any claim for a commission or fee resulting from a
breach of this representation and warranty. The foregoing provisions for the
payment of leasing and sales commissions are an integral part of this Lease and
are covenants which run with the land, and shall be binding upon any subsequent
owner of the Premises. Agent has no responsibility for the condition of the
Premises or for the performance of this Lease or any other agreement between the
Landlord and Tenant, and both parties agree to protect and hold harmless Agent
from any and all claims for injury to person or personal property by reason of
any accident or happening, in, upon or about the Premises.
3.1 Assignment and Subletting. Tenant will not assign this Lease, in
whole or in part, or sublet all or any part of the Premises, without first
obtaining the Landlord's written consent, which consent shall not be
unreasonably withheld. This prohibition includes any subletting or assignment
which would otherwise occur by operation of law, merger, consolidation,
reorganization, transfer or other change of Tenant's corporate or proprietary
structure, or an assignment or subletting to or by a receiver or trustee in any
bankruptcy, insolvency, or other proceedings. Consent by Landlord to any
assignment or subletting shall not constitute a waiver of the requirement for
Landlord's consent to any subsequent assignment or subletting. The acceptance by
Landlord of the payment of rent following any assignment or subletting shall not
be deemed to be a consent by Landlord to such assignment or subletting.
3.2 Casualty Damage. If the Premises shall be damaged by fire, the
elements, accident or other unavoidable casualty (any of such causes being
referred to herein as a "Casualty"), but the Premises shall not be thereby
rendered wholly or partially untenantable, then Landlord shall cause such damage
to be repaired and there shall be no abatement of rent. If as the result of a
Casualty, the Premises shall be rendered wholly or partially untenantable, then
Landlord may at Landlord's option either terminate this Lease by giving written
notice of termination to Tenant within Thirty (30) days after the Casualty,
whereupon the rights and obligations of the parties under this Lease shall cease
and the rent shall be abated proportionately as to the portion of the Premises
rendered untenantable for the period until such repairs are completed. Landlord
shall not be required to perform any work costing in
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excess of the amount covered by Landlord's insurance on the Premises. Landlord
shall not be liable for interruption to Tenant's business or for damage to or
replacement or repair of Tenant's personal property (including but not limited
to inventory, trade fixtures, floor coverings, furniture and other property) or
to any leasehold improvements installed in the Premises by Tenant, all of which
damage, replacement and repairs shall be undertaken and promptly completed by
Tenant. Notwithstanding any provision of this Lease, Landlord shall have no
obligation to repair or replace any property which is damaged or destroyed due
to the negligence of Tenant or anyone on or about the Premises or acting by,
through or under Tenant.
3.3 Eminent Domain. If the whole or any part of the Premises shall be
taken under the power of eminent domain, then this Lease shall terminate as to
the part of the Premises so taken on the date Tenant is required to yield
possession thereof to the condemning authority. Rent shall be reduced in the
same proportion as the portion of the floor area of the Premises so taken bears
to the total floor area of the Premises prior to such taking. If the taking
renders the remainder of the Premises untenantable, then either party may
terminate this Lease as of the date when Tenant is required to yield possession
to the condemning authority. All compensation awarded for any taking of the
Premises shall be the property of Landlord, and Tenant hereby to Landlord all
rights with respect thereto. Nothing contained herein shall prevent Tenant from
applying for reimbursement from the condemning authority for Tenant's damages,
but if and only if such action is permitted by law and shall not reduce the
amount of the award or other compensation otherwise recoverable from the
condemning authority by Landlord.
3.4 Subordination. This Lease shall be subject and subordinate to the
liens of any mortgages and deeds of trust now existing or hereafter placed on
the Premises or the property of which it is a part. Tenant shall promptly
execute any certificates or assurances that the Landlord may request in
confirmation of this subordination. Tenant hereby constitutes and appoints the
Landlord as Tenant's attorney in fact to execute any such certificate or
certificates for or on behalf of the Tenant, in the event that the Tenant shall
have failed to execute any such certificate or certificates within Ten (10) days
after having been requested to do so by the Landlord.
3.5 Default. The happening of any of the following shall be deemed to
be an event of default by Tenant under this Lease: (a) failure of Tenant to pay
any installment of rent or other charge or money obligation herein required to
be paid by Tenant within Ten (10) business days after the same becomes due and
payable; (b) failure of Tenant to perform any other of its covenants under this
Lease within Thirty (30) days after receipt of written notice from Landlord; (c)
the filing of a petition in bankruptcy by Tenant or adjudication that Tenant is
bankrupt, or the making by Tenant of a general assignment for the benefit of
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creditors, or the appointment of a receiver of substantially all of the property
of Tenant, including, in any event, this Lease, in a proceeding based upon
Tenant's insolvency which shall not be discharged within Ninety (90) days after
such appointment; or (d) vacation or abandonment of the Premises by Tenant. Upon
the occurrence of any of the aforesaid events of default by Tenant, Landlord
lawfully may immediately, or at any time thereafter, and without any further
notice or demand, enter into and upon the Premises or any part thereof in the
name of the whole, by force or otherwise, and hold the Premises as if this Lease
had not been made, and expel Tenant and remove Tenant's property without being
deemed to be guilty in any manner of trespass, or Landlord may send written
notice to Tenant of the termination of this Lease. Upon entry as aforesaid or,
if Landlord shall so elect, upon the giving of such written notice, this Lease
shall terminate.
If Landlord shall terminate this Lease as hereinabove provided, whether
or not the Premises or any part thereof shall be relet and regardless of the
terms of any such reletting, or to the extent of Landlord's efforts to relet,
Tenant shall remain liable for the performance of all covenants under this
Lease, and for any and all damages and expenses incurred by Landlord arising
from such default and re-entry and for any loss of rents sustained by Landlord
for the balance of the term of this Lease. In the event of default under this
Lease by Tenant, Landlord shall have the right, at Landlord's option, to relet
the Premises as agent of Tenant and to apply the proceeds received from such
reletting toward the payment of the rent under this Lease, and any loss of rent
for the balance of the term shall be payable monthly by Tenant in advance in the
same manner that rent hereunder is to be paid.
In the event of default hereunder, the Tenant will be responsible and
liable for all costs, charges, fees, including reasonable attorney's fees, which
Landlord may incur in connection with the breach hereof and/or the collection of
any sums due hereunder.
3.6 Indemnity. Tenant agrees to and does hereby indemnify Landlord and
Agent and save Landlord and Agent harmless and shall defend Landlord and Agent
from and against any and all claims, actions, damages, liability and expense,
including attorney's and other professional fees, in connection with loss of
life, personal injury and property damage arising from or out of the occupancy
or use of the Premises or any part thereof or any parking areas, sidewalks, or
other amenities in the vicinity of the Premises. Neither Landlord nor Agent
shall be responsible or liable to Tenant, or to those claiming by, through or
under Tenant, for any loss or damage to person or property which may be
occasioned by or through the acts or omissions of persons occupying space in the
vicinity of the Premises, or which may be occasioned by or through the breaking,
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bursting, stoppage or leakage of water, gas, oil, sewer or steam pipes and
equipment or electrical wires.
3.7 Insurance. At all times after the execution of this Lease, Tenant
will carry and maintain at Tenant's expense public liability insurance,
including the hazards of bodily injury, property damage, personal injury and any
assumed or contractual liability under contracts defined as "incidental
contract" under standard Insurance Services Offices definitions, to afford
protection with limits not less than $1,000,000.00 each occurrence/$1,000,000.00
aggregate if written on a Combined Single Limit basis for bodily injury and
property damage, or $1,000,000.00 each occurrence/$1,000,000.00 aggregate for
bodily injury and $500,000.00 each occurrence/$500,000.00 aggregate for property
damage if written on a Split Limit basis, and in either event, the limit for
personal injury shall be $1,000,000.00.
The insurance policies evidencing such insurance shall name Landlord as
additional insured and shall also contain a provision by which the insurer
agrees that such policies shall not be canceled except after Thirty (30) days
written notice to Landlord. Upon execution of this Lease and annually
thereafter, and upon request by Landlord, Tenant shall deliver to Landlord a
certificate from the insurer evidencing each such policy to be in effect. In the
event Tenant fails to procure such insurance, Landlord may, but shall not be
obligated to procure same, and all expenses incurred by Landlord in connection
therewith shall be chargeable to Tenant as additional rent.
Tenant will not do or suffer to be done, or keep or suffer to be kept,
anything in, upon or about the Premises which will violate Landlord's policies
of hazard or liability insurance or which will prevent Landlord from procuring
such policies in companies acceptable to Landlord. If anything done, omitted to
be done or suffered by Tenant to be kept in, upon or about the Premises shall
cause the rate of fire or other insurance on the Premises to be increased beyond
the minimum rate from time to time applicable to the Premises, then Tenant will
promptly pay to Landlord, as additional rent, the amount of any such increase
upon Landlord's demand.
3.8 Landlord Access. Landlord or his agents shall have access to the
Premises at any and all reasonable times for the purpose of inspecting the
Premises, protecting the Premises against fire or other damage, and exhibiting
the Premises to prospective tenants or purchasers. Landlord reserves the right
to show the Premises to prospective new tenants or purchasers and to post signs
on the Premises advertising its availability for sale or lease within the last
Sixty (60) days of Tenant's occupancy of the Premises.
3.9 Possession. If for any reason whatsoever the Landlord does not
deliver possession of the Premises according to the terms of this Lease, then
the rent shall be abated until the
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date that possession of the Premises is tendered by the Landlord. In no event
shall the Landlord or Agent be liable in damages for failure to deliver
possession under the terms of this Lease.
3.10 Signs and Advertising. Tenant will not place or suffer to be
placed or maintained on the exterior or visible from the exterior of the
Premises, any sign, advertising matter, decoration, or any other thing, nor
shall Tenant paint or decorate any part of the exterior of the Premises without
first obtaining Landlord's written approval, which approval shall not be
unreasonably withheld. Tenant will at Tenant's sole cost and expense maintain
any sign, decoration, advertising matter or other thing permitted by Landlord in
good condition and repair at all times.
3.11 Estoppel Certificate. At any time and from time to time, within
Ten (10) days after request by Landlord, Tenant will execute, acknowledge and
deliver to Landlord and to such other party as may be designated by Landlord, an
estoppel certificate in form acceptable to Landlord setting forth the status of
performance of the obligations of the parties under this Lease. If Tenant fails
to provide such certificate within Ten (10) days after request by Landlord,
Tenant shall be deemed to have approved the contents of any such certificate
submitted to Tenant by Landlord. The failure to provide such certificate may, at
the option of the Landlord, be considered an event of default hereunder in
accordance with Section 3.5 hereof.
3.12 Waiver. No reference in this Lease to any specific right or remedy
shall preclude Landlord from exercising any other right or from having any other
remedy or from maintaining any action to which Landlord may otherwise be
entitled at law or in equity. No failure by Landlord to insist upon the strict
performance of any covenant herein or to exercise any right or remedy consequent
upon a breach thereof, and no acceptance of full or partial rent during the
continuance of any such breach, shall operate as a waiver of any such breach or
covenant or any subsequent breach thereof.
Tenant does hereby waive its right to a trial by jury, but Tenant does
not waive its right to a bench trial in any dispute arising hereunder, nor does
Tenant waive its right to applicable statutory provisions concerning notice to
vacate the Premises.
3.13 Landlord's Right to Cure. If Tenant fails to perform any covenant
or responsibility of Tenant under this Lease, then Landlord may at Landlord's
option perform such responsibility and Tenant shall promptly reimburse Landlord
for any costs so incurred by Landlord, including attorney's fees, as additional
rent hereunder. Any and all costs and expenses which are Tenant's responsibility
under this Lease may be collected by Landlord as additional rent hereunder.
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3.14 Landlord's Responsibility. It is the intention of Landlord and
Tenant that Landlord shall only be responsible for those items and expenses
which are expressly made Landlord's responsibility herein, and all other items
and expenses shall be borne by Tenant.
3.15 No Joint Venture. Any intention to create a joint venture,
partnership or agency relationship between the Landlord and Tenant is hereby
expressly disclaimed. Nothing contained in this Lease shall be construed so as
to confer upon any other party the rights of a third party beneficiary, with the
exception of the rights of the Agent.
3.16 Corporate Tenant. If Tenant is a corporation, the persons
executing this Lease on behalf of Tenant hereby covenant and warrant that:
Tenant is a duly constituted corporation qualified to do business in the state
in which the Premises are located; all Tenant's franchises and corporate taxes
have been paid to date; all future forms, reports, fees and other documents
necessary for Tenant to comply with applicable laws will be filed by Tenant when
due; and such persons are duly authorized by the board of directors of such
corporation to execute and deliver this Lease on behalf of the corporation.
3.17 Construction of Lease. This Lease and the rights and obligations
of the parties hereunder shall be construed in accordance with the laws of the
state in which the premises are located. This agreement shall bind the
administrators, executors, successors and assigns of the parties hereto.
Landlord and Tenant each acknowledge that they have had full opportunity to
obtain legal counsel prior to executing this Lease.
This Lease contains the entire and final agreement of and between the
parties hereto, and they shall not be bound by any statements, conditions,
representations, inducements or warranties, oral or written, not herein
contained. This Lease may be modified only by a writing signed by Landlord and
Tenant. If any provision of this Lease shall to any extent be invalid or
unenforceable, the remainder of this Lease shall not be affected thereby and
each other provision of this Lease shall be valid and enforceable to the fullest
extent permitted by law.
For the convenience of the parties hereto, this Agreement is executed
in several counterparts, each of which shall be deemed an original for all
purposes without the necessity of producing any counterpart. The section
headings in this Lease are for convenience of reference only and in no way shall
be used to construe or modify this Lease.
IN WITNESS WHEREOF, the parties have executed this Agreement of Lease
as of the dates indicated below, the effective date of the Agreement of Lease
being the date of final execution hereof by both parties.
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WITNESS/ATTEST: LANDLORD:
- -------------------- ---------------------------- DATE ________
Robert I. Selsky
WITNESS/ATTEST: TENANT:
UP-RIGHT AERIAL PLATFORMS
/s/ Sandi Fowler By: /s/ James Dillon
- -------------------- ---------------------------- DATE 10-15-92
Vice President, UpRight, Inc. --------
With Authority to Bind
The Michael Companies, Inc. joins in execution of this Agreement of
Lease for the purpose of consenting to the terms hereof regarding payment of
commission.
THE MICHAEL COMPANIES, INC.
____________________ By: _________________________ DATE ________
Gary W. Michael,
President
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<PAGE> 14
EXHIBIT I
[Site Plan]
<PAGE> 15
EXHIBIT II
REPAIRS AND IMPROVEMENTS
Landlord shall provide the following improvements to the Premises prior
to November 1, 1992:
a. Repair or replace, re-seal and re-stripe the blacktop areas. Any
areas not so blacktopped shall be gravel, as shown on the site plan attached
hereto as Exhibit "I". Landlord shall also build a "Runoff Trap" five feet
square (5X5X5X5), constructed of filter paper and No. 2 stone to be located at
the end of the swale near the fence which will accommodate the wash runoff.
b. The modular office building will be painted and cleaned on the
exterior where needed. All stairs, railings and ingress and egress ramps will be
repaired and the grass will be mowed. The interior shall be painted or
wallpapered, as designated by the Tenant. Office partitions will be
added/removed per the final floor plan, as previously agreed by the parties. All
systems within the building to be in good working order.
All repairs and improvements performed by Landlord shall be performed
in such a manner so as not to impede the obtaining of a Use & Occupancy Permit
by Tenant.
The Tenant, at its sole expense, shall be responsible for the design
and construction of a loading ramp to its specifications.
<PAGE> 16
ASSIGNMENT OF LEASE
THIS ASSIGNMENT OF LEASE (this "Assignment") is made and entered into
as of June, 1994, by and between Up-Right, Inc., a California corporation
("Assignor"), and Horizon High Reach, Inc., a Delaware corporation ("Assignee").
RECITALS:
A. Assignor is the tenant under that certain Agreement of Lease (the
"Lease") dated October 15, 1992, (a copy of which Lease, including all
amendments and modifications thereto, is attached hereto as EXHIBIT "A") between
Assignor and Robert I. Selsky (herein, "Landlord"), for the premises (the
"Premises") located in the City of Beltsville, State of Maryland, as described
more particularly in the Lease.
B. Pursuant to that certain Asset Contribution Agreement (the "Asset
Contribution Agreement"), dated June __, 1994, Assignor has agreed to transfer,
and Assignee has agreed to acquire, certain of Assignor's assets.
C. In accordance with the Asset Contribution Agreement, Assignor
desires to assign all rights and delegate to Assignee all obligations arising
under the Lease, and Assignee desires to accept such assignment and delegation
on the terms and conditions set forth below.
AGREEMENT:
NOW, THEREFORE, in consideration of the mutual covenant and agreements
contained herein and other good and valuable consideration, the parties agree as
follows:
1. Assignment. Effective upon the Closing (as defined in the Asset
Contribution Agreement) and, to the extent required under the Lease, Lessor's
written consent hereto (such later date herein referred to as the "Effective
Date"), Assignor assigns and transfers to Assignee all of Assignor's right,
title, and interest in, and delegates to Assignee all obligations arising under,
the Lease.
2. Assumption. From and after the Effective Date, Assignee assumes all
the obligations of Assignor under the Lease to be performed by Assignor as the
tenant under the Lease and, agrees to be bound by all the terms, covenants,
conditions, and provisions of the Lease. Assignee hereby agrees to indemnify and
hold Assignor harmless from and against any and all costs, expenses (including,
without limitation, attorneys' fees) and liabilities arising from the breach or
default by Assignee of any of the terms, covenants, conditions, and provisions
of the Lease occurring from and after the Effective Date.
<PAGE> 17
3. Representations and Warranties. Assignor hereby represents and
warrants to Assignee that the documents attached hereto as EXHIBIT A comprise
the entire agreement between Assignor and Lessor respecting the Premises.
4. Governing Law. This Assignment and the rights and obligations of the
parties hereunder shall in all respects be governed by, and interpreted in
accordance with, the laws of the State of California.
5. Interpretation. This Assignment shall be interpreted in accordance
with the common meaning of its terms and shall not be interpreted strictly for
or against either party, provided that in the event of any conflict with the
terms or conditions of the Asset Contribution Agreement, the terms and
conditions of the Asset Contribution Agreement shall control.
6. Counterparts. This Assignment may be executed in any number of
counterparts, each of which shall be deemed an original, and when taken together
they shall constitute one and the same agreement.
7. Successors. This Assignment shall be binding upon and shall inure to
the benefit of Assignor, Assignee, and their respective successors and assigns.
IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment
as of the date first written above.
"ASSIGNOR" "ASSIGNEE"
UP-RIGHT, INC. HORIZON HIGH REACH, INC.
a California corporation a Delaware corporation
By _____________________________ By _____________________________
<PAGE> 18
CONSENT TO ASSIGNMENT
The undersigned ("Landlord") hereby consents to the assignment of
rights and delegation of duties under the Lease to Assignee, as described above,
and from and after the Effective Date hereby releases Assignor from all
obligations and liabilities arising under the Lease. Landlord hereby represents
and warrants to Assignee and agrees that (i) as of the Effective Date, the Lease
is in full force and effect and no default or breach (or no event has occurred
that, with the passage of time, the giving of notice by Landlord, or both,
otherwise would constitute a default or breach) exists under the Lease; (ii) the
Lease attached hereto as EXHIBIT "A" constitutes the entire agreement of
Assignor and Landlord with respect to the subject matter thereof; (iii) Assignor
has paid or been credited with the deposits (whether in the nature of a security
deposit or otherwise) specified in the Lease, and from and after the Effective
Date Landlord shall hold and apply such deposits for Assignee's account in
accordance with the Lease; and (iv) the term of the Lease commenced on the first
day of March, 1993 and shall expire on the last day of February, 1998.
IN WITNESS WHEREOF, Landlord has executed this Consent to Assignment as
of 7/15/94 , 1994.
By /s/ Robert I Selsky
-------------------------------
Robert I. Selsky
<PAGE> 1
EXHIBIT 10.13
LEASE AGREEMENT
BY AND BETWEEN
D. L. PHILLIPS INVESTMENT BUILDERS, INC.,
Landlord,
and
UP-RIGHT, INC.,
Tenant
<PAGE> 2
LEASE AGREEMENT
THIS LEASE AGREEMENT, made and entered into this ____ day of
___________, 1990, by and between D.L. PHILLIPS INVESTMENT BUILDERS, INC., a
North Carolina Corporation, hereinafter called "Landlord"; and UP-RIGHT, INC., a
California Corporation with principal office in Oakland, California, hereinafter
called "Tenant":
W I T N E S S E T H:
ARTICLE I.
DEMISED PREMISES AND USE
Section 1.01. Landlord, in consideration of the covenants, conditions,
agreements and stipulations of the Tenant hereinafter expressed does hereby
demise and lease unto the Tenant, and the Tenant does hereby rent and let from
the Landlord, upon the terms and conditions hereinafter expressed, those certain
premises (hereinafter called "demised premises") being:
situated in the State of North Carolina, County of Mecklenburg, City of
Charlotte, containing approximately 1.84 acres with two approximately
5,000 square foot masonry buildings and known as 4151-A and 4151-B
Barringer Drive, Charlotte, North Carolina 28217 and as shown on
Mecklenburg County Tax Assessor's Map Book 145, Block 261, Parcel 1.
Section 1.02. For purposes of this Lease, "Common Areas" shall mean all
areas, improvements, equipment and special services in, on or at the Building
and Land provided by Landlord for the common use and benefit of Tenant, its
employees, agents, customers and other invitees.
Provided Tenant is not in default under this Lease, Tenant shall be
entitled to use in common with others entitled thereto, the Common Areas as may
be described from time to time by Landlord, subject, however, to terms and
conditions of this Lease and to rules and regulations and use thereof as may be
prescribed from time to time by Landlord.
Section 1.03. During the term of this Lease, or any renewal or
extension thereof, the use of the Common Areas by the Tenant, its employees,
agents, customers and other invitees shall not unreasonably interfere with the
use of the Common Areas by other Tenants, if any, their employees, agents,
customers or other invitees.
Section 1.04. The demised premises shall be used and occupied by Tenant
as general offices, showroom and work and storage areas and for no other
purpose. The Tenant shall make no unlawful or offensive use of the demised
premises, and will not cause or permit a nuisance to be created or maintained
thereon. The Tenant shall not keep or store upon the demised premises any
flammable articles which are prohibited by any local, state or federal
authority, and will comply with all assessments and restrictions of record,
zoning ordinances and other applicable laws, ordinances, rules and regulations
of the local, state and federal governments, and any other public authority
having jurisdiction which may affect the demised premises and the Tenant's use
thereof.
ARTICLE II.
TERM
To have and to hold the demised premises for a term of approximately
five (5) years commencing on July 1, 1990 (hereinafter called the "Commencement
Date") and ending at 12:00 o'clock midnight on March 31, 1995 (hereinafter
called the "Expiration Date"). The Commencement Date and Expiration Date are
subject to extension as provided in Article VIII hereof.
ARTICLE III.
RENTAL
In consideration of the demise and leasing of the premises aforesaid by
Landlord, the Tenant covenants and agrees to pay to the Landlord an annual
rental of SEE ADDENDUM A ATTACHED HERETO AS PART OF THIS LEASE AGREEMENT,
-1-
<PAGE> 3
in twelve equal monthly installments of ___________ each, which rental shall be
payable in advance, without notice or demand therefore, on or before the first
day of each month, beginning on April 1, 1990, provided, however, that if the
Commencement Date of the term of this Lease shall not be the first day of the
month, the monthly base rental for the period of time between the Commencement
Date and the end of the month during which such date occurs shall be prorated on
a daily basis, and shall be paid along with the monthly base rental payment
payable on the first day of the following month.
ARTICLE IV.
RENTAL PAYMENTS
All rental payments to be paid by Tenant as herein provided shall be
paid to D.L. PHILLIPS INVESTMENT BUILDERS, INC., at its offices in Charlotte,
North Carolina, until notice to the contrary is given by the Landlord.
ARTICLE V.
HOLD-OVER
Section 5.01. Tenant shall pay Landlord double the rental then
applicable for each month or portion thereof Tenant retains possession of the
demised premises, or any portion thereof, after the expiration or earlier
termination of the term of this Lease, and also shall pay all damages sustained
by Landlord by reason of such retention of possession. The provisions of this
Section 5.01 shall not constitute a waiver by Landlord of any re-entry rights of
Landlord herein or by law provided. Tenant's retention of possession shall not
constitute a renewal of the term of this Lease and Tenant shall be a tenant at
will. [Illegible] prior to such term, and to any hold-over, renewal or extension
of such term, except as may herein otherwise be provided, and as may be
hereinafter amended in compliance with the terms and conditions of this Lease.
ARTICLE VI.
PROPERTY TAXES
Section 6.01. The Landlord shall pay all real estate taxes on the
demised premises. Provided, however, that if for any calendar year during the
term of this Lease (as renewed) the amount of real estate taxes levied or
assessed against the land and/or buildings of which the demised premises form a
part shall exceed the amount of such taxes for the calendar year 1990, then and
in that event, Tenant covenants and agrees to pay to the Landlord, upon demand,
as additional rental, within thirty (30) days of such demand ONE HUNDRED percent
(100%) of the amount of the excess over the amount of the taxes payable for the
year 1990, provided, however, that additional rents payable by Tenant or
co-Tenants or other occupants of the building, if any, under the provisions of
Section 6.03 hereunder shall not contribute to or be a portion of the additional
rents provided for in this Section 6.01.
Section 6.02. If, during any calendar year, the Tenant shall occupy the
demised premises under the terms hereof for less than a full one-year period,
then for that year the Tenant shall be required to pay only a pro rata portion
of the amount of any increase in real estate taxes chargeable to the Tenant
under the provisions of Section 6.01 above, which portion shall be proportionate
to the length of the Tenant's occupancy during the year as compared to a full
one-year period.
Section 6.03. The Tenant shall, for each calendar year falling
completely or partially within the term hereof, and for any renewal or extension
thereof, pay as additional rental to the Landlord the amount of any increase in
real estate taxes for the demised premises resulting from the assessment of any
property upon said premises which was not a part thereof at the beginning of the
term hereof, and which was placed thereon by, or at the direction or under the
control of the Tenant, including, but not limited to, any trade fixtures,
leasehold improvements, furniture, merchandise supplies, and other personal
property situated within the demised premises.
Section 6.04. Tenant shall promptly pay all taxes levied against
Tenant's stock or merchandise, furniture, equipment, fixtures, supplies and
other personal property situated within the demised premises.
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<PAGE> 4
ARTICLE VII.
OWNERSHIP, POSSESSION, WARRANTY
The Landlord covenants that it is lawfully seized of the demised
premises and has a good right and lawful authority to enter into this Lease for
the full term aforesaid; that the Landlord will put the Tenant in actual
possession of the demised premises at the beginning of the term aforesaid,
subject to the provisions of Section 8.02.d below; and that Tenant, upon paying
the rental and performing the conditions herein agreed by it to be performed,
shall and may peaceably and quietly have, hold and enjoy the demised premises
for said term.
ARTICLE VIII.
IMPROVEMENTS AND EXTENSION OF COMMENCEMENT DATE
Section 8.01. If the demised premises are leased to the Tenant with the
existing improvements thereon, Tenant warrants that it has inspected the said
demised premises and that no representations or warranties, whether express or
implied, have been made with respect to the same, except as is herein expressly
set forth.
Section 8.02.a. In the event this Lease involves the construction of
space for Tenant by Landlord, the Landlord, prior to the commencement of the
term of this Lease, at Tenant's sole cost and expense for items in excess of
those shown on Exhibit(s) A attached hereto and incorporated herein by
reference, shall alter and "up-fit" the demised premises for occupancy by Tenant
in accordance with said Exhibit(s) A. All work to be done by Landlord shall be
completed in a good and workmanlike manner, and shall be in compliance with
state, federal and local laws, and shall include delivery by the Landlord of a
temporary certificate of occupancy issued by the appropriate governmental agency
stating that the demised premises may be lawfully occupied for the uses
permitted by this Lease.
Section 8.02.b. In the event this Lease requires upfitting by the
Landlord in accordance with the provisions of 8.02.a. above, and said upfitting
exceeds the work to be done by Landlord as real property improvements as shown
on Exhibit(s) A, then and in that event, the Tenant shall pay to the Landlord at
the time of the execution of this Lease, fifty percent (50%) of the anticipated
excess, with the balance being due on or before the date on which the Tenant
takes possession of the demised premises.
Section 8.02.c. Any changes in the upfitting or alterations of the
demised premises, other than in compliance with Exhibit(s) A attached hereto,
shall only be done with the prior written consent of the Landlord and upon the
execution by both parties of the Landlord's standard "change order" form. Upon
the execution of said standard "change order" form, such change order shall then
become a part of this Lease as if specifically set forth herein, including
without limitation any provisions set forth in said change order form relating
to the Commencement Date of this Lease.
Section 8.02.d. In the event the Lease involves construction of space
for the Tenant by Landlord, the Commencement Date shall be as specified in
Article II hereinabove, or if said construction is delayed, the Commencement
Date shall be postponed to the date upon which improvements constituting the
demised premises have been substantially completed in accordance with the agreed
upon plans and specifications therefor and the said temporary certificate of
occupancy is delivered by Landlord. The form of the Lease and the Expiration
Date shall be extended to the last day of the ONE HUNDRED & TWENTIETH full
calendar month following the new Commencement Date.
Landlord shall notify Tenant of such completion not less than five (5)
days prior to the Commencement Date. The taking of possession by Tenant shall
conclusively establish that said improvements have been completed in accordance
with Exhibit(s) A attached hereto and that the demised premises are in good and
satisfactory condition at the time possession is taken.
ARTICLE IX.
PERSONAL PROPERTY
Section 9.01. Any trade fixtures, equipment and other personal property
installed in or attached to the demised premises by and at the expense of the
Tenant shall remain the property of the Tenant and the Tenant shall have the
right, at any time and from time to time, provided it is not in default
hereunder, to remove any and all such trade fixtures, equipment, signs and other
personal property which it may have stored in or installed upon the demised
premises; provided, however, that in such event, Tenant shall restore the
demised premises to substantially the same condition in which they were at the
time Tenant took possession.
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<PAGE> 5
Section 9.02. All personal property (including, but not limited to,
inventory), placed in the demised premises by Tenant shall be at the risk of the
Tenant, and the Landlord shall not be liable for any loss or damage to said
personal property, or to Tenant, unless such damage results from the gross
negligence or willful misconduct of the Landlord.
Section 9.03. Tenant shall maintain its own insurance coverage on the
upfittings and alterations of the premises which exceed the Landlord's standard
improvements.
ARTICLE X.
LANDLORD'S COVENANT TO MAINTAIN
Except as hereinafter provided, the Landlord covenants and agrees that
it will, at its own expense, during the term of this Lease, keep and maintain in
good order and repair the roof, principal structural members and exterior
masonry walls of the improvements which are located upon and included as a part
of the demised premises at the beginning of the term hereof; provided, however,
that Landlord shall not be responsible for or required to make any repairs which
may have been necessitated by the negligence or willfulness of the Tenant, its
agents or employees, or as a result of excessive wear and tear. Tenant shall
promptly notify the Landlord of any need for repairs for which Landlord is
responsible hereunder.
ARTICLE XI.
TENANT'S COVENANT TO MAINTAIN
Section 11.01. Tenant covenants and agrees that it will, at its own
expense, keep and maintain in good repair the entire interior of the
improvements located upon the demised premises from the time of the beginning of
the term hereof, including, without limitation, all plate and window glass,
plumbing systems, wiring and electrical systems, doors, interior walls, heating
and air conditioning systems, and all equipment associated therewith, and will
maintain landscaping and grassed areas, and keep parking lots, gutters and
downspouts free from litter and obstructions to their normal functions.
Section 11.02. Tenant further covenants that it will, at its own
expense, repair any damage to the improvements located upon the demised premises
which is occasioned by the negligence or willfulness of its agents, invitees,
customers or employees, or by vandalism, breaking and entering or any acts of
persons not a party to this Lease.
Section 11.03. Tenant further covenants and agrees to keep the demised
premises in a clean and orderly condition, and not to cause, allow or create
upon the demised premises or common areas any condition which may constitute
unsightliness, litter or a nuisance or danger to the general public or to other
occupants of the land and building containing the demised premises, if any, or
adjoining or neighboring properties.
Section 11.04. Tenant further covenants that it will make no structural
changes or major alterations without the prior written consent of the Landlord;
that it will not injure or deface said demised premises, or any part thereof;
and that it will return said demised premises peaceably and promptly to the
Landlord at the end of the term of this Lease, or any earlier termination
thereof in full compliance with Article XII of this Lease.
Section 11.05. Tenant further covenants that it will, under no
circumstances, except with the prior written consent of the Landlord, paint any
surfaces, or portions thereof, which have not been previously painted,
including, but not limited to, concrete floor, interior and exterior masonry
walls, naturally finished stained or unstained wood, or ceilings in offices or
other areas.
ARTICLE XII.
SURRENDER OF PREMISES
Upon the expiration or other termination of the term of this Lease,
Tenant shall quit, surrender and deliver to the Landlord the demised premises in
good order and repair, reasonable wear and tear and damage by accidental fire or
other casualty alone excepted (which exception, however, shall not include, in
any case, damage or injury caused by moving Tenant's property into or out of the
demised premises, or by the installation or removal of furniture, fixtures or
any other property of Tenant), and Tenant shall remove all of its property.
Tenant's obligation to observe or perform this covenant shall survive such
expiration or other termination.
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<PAGE> 6
ARTICLE XIII.
UTILITIES
During the term of this Lease, the Tenant shall be responsible for and
shall promptly pay, when due, all charges for utilities used upon the demised
premises, including, but not limited to, gas and electricity, whether such
charges arise from actual consumption, a minimum billing, a demand billing, or a
combination thereof.
ARTICLE XIV.
INDEMNIFICATION
Section 14.01. The Tenant hereby indemnifies and holds the Landlord
harmless from any and all liabilities, claims, cause of action, obligations of
every kind and nature arising out of or in any manner related to the Tenant's
use or occupancy of the demised premises, or from any claims by third persons
arising out of such use or occupancy, including, but not limited to, all
expenses, legal fees, claims of every kind and nature relating thereto, unless
such claims are the result of the gross negligence or willful misconduct of the
Landlord.
Section 14.02. Neither Landlord nor any of its agents or employees
shall be liable to Tenant, its agents, invitees, employees or contractors, for
any damage by or from any act or negligence of any co-tenant or other occupant
of the building, if any, any owner or occupant of adjoining or contiguous
property, or any of their respective agents, contractors, invitees or employees.
ARTICLE XV.
INSURANCE AND WAIVER OF SUBROGATION
Section 15.01. From and after the date of this Lease, the Landlord, at
its sole cost and expense, will keep and maintain policies of insurance on the
improvements against loss or damage by fire and loss or damage by other risks or
casualties now embraced by the so-called "extended coverage endorsement", in
amounts at all times sufficient to prevent the Landlord from becoming a
co-insurer under the terms of the applicable policy, said insurance being for
Landlord's sole protection.
Section 15.02. Tenant covenants and agrees that it will not use the
demised premises for such purposes or in such a manner as to preclude or prevent
the Landlord from obtaining, through normal, usual and responsible efforts on
its part, such insurance coverage as is herein required of the Landlord, and in
no event will store any items, or undertake any activities, which would cause
the improvements to be rated by fire insurance companies as extra hazardous. The
Tenant agrees promptly to pay to Landlord such excess insurance premium cost, as
may be from time to time determined. Further, if during the term of this Lease,
the demised premises are used by the Tenant for any purposes or in any manner
which causes the improvements to be rated by fire insurance companies as extra
hazardous or which causes the cancellation or threatened cancellation of
Landlord's hazard insurance, the Tenant, upon notification by the Landlord, will
immediately cease such activities or storage, in order to remove the extra
hazardous rating or the threat of cancellation of Landlord's hazard insurance.
Section 15.03. In addition to the preceding Section 15.02, the Tenant
shall pay to the Landlord during each policy year falling partially or
completely within the form of this Lease, and any renewals or extensions
thereof, ONE HUNDRED PERCENT (100%) of any increase in the insurance premium
resulting from an increase in the combined rate for fire and extended coverage
insurance on said improvements in excess of the premium paid on this insurance
during the year 1990. If the Tenant shall occupy the demised premises under the
term hereof for less than a full one-year period, then for that policy year, the
Tenant shall be required to pay only a pro rata portion of any additional
insurance premium chargeable to the Tenant under the provisions of the above
paragraph. Any additional sums due Landlord pursuant to this Article shall be
due after the premiums for said policies have been paid, and the Landlord has
given Tenant written notice of such additional sum due, such sum being due and
payable within thirty (30) days after the date of such notice.
Section 15.04. From and after the date of this Lease, Tenant will, at
its own cost and expense, keep and maintain policies of general public liability
insurance protecting and indemnifying the Tenant and the Landlord against any
and all claims for damages to persons or property, or for loss of life or
property occurring upon, in or about the demised premises. Such insurance shall
afford immediate protection to the limit of not less than $500,000.00 in respect
of bodily injury or death to any one person; and to the limit of not less than
$1,000,000.00 in respect to any one accident or occurrence; and to the limit of
not less than $250,000.00 to property damage, with not more than $5,000.00
deductible.
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<PAGE> 7
Section 15.05. All insurance provided for in this Article shall be
effected under standard form policies issued by insurers of recognized
responsibility and authorized to do business in the State of North Carolina, and
which are well rated by national rating organizations.
Section 15.06. Upon the commencement of the term of this Lease, and
thereafter no less than thirty (30) days prior to the expiration dates which are
therefore furnished pursuant to this Article, Tenant shall provide Landlord with
certificates of insurance evidencing that the insurance required is in effect,
and that the premiums therefore have been paid. Each policy delivered hereunder
shall, to the extent obtainable, contain an agreement by the insurer that the
policy shall not be cancelled without at least ten (10) days' prior written
notice to the Landlord.
Section 15.07. The Landlord and Tenant, for their respective heirs,
successors and assigns, hereby waive all rights, claims and causes of action
which they may hereafter acquire against the other, as the case may be, to
recover damage from the other for any act or actions committed by them or by
persons or entities for which they are then responsible, arising out of any
damage or loss sustained by the Landlord or Tenant to their respective property,
or upon any cause of action against either party which the other party hereto
may be primarily or secondarily liable, when such loss, damage, claim or cause
of action is insured by either Landlord or Tenant against such loss, damage,
claim or cause of action through any policy of insurance issued to Landlord or
Tenant at such time, and the insurance carrier of such party is liable to pay
for such loss, damage, claim or cause of action.
ARTICLE XVI.
SIGNS
During the term of this Lease, Tenant shall install, at its sole cost
and expense, only those signs which have been approved in writing by the
Landlord and are in compliance with all codes and ordinances and are in
accordance with the rules and regulations. Tenant shall install at its expense
such approve signs on the demised premises in the location approved by the
Landlord. The care and maintenance of such signs shall be the duty of the
Tenant. Tenant shall remove all such signs at its expense at the end of the
Lease term.
ARTICLE XVII.
INSPECTION AND "FOR RENT and "FOR SALE" SIGNS
The Landlord or its authorized agent shall have access to the demised
premises at reasonable and convenient times during normal business hours for
purposes of making such inspections as it deems necessary for the proper
enforcement of any covenant, condition, or obligation under this Lease. The
Landlord or its authorized agents may exhibit the premises to prospective
tenants at reasonable times and post "For Rent" or "For Sale" signs within three
(3) months prior to the termination of this Lease, or any renewal or extension
thereof.
ARTICLE XVIII.
TENANT'S DEFAULT
Section 18.01. If Tenant shall fail to pay any installment of rent
promptly on the day the same is due and payable hereunder, and shall continue in
such default for a period of ten (10) days after written notice thereof has been
served by the Landlord, or if Tenant shall fail to promptly keep and perform any
other covenants of this Lease, strictly in accordance with the terms of this
Lease, and, other than as provided in Article I, Section 1.03 and Article XV,
Section 15.02, shall continue in default for a period of thirty (30) days after
written notice thereof has been served by Landlord of default and demand of
performance, of if the leasehold interest of Tenant shall be taken on execution
or other process of law, or if the Tenant shall petition to be or be declared
bankrupt or insolvent according to law or make any conveyance or general
assignment for the benefit of creditors, or if a receiver be appointed for such
Tenant's property, and such appointment be not vacated and set aside within
thirty (30) days from the date of such appointment, or if proceedings for
reorganization or for composition with creditors be instituted by or against the
Tenant, then and in any of said events, the Landlord may immediately, or at any
time thereafter, and without further notice or demand, either terminate this
Lease or enter into and upon said premises, or any part thereof, and take
absolute possession of the same, fully and absolutely, and without such re-entry
working as a forfeiture of the rents to be paid and the covenants to be
performed by the Tenant for the full term of the Lease, and may, at the
Landlord's election, lease or sublet such premises, or any part thereof, on such
terms and conditions and for such [illegible], and for such time as the Landlord
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<PAGE> 8
may elect; and, collect from the tenant any balance remaining [illegible] under
this Lease, Landlord shall have such additional rights and remedies as may be
provided by then applicable law.
ARTICLE XIX.
ASSIGNING AND SUBLETTING
The Tenant may not assign this Lease, nor sublet the whole or any part
of the demised premises, without the prior written consent of the Landlord, it
being understood and agreed that such consent will not be unreasonably withheld.
ARTICLE XX.
SUBORDINATION AND NON-DISTURBANCE
Section 20.01. Tenant agrees that this Lease is and shall remain
subject and subordinate to, and may be assigned as security to, any present and
all future ground leases or underlying leases of the land, any improvements
thereon or any part thereof, and to and for all mortgages or deeds of trust
which may now or hereafter affect such leases or the land, any improvements
thereon or any parts thereof, and to and for all renewals, modifications,
consolidations, replacements and extensions thereof. This clause shall be
self-operative and no further instructions shall be necessary to effect
subordination; however, Tenant shall execute promptly and deliver to Landlord
any such certificates in writing as Landlord may request evidencing the
subordinate of this Lease, or the assignment of this Lease as additional
security for, such ground leases, underlying leases, mortgages or deeds of
trust, and Tenant hereby constitutes and appoints Landlord as Tenant's
attorney-in-fact, coupled with an interest, to execute any such certificates or
assignment on Tenant's behalf in default of such execution by Tenant.
Section 20.02. Landlord agrees to exercise its best efforts to arrange
with the lender or holder of the mortgage, an agreement that if, by disposition,
foreclosure or otherwise, such holder or any successor in interest shall become
the owner of the demised premises, or take the rights of the Landlord in the
demised premises. It will not disturb the possession, use or enjoyment of the
leased premises by the Tenant, its successors or assigns, nor disaffirm the
Lease or Tenant's rights or estate hereunder, so long as all of the obligations
of the Tenant are fully performed in accordance with this Lease.
ARTICLE XXI.
DAMAGE OR DESTRUCTION BY FIRE
Section 21.01. Tenant shall give immediate written notice to Landlord
of any damage caused to the demised premises by fire or other casualty, and if
Landlord does not elect to terminate this Lease, as hereinafter provided,
Landlord shall proceed with reasonable diligence, at Landlord's expense, to
build and repair the premises. If the buildings or improvements located on the
premises shall: (a) be destroyed or substantially damaged so that the demised
premises cannot be repaired within ninety (90) days for the purposes for which
the demised premises was herein leased; or (b) if there is less than one (1)
year remaining under the term of this Lease, than in either of said events,
Landlord or Tenant may elect to terminate this Lease by giving thirty (30) days
written notice to the other party of such termination, without any further duty
of either party to rebuild or repair the demised premises.
Section 21.02. In the event there is no termination, as provided
herein, the Landlord will repair and rebuild the demised premises as promptly as
is practical to substantially the same condition which existed prior to the
occurrence of said damage or casualty; provided, however, that in no event will
Landlord be required in making such repairs to expend in excess of the fire and
extended coverage insurance proceeds actually received as a result of the said
casualty or damage. If the damage and repairing thereof shall render the demised
premises untenable, in whole or in part, a proportionate abatement of the rent
shall be allowed from the date the damage first occurred until the completion of
the repairs, as herein provided.
-7-
<PAGE> 9
ARTICLE XXII.
EMINENT DOMAIN
Section 22.01. In the event, during the term of this Lease, that the
entire demised premises are acquired by the exercise of the power of eminent
domain, this Lease shall terminate at the time possession must be surrendered,
and the Tenant shall be relieved of all future payments provided for herein.
Section 22.02. In the event, during the term of this Lease, that only a
portion of the demised premises is acquired by the exercise of the power of
eminent domain, and the demised premises as thus affected cannot be reasonably
used by the Tenant, then this Lease shall be terminable by the Tenant by serving
written notice upon the Landlord, and when so terminated, the Tenant shall be
relieved of all future rental payments provided for herein.
Section 22.03. In either of said events, Landlord shall be entitled to
the proceeds arising out of any such acquisition of the demised premises, or
portion thereof, under the power of eminent domain; provided, however, that
nothing herein contained shall be construed so as to prevent the Tenant from
making a claim for a separate award for any relocation expense, or for such
losses as it may sustain in connection with any items belonging to the Tenant
and not a part of the demised premises; and provided, further, that Tenant shall
be entitled to any amount specifically designated for such losses which it may
sustain in either of said events, whether such amount shall be a separate award
in itself, or shall be only a part of an award.
ARTICLE XXIII.
MISCELLANEOUS PROVISIONS
Section 23.01. It is expressly understood and agreed by and between the
parties hereto that this Lease sets forth all of the promises, agreements,
conditions and understandings between the Tenant and Landlord relative to the
demised premises, and that there no promises, agreements, conditions or
understandings, either oral or written, between them, other than as are herein
set forth. It is further understood and agreed that, except as herein otherwise
provided, no subsequent alterations, amendments, changes or additions to this
Lease shall be binding upon Landlord or Tenant, unless reduced to writing and
signed by both parties.
Section 23.02. If any base rental, additional rent or any other sum due
Landlord, in accordance with the provisions of this Lease shall not be paid when
due, the same shall bear interest at the rate of eighteen (18%) per cent per
annum, (or, if less, the highest rate allowed by law) from such due date until
such sum and interest accrued thereon shall have been paid. Interest accrued as
aforesaid shall be deemed to be additional rental hereunder, due on demand, and
if not paid, shall constitute an event of default.
Section 23.03. It is further understood and agreed that no waiver by
either party, or its successors and assigns, of any breach of any of the
covenants or conditions herein contained to be performed by the other party,
shall be construed as a waiver of any succeeding breach of the same or any other
covenant or condition.
Section 23.04. It is further understood and agreed that if any of the
terms and conditions of this Lease, or the application thereof, shall to any
extent by invalid or unenforceable, the remaining terms and conditions of this
Lease, other than any held to be invalid or unenforceable, shall not be affected
thereby, shall be and remain valid, and shall continue to be binding upon the
parties hereto to the fullest extent permitted by law.
Section 23.05. It is further understood and agreed that the execution
of this Lease, and the performance of any act pursuant to the terms and
conditions hereof, shall not be deemed or construed to have the effect of
creating between Landlord and Tenant the relationship of principal and agent, or
partnership or of joint venture, and the relationship between them shall be that
of Landlord and Tenant only.
Section 23.06. This Lease shall be governed by and construed in
accordance with the laws of the State of North Carolina.
Section 23.07. The parties will, at the opinion of the Landlord,
execute and deliver a Memorandum of Lease for the purpose of recording, and both
parties agree that only such short form lease shall be recorded.
Section 23.08. Whenever in this Lease it shall be required or permitted
that notice or demand be given or served by either party to this Lease to or
upon the other, such notice or demand shall be given or served, and shall not be
deemed to have been given or served unless in writing, and forwarded by
certified or registered mail, return receipt, addressed as follows:
-8-
<PAGE> 10
To the Landlord: With Copy To:
- --------------------------------------------------------------------------------
D.L. Phillips Investment Builders, Inc. James M. Alexander Realty, Inc.
- --------------------------------------------------------------------------------
2121 E. Independence Boulevard 4400-A Stuart Andrew Boulevard
- --------------------------------------------------------------------------------
Charlotte, North Carolina 28205 Charlotte, North Carolina 28217
- --------------------------------------------------------------------------------
To the Tenant: With Copy to:
- --------------------------------------------------------------------------------
Up-Right, Inc. Up-Right, Inc.
- --------------------------------------------------------------------------------
401 Roland Way Post Office Box 34007
- --------------------------------------------------------------------------------
Oakland, California 94621 Charlotte, North Carolina 28234
- --------------------------------------------------------------------------------
Such addressee may be changed from time to time by either party by serving
notice of such change as provided above.
Section 23.09. If any rent owing under this Lease is collected by or
through an attorney-at-law, or in the event eviction proceedings are brought by
or through an attorney-at-law to obtain possession of the demised premises or
any action is brought by the Landlord for breach of any provisions of this Lease
by Tenant, Tenant agrees to pay to the Landlord as attorney's fees an amount
equal to fifteen percent (15%) (or if the statutes or other laws of the State of
North Carolina in effect at the time of such collection or eviction proceedings
limit the amount recoverable as attorney's fees, then the maximum percentage
allowed by such statute or law) of the amount so collected, or of the amount of
rent past-due, whichever is greater.
Section 23.10. Subject to the restrictions on assigning and subletting
hereinbefore contained, this Lease shall be binding upon and inure to the
benefit of the parties hereto, their successors, assigns, heirs and legal
representatives [illegible] governmental restrictions, scarcity of labor or
materials, strikes, fire or any other reason beyond its control, the performance
of such act shall be excused for the period of delay, and the period for the
performance of any such act shall be extended for the period necessary to
complete the performance after the end of the period of such delay.
Section 23.14. Option to Extend Term. See Addendum A attached hereto
and made part of this Lease Agreement.
Section 23.15. The parties hereto hereby agree that the Lease Agreement
on this property between the parties hereto dated October 26, 1988 and extended
and Modified by Agreement dated August 23, 1989 is hereby superseded and
replaced by this Lease Agreement.
Section 23.16. Right of First Offer: See Addendum A attached hereto and
made part of this Lease Agreement.
Section 23.12. Tenant further covenants and agrees that consistent with
and in addition to those covenants and agreements contained in Articles XI and
XIII hereinabove, it will, as its own expense, keep and maintain the landscaping
and grassed areas and keep parking lots, gutters and downspouts free from litter
and other obstructions to their normal functions and will be responsible for and
pay, when due, all water and sewer charges incurred on the demised premises.
In Witness Whereof, the parties hereto have duly executed this Lease
Agreement under seal as of the day and year above written.
LANDLORD, D.L. PHILLIPS INVESTMENT BUILDERS, INC.
By: /s/ Tom P. Phillips, President (Seal)
----------------------------------------------
Tom P. Phillips
Attest: /s/ Fletcher Harrington, Secretary
----------------------------------------------
Tenant: UP-RIGHT, INC.
(Corporate Seal) By: /s/ [illegible] V.P. Marketing
----------------------------------------------
(Vice) President
Attest:
/s/ James T. Dillon
- ----------------------
(Assistant) Secretary
-9-
<PAGE> 11
STATE OF NORTH CAROLINA
COUNTY OF MECKLENBURG
I,_______________________, a notary public for said county and state,
do hereby certify that _________________________________________________________
- --------------------------------------------------------------------------------
_________________________________ personally appeared before me this day and
acknowledged the execution of the foregoing instrument.
WITNESS my hand and notarial seal, this the _______ day of
_________________________________, 19__________.
--------------------------------------
Notary Public
My Commissions Expires ___________
(Notarial Seal)
STATE OF ______________
COUNTY OF _____________
This the _______day of ____________________________________19______,
personally appeared before
me______________________________________________________ [illegible] he is the
(vice) president of
___________________________________________________________________ and that the
seal affixed to the foregoing instrument in writing is the corporate seal of
said corporation, and that the said writing was signed and sealed by him, in
behalf of the corporation, by its authority duly given. And the said
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
acknowledged the said writing to be the act and deed of said corporation.
----------------------------------------
Notary Public
My Commission Expires:______________
(Notarial Seal)
-10-
<PAGE> 12
Addendum A to Lease Agreement
between D.L. Phillips Investment Builders, Inc., Landlord
and
Up-Right, Inc. Tenant
dated __________________, 1990
Article III. continued:
Rental during the term shall be as follows:
First thirty six months: $4,069 per month
Next twenty four months: $4,476 per month
Article 23.14: Option to Extend Term continued:
Provided Tenant is not in default of any of the terms and conditions of
this Lease Agreement, Landlord hereby grants Tenant one option to renew this
Lease for five (5 ) years at an annual rental of *SEE BELOW*. Tenant must give
Landlord written notice of its intent six (6) months prior to the expiration of
the term of this lease. All other terms and conditions of the Lease shall remain
in full force and effect.
*Annual rental during the option period shall be the higher of Fifty
Three Thousand and Seven Hundred and Twelve ($53,712.00) Dollars or an amount
computed by multiplying Fifty Three Thousand and Seven Hundred and Twelve
($53,712.00) Dollars by the quotient obtained by dividing the level of the
Consumer Price Index (for urban wage earners and clerical workers: U.S. city
average, by expenditure category and commodity and service group, 1982-84 = 100)
of the United States Bureau of Labor Statistics at the beginning date of said
option period by the level of the Consumer Price Index (for urban wage earners
and clerical workers: U.S. city average, by expenditure category and commodity
and service group, 1982-84 = 100 of the United States Bureau of Labor Statistics
at the beginning date of the term of this Lease.
Article 23.16 Right of First Offer continued:
Right of First Offer: Provided Tenant is not in default of the Lease,
if Landlord desires to offer the Demised Premises for sale at any time during
the term of this Lease (as such term may be extended at any time during the term
of this Lease (as such term may be extended or renewed), then Landlord shall
give tenant written notice of the terms and conditions on which Landlord is
willing [illegible] days after receipt of such notice from Landlord to purchase
the Demised Premises on the terms and conditions set forth in Landlord's notice.
Failure to respond within said 15-day period or variation of the terms and
conditions offered by Landlord shall be deemed a rejection of Landlord's offer.
Upon expiration of said 15-day period or other rejection by Tenant of Landlord's
offer, Landlord shall have the right to offer the Demised Premises for sale to
others on terms and conditions no less favorable than those offered to Tenant.
If Landlord does not close the sale of the Demised Premises within 365 days
after initially offering the Demised Premises on terms and conditions more
favorable to Tenant than those offered to Tenant, then Landlord shall not sell
the Demised Premises without having re-offered the Demised Premises for sale in
writing to Tenant, which offer will be in accordance with such more favorable
terms and conditions, if applicable. Tenant shall have five (5) days after
receipt of such notice to accept Landlord's offer. Closing and terms of payment
shall be in accordance with the terms and conditions of Landlord's offer.
-11-
<PAGE> 13
Attached To And Made Part Of
Lease Dated April 27, 1990
Made Between
Horizon High Reach, Inc., a Delaware Corporation
and
JMA, Ltd., a North Carolina Limited Partnership
***********************
SUPPLEMENTAL AGREEMENT
To the Lease Dated as of the 27th day of April, 1990, made by and
between JMA, Ltd., a North Carolina Limited Partnership as the successor
Landlord, and Horizon High Reach, Inc., as the successor Tenant.
By this Supplemental Agreement dated as of the 30th day of September,
1994, the parties to the Lease agree as follows with respect to the demised
premises located at 4151 A and B Barringer Drive, Charlotte, N.C. and as
otherwise described in the Lease.
1. Landlord shall cause to be constructed the work within the premises
described as Base Bid and Alternate No. 1 in Edison Foard, Inc.,
General Contractor, Bid Letter dated December 13, 1994, attached hereto
as Exhibit "A", on or before March 10, 1995. Provided, however, all
four windows in the interior walls shall be eliminated and a
twenty-four inch by thirty inch glass insert shall be installed in door
"E".
2. Tenant hereby exercises its option to renew this Lease for a period
of five years from April 1, 1995 through March 31, 2000 under Article
24.14 and Landlord concurs and accepts such renewal.
3. The annual rental throughout the renewal period shall be Fifty Nine
Thousand and Forty ($59,040.00) Dollars in monthly installments of
$4,920.00 in accordance with the terms and conditions of the Lease.
Except as hereby supplemented or amended, the Lease shall remain in
full force and effect and is hereby ratified and confirmed.
IN WITNESS WHEREOF, this instrument has been duly executed by the
parties hereto as of September 30, 1994.
Attest Tenant: Horizon High Reach, Inc.
By:
-----------------------------------------
Asst. Secretary Title: (Vice) President
-12-
<PAGE> 14
(CORPORATE SEAL)
Witness Landlord: JMA, Ltd. a North Carolina Limited Partnership
By:
----------------------------------
-13-
<PAGE> 15
ASSIGNMENT OF LEASE
THIS ASSIGNMENT OF LEASE (this "Assignment") is made and entered into
as of June , 1994, by and between Up-Right, Inc., a California corporation
("Assignor"), and Horizon High Reach, Inc., a Delaware corporation ("Assignee").
RECITALS:
A. Assignor is the tenant under that certain Lease Agreement, dated
April 27, 1990, and Assignment of Lease, dated June 18, 1990 (collectively
referred to as the "Lease," a copy of which Lease, including amendments and
modifications thereto, is attached hereto as EXHIBIT "A"), between Assignor and
D.L. Phillips Investment Builders, Inc. (whose interest was assigned to JMA,
Ltd. pursuant to an Assignment of Lease dated June 18, 1990 (herein,
"Landlord")), for the premises (the "Premises") located in the City of
Charlotte, State of North Carolina, as described more particularly in the Lease.
B. Pursuant to that certain Asset Contribution Agreement (the "Asset
Contribution Agreement") dated June , 1994, Assignor has agreed to transfer, and
Assignee has agreed to acquire, certain of Assignor's assets.
C. In accordance with the Asset Contribution Agreement, Assignor
desires to assign all rights and delegate to Assignee all obligations arising
under the Lease, and Assignee desires to accept such assignment and delegation
on the terms and conditions set forth below.
AGREEMENT:
NOW, THEREFORE, in consideration of the mutual covenant and agreements
contained herein and other good and valuable consideration, the parties agree as
follows:
1. Assignment. Effective upon the Closing (as defined in the Asset
Contribution Agreement) and, to the extent required under the Lease, Lessor's
written consent hereto (such later date herein referred to as the "Effective
Date"), Assignor assigns and transfers to Assignee all of Assignor's right,
title and interest in, and delegates to Assignee all obligations arising under,
the Lease.
2. Assumption. From and after the Effective Date, Assignee assumes all
the obligations of Assignor under the Lease to be performed by Assignor as the
tenant under the Lease and, agrees to be bound by all the terms, covenants,
conditions, and provisions of the Lease. Assignee hereby agrees to indemnify and
hold Assignor harmless from and against any and all costs, expenses (including,
without limitation, attorneys' fees) and liability arising from the breach or
default by Assignee of any of the terms, covenants, conditions, and provisions
of the Lease occurring from and after the Effective Date.
3. Representations and Warranties. Assignor hereby represents and
warrants to Assignee that the documents attached hereto as EXHIBIT A comprise
the entire agreement between Assignor and Landlord respecting the Premises.
4. Governing Law. This Assignment and the rights and obligations of the
parties hereunder shall in all respects be governed by, and interpreted in
accordance with, the laws of the State of California.
5. Interpretation. This Assignment shall be interpreted in accordance
with the common meaning of its terms and shall not be interpreted strictly for
or against either party, provided that in the event of any conflict with the
terms or conditions of the Asset Contribution Agreement, the terms and
conditions of the Asset Contribution Agreement shall control.
-1-
<PAGE> 16
6. Counterparts. This Assignment may be executed in any number of
counterparts, each of which shall be deemed an original, and when taken together
they shall constitute one and the same agreement.
7. Successors. This Assignment shall be binding upon and shall inure to
the benefit of Assignor, Assignee, and their respective successors and assigns.
IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment
as of the date first written above.
"ASSIGNOR" "ASSIGNEE"
UP-RIGHT, INC. HORIZON HIGH REACH, INC.
a California corporation a Delaware corporation
By: By:
------------------------------ ---------------------------------
-2-
<PAGE> 17
CONSENT TO ASSIGNMENT
The undersigned ("Landlord") hereby consents to the assignment of
rights and delegation of duties under the Lease to Assignee, as described in
pages one and two above and initialed by Landlord for identification, on the
condition that Assignor remain primarily liable for the performance of all of
its obligations under the Lease. Landlord's consent is strictly limited to the
transaction described above, and any future assignment of the Lease, or sublease
of the premises, by Assignee shall require the prior written consent of
Landlord, as specified in the Lease. Landlord hereby represents and warrants to
Assignee and agrees that (i) as of the Effective Date, the Lease is in full
force and effect and no default or breach (or no event has occurred that, with
the passage of time, the giving of notice by Landlord, or both, otherwise would
constitute a default or breach) exists under the Lease; (ii) the Lease attached
hereto as EXHIBIT "A" constitutes the entire agreement of Assignor and Landlord
with respect to the subject matter thereof; (iii) Assignor has paid or been
credited with the deposits (whether in the nature of a security deposit or
otherwise) specified in the Lease, and from and after the Effective Date
Landlord shall hold and apply such deposits for Assignee's account in accordance
with the Lease; and (iv) the term of the Lease commenced on July 1, 1990 and
shall expire on March 31, 1995.
IN WITNESS WHEREOF, Landlord has executed this Consent to Assignment as
of July 15, 1994.
JMA, Ltd.
a North Carolina Limited Partnership
By: /s/ James M. Alexander
-------------------------------------
Its: General Partner
-------------------------------------
-3-
<PAGE> 18
STATE OF NORTH CAROLINA
ASSIGNMENT OF LEASE
COUNTY OF MECKLENBURG
THIS ASSIGNMENT OF LEASE dated June 18, 1990, is made by and between
D.L. PHILLIPS INVESTMENT BUILDERS, INC., a North Carolina corporation
("Assignor"); and JMA, LTD., A NORTH CAROLINA LIMITED PARTNERSHIP ("Assignee").
Background Statement
Assignor has entered into a Lease dated April 27, 1990 ("Lease"),
pursuant to which Assignor leased to UpRight, Inc. ("Tenant") premises located
in Mecklenburg County, North Carolina, on real property more particularly
described in Exhibit A ("Demised Premises"). Assignor wishes to assign all its
right, title and interest in the Lease to Assignee, effective as of June 18,
1990 ("Effective Date").
Assignment
NOW, THEREFORE, in consideration of the premises, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
I. Assignor assigns to Assignee, as of the Effective Date, all of
Assignor's right, title and interest, as landlord, in the Lease. Assignor
warrants and represents to Assignee that it has full and lawful authority to
execute this Assignment of Lease.
II. Assignor agrees to indemnify, defend and hold Assignee harmless
from and against any and all liabilities, claims, demands, costs and expenses of
every kind and nature (including attorneys' fees and court costs) resulting from
the failure of Assignor to perform its obligation under, or observe the
covenants and conditions in, the Lease accruing prior to the Effective Date.
III. Assignee agrees to assume all the obligations of Assignor under
the Lease arising from and after the Effective Date, and to perform and observe
all the covenants and conditions to be performed or observed by Assignor in the
Lease accruing from and after the Effective Date. Assignee agrees to indemnify,
defend and hold Assignor harmless from and against all liabilities, claims,
demands, costs and expenses of every kind and nature (including attorneys' fees
and court costs) resulting from the failure of Assignee to perform its
obligations under, or observe the covenants and conditions in, the Lease
accruing on or after the Effective Date.
-1-
<PAGE> 19
IV. This Assignment of Lease may not be modified, discharged or
terminated orally or in any manner other than by an agreement in writing signed
by the parties hereto or their respective successors and assigns.
IN WITNESS WHEREOF, the parties hereto have executed this Assignment of
Lease under seal as of the day and year first written above.
ASSIGNOR:
D.L. PHILLIPS BUILDERS, INC.
[CORPORATE SEAL] By: /s/ Tom Phillips
-------------------------------------
Title: President
Attest:
/s/ Fletcher Harrington
- ------------------------------
Secretary
ASSIGNEE:
JMA LTD., A NORTH CAROLINA
LIMITED PARTNERSHIP
By: /s/ James M. Alexander (SEAL)
-------------------------------------
James M. Alexander, General Partner
-2-
<PAGE> 20
STATE OF NORTH CAROLINA
COUNTY OF MECKLENBURG
This 15th day of October, 1990, personally came before me Tom P.
Phillips, who, being by me duly sworn, says that he is the President of
D.L. PHILLIPS INVESTMENT BUILDERS, INC. and that the seal affixed to the
foregoing instrument in writing is the corporate seal of the company, and that
said writing was signed and sealed by him, in behalf of said corporation, by its
authority duly given. And the said Tom P. Phillips acknowledged the said writing
to be the act and deed of said corporation.
/s/ Stephanie S. Link
-------------------------------------
Notary Public
My commissions expires:
8-28-91
- -----------------------
[NOTARIAL SEAL]
STATE OF NORTH CAROLINA
COUNTY OF MECKLENBURG
This 11th day of October, 1990, personally came before me JAMES M.
ALEXANDER, who, being by me duly sworn, says that he is a general partner of
JMA, LTD., A NORTH CAROLINA LIMITED PARTNERSHIP, and acknowledged the due
execution of the foregoing instrument on behalf of said partnership.
/s/ Stephanie S. Link
-------------------------------------
Notary Public
My commissions expires:
8-28-91
- -----------------------
[NOTARIAL SEAL]
-3-
<PAGE> 21
EXHIBIT A
BEGINNING at a point which is located in the southerly margin of the
right-of-way of Barringer Drive (60 foot right-of-way) which point is located at
the northerly corner of the property of Suzy Realty of North Carolina (now or
formerly) as described in Deed recorded in Book 3694 at Page 328 of the
Mecklenburg Public Registry; thence, continuing with said margin of Barringer
Drive in a northeasterly direction along the arc of a circular curve to the left
having a radius of 746.20 feet an arc distance of 60.00 feet to a point which is
located in the westerly corner of the property of Halifax Realty (now or
formerly) as described in Deed recorded in Book 4056 at page 797 of the
Mecklenburg Public Registry; thence, continuing with the southwesterly boundary
of said Halifax Realty Company property the following two (2) courses and
distances: 1) S 48-29-04 E. 139.61 feet to a point; and 2) S 71-18-58 E (passing
a new iron pin at 132.13 feet) a total distance of 281.11 feet to a point which
is located in the rear line of Parcel B-4 as shown on a map of Phillips
Industrial Park recorded in Map Book 19 at Page 449 of the Mecklenburg Public
Registry; thence, continuing in part with said rear line of Parcel B-4 S
40-44-36 W 377.48 feet to an existing iron pipe located in the easterly line of
the aforesaid Suzy Realty Company; thence, continuing with said boundary of said
Suzy Realty Company property N 21-20-10 W 456.82 feet to the point and place of
BEGINNING, all as shown on that survey dated June 3, 1980, as revised October
30, 1980 and prepared by H.E. McCauley.
BEING part of the property conveyed to Chaney Development Company by
deed recorded in Book 1723 at Page 141 of the Mecklenburg Public Registry.
Chaney Development Company was merged into D.L. Phillips Investment Builders,
Inc., by Articles of Merger recorded on Roll 17 at Frame 655 among the corporate
records in the Mecklenburg Public Registry.
<PAGE> 1
EXHIBIT 10.14
LEASE RENEWAL AGREEMENT
WERNER WITH UPRIGHT, INC.
222 BERGEN TURNPIKE
RIDGEFIELD PARK, NJ
WHEREAS, Ronald W. Werner, as Lessor, and Upright, Inc., as Lessee,
entered into a certain lease agreement dated January 10, 1983 (hereinafter
"lease") with respect to the above premises; and
WHEREAS, said lease was for a term of five (5) years, ending on October
31, 1987; and
WHEREAS, Lessee exercised a renewal option contained in the lease, for
a renewal term ending October 31, 1992, and the parties having further executed
an undated Amendment to Lease, effective on November 1, 1987 (hereinafter "Lease
Amendment"); and
WHEREAS, the parties desire to renew and further extend said lease, on
the terms and conditions set forth herein;
NOW THEREFORE, for good and valuable consideration, the parties do
hereby agree as follows:
1. The renewal term shall commence on November 1, 1992 and shall end on
October 31, 1997.
2. Lessee covenants and agrees to pay to Lessor, as basic rent for and
during said renewal term the sum of Four Hundred Ninety Thousand Four Hundred
Four and 60/100 ($490,404.60) Dollars. Said rent shall be due and payable in
sixty (60) monthly installments each in the sum of $7,000.00, due on the first
day of the month in advance, without set-off or deduction of any kind,
commencing on November 1, 1992, + 3% increase per year.
-1-
<PAGE> 2
Rents shall be payable to Lessor at the address set forth in the lease
or such other address as Lessor shall hereinafter designate in writing.
3. Lessor presently holds a security deposit previously paid by Lessee.
On or before November 1, 1992, Lessee shall deposit with Lessor such additional
deposit so as to make the total security deposit equal to two (2) months of
basic rent plus two (2) months of current tax payments and insurance premiums.
All of said deposits shall be held as security for the faithful performance and
observance by Lessee of the terms, provisions and conditions of the lease, as
modified thereby.
4. Lessee shall, at Lessee's own expense, comply with the Environmental
Cleanup Responsibility Act, N.J.S.A. 12:1K-6 et seq. and the regulations
promulgated thereunder ("ECRA") with respect to Lessee's occupancy of and
activities upon the premises. Lessee shall, at Lessee's own expense, make all
submissions to, provide all information to, and comply with all requirements of
the Bureau of Industrial Site Evaluation ("the Bureau") of the New Jersey
Department of Environmental Protection ("NJDEPE").
Should the Bureau or any other division of NJDEPE determine that a
cleanup plan be prepared and that a cleanup be undertaken because of any spills
or discharges of hazardous substances or wastes at the premises which occur
during the term of this lease, then Lessee shall, at Lessee's own expense,
prepare and submit the required plans and financial assurances, and carry out
the approved plans. ECRA only [illegible] to spillage on floors and
-2-
<PAGE> 3
asphalt--nothing underneath. Lessee's obligations under this paragraph shall
arise if there is any closing, termination on or transferring of operations of
an industrial establishment at the premises pursuant to ECRA. At no expense to
Lessor, Lessee shall promptly provide all information requested by Lessor for
preparation of nonapplicability affidavits and shall promptly sign such
affidavits when requested by Lessor. Lessee shall indemnify, defend and save
harmless Lessor from all fines, suits, procedures, claims and action of any kind
arising out of or in any way connected with any spills or discharges of
hazardous substances or wastes at the premises which occur during the term
hereof or the term of any prior lease or occupancy agreement between the
parties; and from all fines, suits, procedures, claims and actions or any kind
arising out of Lessee's failure to provide all information, make all submissions
and take all actions required by the Bureau or any other division of NJDEPE.
Where appropriate, and to the extent required, Lessor will cooperate therewith,
at no expense to Lessor. Lessee's obligations and liabilities under this
paragraph shall continue for so long as Lessor remains responsible for any
spills or discharges of hazardous substances or wastes at the premises which
occur during the term hereof or during the term of any prior lease or occupancy
agreement between the parties. Lessee's failure to abide by the terms of this
paragraph shall be restrainable by injunction.
-3-
<PAGE> 4
5. (A). Public liability insurance coverage limits set forth in Section
2.3 of the lease are hereby increased as follows:
For injuries to any person or persons, for limits of not less than One
Million ($1,000,000.00) Dollars for injuries to one person and Three Million
($3,000,000.00) Dollars for injuries to more than one person, in any one
accident or occurrence, and for loss or damage to the property of any person or
persons, for not less than Five Hundred Thousand ($500,000.00) Dollars.
(B) Lessor shall keep the building on the demised premises insured
against loss or damage by fire with extended coverage endorsement in an amount
reasonably satisfactory to Lessor. If for any reason it shall be impossible to
obtain fire and other hazard insurance on the buildings and improvements on the
leased premises, in an amount and in the form and with insurance companies
reasonably acceptable to Lessor, Lessor may, if Lessor so elects at any time
thereafter, terminate this Lease and the term hereof, upon giving to Lessee
fifteen (15) days notice in writing of Lessor's intentions to do so, and upon
the giving of such notice, this Lease and the term thereof shall terminate.
During said period, Lessee shall have the right to attempt to obtain such
reasonably acceptable insurance. If same is obtained during said period, this
Lease shall not terminate. Lessee shall pay to Lessor, as additional rent,
Lessee's share of all premiums relating to the insurance to be obtained by
Lessor pursuant hereto. Lessee's share of such insurance premiums shall be
calculated based upon the ratio that area leased by Lessee bears
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to total square footage of building(s) insured under said policies. Lessor shall
notify Lessee of such premiums, and Lessee's share thereof shall be paid to
Lessor in the same manner set forth for tax increases in paragraph 6 hereof.
Additionally, if solely by reason of the use to which the premises are put by
Lessee or character of or the manner in which Lessee's business is carried on,
the insurance rates for fire and other hazards shall be increased, the Lessee
shall upon demand, pay to Lessor, as rent, the amounts by which the premiums for
such insurance are increased. Lessor agrees to provide evidence of rate
increase(s) to Lessee.
6. During the term hereof, Lessee shall pay to Lessor, as additional
rent, the "Lessee's Share" of tax increases imposed on the Lessor's entire
premises, to the extent that said taxes have increased from the taxes in the
base year of 1991. For the purpose of this Section, "taxes" shall mean all taxes
and special and extraordinary assessments. Lessee's share shall be calculated
based upon the ratio that area leased by Lessee bears to total square footage of
buildings located on Lessor's entire premises.
Lessee's share of taxes shall be payable monthly on the first day of
the month in advance to Lessor. Lessor shall give notice to Lessee of any tax
increases, and Lessee's share thereof (computed on a cumulative basis from the
1991 base year) shall be paid to Lessor in 12 equal consecutive monthly
installments as additional rent. The first monthly installment shall be due and
payable on the first day of the next month after said notice. To
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<PAGE> 6
the extent that a tax change shall relate to any time period prior to said
notice, said change shall apply retroactively (but not earlier than the
commencement date of the within lease term). The amount of any deficit in the
payments made prior to the notice of tax change shall be credited to or paid by
Lessee on the first day of the next month after said notice.
Lessor agrees to annually furnish to Lessee a copy of the tax bill(s),
upon Lessee's request therefor.
Notwithstanding the foregoing, in the event of any assessment imposed
upon the premises, payable over a term of years, Lessee shall pay Lessee's share
of same to Lessor as additional rent in monthly installments. The amount of each
monthly installment shall be computed based upon the amount of the assessment
divided by the number of months over which same shall be payable, together with
such interest thereof as may be due to the governmental entity imposing the
assessment. In the event that the assessment is imposed on Lessor's entire
premises, Lessee's share of assessment shall be computed on the same percentage
basis as utilized herein to determine Lessee's share of taxes.
7. Lessee agrees to annually decorate (and redecorate, if necessary) a
certain Spruce Tree (presently approximately 65 feet tall) located at Lessor's
residence, and thereafter to remove said decorations, at such time and in such
manner as Lessor may designate.
8. Pursuant to Paragraph 1 of the Lease Amendment, Lessee was granted
the right to use certain property. Lessee may
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<PAGE> 7
continue said use during the within renewal term; provided, however, that Lessor
may terminate said use upon thirty (30) days written notice to Lessee, at which
time all rights on the part of Lessee to use same shall cease and Lessee shall
vacate said additional property. Lessee shall not be entitled to any reduction
of rent or other payments due hereunder by reason of such use termination.
9. If Lessee shall fail to make payment of any rent or additional rent,
or of any other charge due hereunder, within ten (10) days of the due date
thereof, Lessee shall pay to Lessor a late charge equal to five (5%) percent of
the unpaid amount, which late charge shall be deemed additional rent.
10. In all other respects not inconsistent herewith, the parties do
hereby incorporate all of the terms and conditions of lease and lease amendment.
IN WITNESS WHEREOF, the parties have hereunto set their respective
hands and seals.
Dated:
/s/ Ronald W. Werner
- ------------------------------- -------------------------------
RONALD W. WERNER (LESSOR)
Dated: UPRIGHT, INC.
(LESSEE)
10-19-92 /s/ Hamilton Parr
- ------------------------------- -------------------------------
President
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<PAGE> 1
EXHIBIT 10.15
INDUSTRIAL REAL ESTATE LEASE
(MULTI-TENANT FACILITY)
ARTICLE ONE: BASIC TERMS
This Article One contains the Basic Terms of this Lease between the
Landlord and Tenant named below. Other Articles, Sections and Paragraphs of
the lease referred to in this Article One explain and define the Basic Terms
and are to be read in conjunction with the Basic Terms.
Section 1.01. Date of Lease: March 7, 1995
Section 1.02. Landlord (include legal entity): BMB Investment
Group
Address of Landlord: c/o Grubb & Ellis Property Management, 770 L Street,
Suite 700, Sacramento, CA 95814.
Section 1.03. Tenant (include legal entity): Horizon High Reach, a
Delaware corporation.
Address of Tenant: ____________________________________________________________
_______________________________________________________________________________
Section 1.04. Property: The Property is part of Landlord's
multi-tenant real property development known as 4119 South Market Court,
Sacramento and described or depicted in Exhibit "A" (the "Project"). The
Project includes the land, the buildings and all other improvements located on
the land, and the common areas described in Paragraph 4.05(a). The property is
(include street address, approximate square footage and description)
approximately 12,800 square feet of warehouse/ office space and the adjacent
yard space at 4119 South Market Court.
Section 1.05. Lease Term: 5 years 0 months beginning on April 1,
1995 or such other date as is specified in this Lease, and ending on March 31,
2000.
Section 1.06. Permitted Uses: (See Article Five) operation of a
construction equipment firm and other related uses not injurious to the
premises.
Section 1.07. Tenant's Guarantor: (If none, so state) N/A.
Section 1.08. Brokers: (See Article Fourteen) (If none, so state)
Landlord's Broker: Sylva-Kirk and Company.
Tenant's Broker: Cornish and Carey Commercial.
<PAGE> 2
Section 1.09. Commission Payable to Landlord's Broker: (See
Article Fourteen) $ as per agreement.
Section 1.10. Initial Security Deposit: (See Section 3.03)
$3,000.00.
Section 1.11. Vehicle Parking Spaces allocated to Tenant: (See
Section 4.05) as per code.
Section 1.12. Rent and Other Charges Payable by Tenant:
(a) BASE RENT: Three Thousand Dollars ($3,000.00) per month for
the first 30 months, thru October 1997, as provided in Section 3.01, and shall
be increased on the first day of the 31st month(s) after the Commencement Date,
either (i) as provided in Section 3.02 or (ii) after October 31, 1997, to
$3,250 per month for months 31 through 60. (If (ii) is completed, then (i) and
Section 3.02 are inapplicable.)
(b) OTHER PERIODIC PAYMENTS: (i) Real Property Taxes above the
"Base Real Property Taxes" (See Section 4.02); (ii) Utilities (See Section
4.03); (iii) Increased Insurance Premiums above "Base Premiums" (See Section
4.04); (iv) 10.8% (See Section 4.05); (v) Impounds for Tenant's Share of
Insurance Premiums and Property Taxes (See Section 4.08); (vi) Maintenance,
Repairs and alterations (See Article Six).
Section 1.13. Costs and Charges Payable by Landlord: (a) Base Real
Property Taxes (See Section 4.02); (b) Base Insurance Premiums (See Section
4.04)(c)); (c) Maintenance and Repair (See Article Six).
Section 1.14. Landlord's Share of Profit on Assignment or Sublease:
(See Section 9.05) one hundred percent (100%) of the Profit (the "Landlord's
Share").
Section 1.15 Riders: The following Riders are attached to and
made a part of this Lease: (If none, so state) Addendum 1.
ARTICLE TWO: LEASE TERM
Section 2.01. Lease of Property for Lease Term. Landlord leases
the property to Tenant and Tenant leases the Property from Landlord for the
Lease Term. The Lease Term is for the period stated in Section 1.05 above and
shall begin and end on the date specified in Section 1.05 above, unless the
beginning or end of the Lease Term is changed under any provision of this
Lease. The "Commencement Date" shall be the date specified in Section 1.05
above for the beginning of the Lease Term, unless advanced or delayed under any
provision of this Lease.
Section 2.02. Delay in Commencement. Landlord shall not be liable
to Tenant if Landlord does not deliver possession of
<PAGE> 3
the Property to Tenant on the Commencement Date. Landlord's non-delivery of
the Property to Tenant on that date shall not affect this lease or the
obligations of Tenant under this Lease except that the Commencement Date shall
be delayed until Landlord delivers possession of the Property to Tenant and the
Lease Term shall be extended for a period equal to the delay in delivery of
possession of the Property to Tenant, plus the number of days necessary to and
the Lease Term on the last day of a month. If Landlord does not deliver
possession of the Property to Tenant Within sixty (60) days after the
Commencement Date, Tenant may elect to cancel this Lease by giving written
notice to Landlord within ten (10) days after the sixty (60) -day period ends.
If Tenant gives such notice, the Lease shall be canceled and neither Landlord
nor Tenant shall have any further obligations to the other. If Tenant does not
give such notice, Tenant's right to cancel the Lease shall expire and the Lease
Term shall commence upon the delivery of possession of the Property to Tenant.
If delivery of possession of the Property to Tenant is delayed, Landlord and
Tenant shall, upon such delivery, execute an amendment to this lease setting
forth the actual Commencement Date and expiration date of the Lease. Failure
to execute such amendment shall not affect the actual Commencement Date and
expiration date of the Lease.
Section 2.04 Holding Over. Tenant shall vacate the Property upon
the expiration or earlier termination of this Lease. Tenant shall reimburse
Landlord for and indemnify Landlord against all damages which landlord incurs
from Tenant's delay in vacating the Property. If Tenant does not vacate the
Property upon the expiration or earlier termination of the Lease and Landlord
thereafter accepts rent from Tenant, Tenant occupancy of the Property shall be
a "month-to-month" tenancy, subject to all of the terms of this Lease
applicable to a month-to-month tenancy, except that the Base Rent then in
effect shall be increased by twenty-five percent (25%).
ARTICLE THREE: BASE RENT
Section 3.01. Time and Manner of Payment. Upon execution of this
Lease, Tenant shall pay Landlord the Base Rent in the amount stated in
Paragraph 1.12(a) above for the first month of the Lease Term. On the first
day of the second month of the Lease Term and each month thereafter, Tenant
shall pay Landlord the Base Rent, in advance, without offset, deduction or
prior demand. The Base Rent shall be payable at Landlord's address or at such
other place as Landlord may designate in writing.
Section 3.03. Security Deposit; Increases.
(a) Upon the execution of this Lease, Tenant shall deposit with
Landlord a cash Security Deposit in the amount set forth in Section 1.10 above.
Landlord may apply all or part of the Security Deposit to any unpaid rent or
other charges due from Tenant or to cure any other defaults of Tenant. If
Landlord
<PAGE> 4
uses any part of the Security Deposit, Tenant shall restore the Security to its
full amount within ten (10) days after Landlord's written request. Tenant's
failure to do so shall be a material default under this Lease. No interest
shall be paid on the Security Deposit. Landlord shall not be required to keep
the Security Deposit separate from its other accounts and no trust relationship
is created with respect to the Security Deposit.
(b) Each time the Base Rent is increased, Tenant shall deposit
additional funds with Landlord sufficient to increase the Security Deposit to
an amount which bears the same relationship to the adjusted Base Rent as the
initial Security Deposit bore to the initial Base Rent.
Section 3.04. Termination; Advance Payments. Upon termination of
this Lease under Article Seven (Damage or Destruction) Article Eight
(Condemnation) or any other termination not resulting from Tenant's default,
and after Tenant has vacated the Property in the manner required by this Lease,
Landlord shall refund or credit to Tenant (or Tenant's successor) the unused
portion of the Security Deposit, any advance rent or other advance payments
made by Tenant to Landlord, and any amounts paid for real property taxes and
other reserves which apply to any time periods after termination of the Lease.
ARTICLE FOUR: OTHER CHARGES PAYABLE BY TENANT
Section 4.01. Additional Rent. All charges payable by Tenant other
than Base Rent are called Additional Rent." Unless this Lease provides
otherwise, Tenant shall pay all Additional Rent then due with the next monthly
installment of Base Rent. The term "rent" shall mean Base Rent and Additional
Rent.
Section 4.02. Property Taxes.
(a) Real Property Taxes. Landlord shall pay the "Base Real
Property Taxes' on the Property during the Lease Term. Base Real Property
Taxes are real property taxes applicable to the Property as shown on the tax
bill for the most recent tax fiscal year ending prior to the Commencement Date.
However, if the structures on the Property are not completed by the tax lien
date of such tax fiscal year, the Base Real Property Taxes are the taxes shown
on the first tax bill showing the full assessed value of the Property after
completion of the structures. Tenant shall pay Landlord the amount, if any, by
which the real property taxes during the Lease Term exceed the Base Real
Property Taxes. Subject to Paragraph 4.02(c), Tenant shall make such payments
within fifteen (15) days after receipt of Landlord's statement showing the
amount and computation of such increase. Landlord shall reimburse Tenant for
any real property taxes paid by Tenant covering any period of time prior to or
after the Lease Term.
<PAGE> 5
(b) Definition of "Real Property Tax." "Real property tax" means:
(i) any fee, license fee, license tax, business license fee, commercial rental
tax, levy, charge, assessment, penalty or tax imposed by any taxing authority
against the Property; (ii) any tax on the Landlord's right to receive, or the
receipt of, rent or income from the Property or against Landlord's business of
leasing the Property; (iii) any tax or charge for fire protection, streets,
sidewalks, road maintenance, refuse or other services provided to the Property
by any governmental agency; (v) any charge or fee replacing any tax previously
included within the definition of real property tax. "Real property tax" does
not, however, include Landlord's federal or state income, franchise,
inheritance or estate taxes.
(c) Joint Assessment. If the property is not separately assessed,
Landlord shall reasonably determine Tenant's share of the real property tax
payable by Tenant under Paragraph 4.02(a) from the assessor's worksheets or
other reasonably available information. Tenant shall pay such share to
Landlord within fifteen (15) days after receipt of Landlord's written
statement.
(d) Personal Property Taxes.
(i) Tenant shall pay all taxes charged against trade
fixtures, furnishings, equipment or any other personal property belonging to
Tenant. Tenant shall try to have personal property taxed separately from the
Property.
(ii) If any of Tenant's personal property is taxed with
the Property, Tenant shall pay Landlord the taxes for the personal property
within fifteen (15) days after Tenant receives a written statement from
Landlord for such personal property taxes.
Section 4.03. Utilities. Tenant shall pay, directly to the
appropriate supplier, the cost of all natural gas, heat, light, power,
telephone, refuse disposal and other utilities and services supplied to the
Property. However, if any services or utilities are jointly metered with other
property, Landlord shall make a reasonable determination of Tenant's
proportionate share of the cost of such utilities and services and Tenant shall
pay such share to Landlord within fifteen (15) days after receipt of Landlord's
written statement.
Section 4.04. Insurance Policies.
(a) Liability Insurance. During the Lease Term, Tenant shall
maintain a policy of commercial general liability insurance (sometimes known as
broad form comprehensive general liability insurance) insuring Tenant against
liability for bodily injury, property damage (including loss of use of
property) and personal injury arising out of the operation, use or occupancy of
the Property. Tenant shall name Landlord as an additional insured under such
policy. The initial amount of
<PAGE> 6
such insurance shall be One Million Dollars ($1,000,000) per occurrence and
shall be subject to periodic increase based upon inflation. Increased
liability awards, recommendation of Landlord's professional insurance advisers
and other relevant factors. The liability insurance obtained by Tenant under
this Paragraph 4.04(a) shall (i) be primary and non-contributing; (ii) contain
cross-liability endorsements; and (iii) insure Landlord against Tenant's
performance under Section 5.05. If the matters giving rise to the indemnity
under Section 5.05 result from the negligence of Tenant. The amount and
coverage of such insurance shall not limit Tenant's liability nor relieve
Tenant of any other obligation under this Lease. Landlord may also obtain
comprehensive public liability insurance in an amount and with coverage
determined by Landlord insuring Landlord against liability arising out of
ownership, operation, use or occupancy of the Property. The policy obtained by
Landlord shall not be contributory and shall not provide primary insurance.
(b) Property and Rental Income Insurance. During the Lease Term,
Landlord shall maintain policies of insurance covering loss of or damage to the
Property in the full amount of its replacement value. Such policy shall
contain an Inflation Guard Endorsement and shall provide protection against all
perils included within the classification of fire, extended coverage,
vandalism, malicious mischief, special extended perils (all risk), sprinkler
leakage and any other perils which Landlord deems reasonably necessary.
Landlord shall have the right to obtain flood and earthquake insurance if
required by any lender holding a security interest in the Property. Landlord
shall not obtain insurance for Tenant's fixtures or equipment or building
improvements installed by Tenant on the Property. During the Lease Term,
Landlord shall also maintain a rental income insurance policy, with loss
payable to Landlord, in an amount equal to one year's Base Rent, plus estimated
real property taxes and insurance premiums.
(c) Payment of Premiums.
(i) Landlord shall pay the "Base Premiums" for the insurance
policies maintained by Landlord under Paragraph 4.04(b). If the Property has
been previously fully occupied, the "Base Premiums" are the insurance premiums
paid during or applicable to the last twelve (12) months of such prior
occupancy. If the Property has not been previously fully occupied or has been
occupied for less than twelve (12) months, the Base Premiums are the lowest
annual premiums reasonably obtainable for the required insurance for the
Property as of the Commencement Date.
(ii) Tenant shall pay Landlord the amount, if any, by which the
insurance premiums for all policies maintained by Landlord under Paragraph
4.04(b) have increased over the Base Premiums, whether such increases result
from the nature of Tenant's
<PAGE> 7
occupancy, any act or omission of Tenant, the requirement of any lender
referred to in Article Eleven (Protection of Lenders), the increased value of
the Property or general rate increases. However, if Landlord substantially
increases the amount of insurance carried or the percentage of insured value
after the period during which the Base Premiums were calculated, Tenant shall
only pay Landlord the amount of increased premiums which would have been
charged by the insurance carrier if the amount of insurance or percentage of
insured value had not been substantially increased by Landlord. This
adjustment in the amount due from Tenant shall be made only once during the
Lease Term. Thereafter, Tenant shall be obligated to pay the full amount of
any additional increases in the insurance premiums, including increases
resulting from any further increases in the amount of insurance or percentage
of insured value. Subject to Section 4.05, Tenant shall pay Landlord the
increases over the Base Premiums within fifteen (15) days after receipt by
Tenant of a copy of the premium statement or other evidence of the amount due.
If the insurance policies maintained by Landlord cover improvements or real
property other than the Property, Landlord shall also deliver to Tenant a
statement of the amount of the premiums applicable to the Property showing, in
reasonable detail, how such amount was computed. If the Lease Term expires
before the expiration of the insurance period, Tenant's liability shall be pro
rated on an annual basis.
(d) General Insurance Provisions.
(i) Any insurance which Tenant is required to maintain under this
Lease shall include a provision which requires the insurance carrier to give
Landlord not less than thirty (30) days' written notice prior to any
cancellation or modification of such coverage.
(ii) If Tenant fails to deliver any policy, certificate or renewal
to Landlord required under this Lease within the prescribed time period or if
any such policy is canceled or modified during the Lease Term without
Landlord's consent, Landlord may obtain such insurance, in which case Tenant
shall reimburse landlord for the cost of such insurance within fifteen (15)
days after receipt of a statement that indicates the cost of such insurance.
(iii) Tenant shall maintain all insurance required under this Lease
with companies holding a "General Policy Rating" of A-12 or better, as set
forth in the most current issue of "Best Key Rating Guide." Landlord and
Tenant acknowledge the insurance markets are rapidly changing and that
insurance in the form and amount described in this Section 4.04 may not be
available in the future. Tenant acknowledges that the insurance described in
this Section 4.04 is for the primary benefit of Landlord. If at any time
during the Lease Term, Tenant is unable to maintain the insurance required
under the Lease, Tenant shall nevertheless maintain insurance coverage which is
<PAGE> 8
customary and commercially reasonable in the insurance industry for Tenant's
type of business, as that coverage may change from time to time. Landlord
makes no representation as to the adequacy of such insurance to protect
Landlord's or Tenants interests. Therefore, Tenant shall obtain such
additional property or liability insurance which Tenant deems necessary to
protect Landlord and Tenant.
(iv) Unless prohibited under any applicable insurance policies
maintained, Landlord and Tenant each hereby waive any and all rights of
recovery against the other, or against the officers, employees, agents,
representatives of the other, for loss of or damage to its property or the
property of others under its control, such loss or damage is covered by any
insurance policy in force (whether or not described in this Lease) at the time
of such loss or damage. Upon obtaining the required policies of insurance,
Landlord and Tenant shall give notice to the insurance carriers of this mutual
waiver of subrogation.
Section 4.05. Common Areas: Use, Maintenance and Costs.
(a) Common Areas. As used in this Lease, "Common Areas" shall
mean all areas within the Project which are available for the common use of
tenants of the Project and which are not leased or hold for the exclusive use
of Tenant or other tenants, including, but not limited to, parking areas,
driveways, sidewalks, loading areas, access roads, corridors, landscaping and
planted areas. Landlord, from time to time, may change the size, location,
nature and use of any of the Common Areas, convert Common Areas into leasable
areas, construct additional parking facilities (including parking structures)
in the Common Areas, and increase or decrease Common Area land and/or
facilities. Tenant acknowledges that such activities may result in
inconvenience to Tenant. Such activities and changes are permitted if they do
not materially affect Tenant's use of the property.
(b) Use of Common Areas. Tenant shall have the nonexclusive right
(in common with other tenants and any others to whom Landlord has granted or
may grant such rights) to use the Common Areas for the purposes intended
subject to such reasonable rules and regulations as Landlord may establish from
time to time. Tenant shall abide by such rules and regulations and shall use
its best effort to cause others who use the Common Areas with Tenant's express
or implied permission to abide by Landlord's rules and regulations. At any
time, Landlord may close any Common Areas to perform any acts in the Common
Areas as, in Landlord's judgment, are desirable to improve the Project. Tenant
shall not interfere with the rights of Landlord, other tenants or any other
person entitled to use the Common Areas.
<PAGE> 9
(c) Specific Provision re: Vehicle Parking. Tenant shall be
entitled to use the number of vehicle parking spaces in the Project allocated
to Tenant in Section 1.11 of the Lease without paying any additional rent.
Tenant's parking shall not be reserved and shall be limited to vehicles no
larger than standard size automobiles or pickup utility vehicles. Tenant shall
not cause large trucks or other large vehicles to be parked within the Project
or on the adjacent public streets. Temporary parking of large delivery
vehicles in the Project may be permitted by the rules and regulations
established by Landlord. Vehicles shall be parked only in striped parking
spaces and not in driveways, loading areas or other locations not specifically
designated for parking. Handicapped spaces shall only be used by those legally
permitted to use them. If Tenant parks more vehicles in the parking area than
the number set forth in Section 1.11 of this Lease, such conduct shall be a
material breach of this Lease. In addition to Landlord's other remedies under
the Lease, Tenant shall pay a daily charge determined by Landlord for each such
additional vehicle.
Section 4.06. Late Charges. Tenant's failure to pay rent promptly
may cause Landlord to incur unanticipated costs. The exact amount of such
costs are impractical or extremely difficult to ascertain. Such costs may
include, but are not limited to, processing and accounting charges and late
charges which may be imposed on Landlord by any ground lease, mortgage or trust
deed encumbering the Property. Therefore, if Landlord does not receive any
rent payment within ten (10) days after it becomes due, Tenant shall pay
Landlord a late charge equal to ten percent (10%) of the overdue amount. The
parties agree that such late charge represents a fair and reasonable estimate
of the costs Landlord will incur by reason of such late payment.
Section 4.07. Interest on Past Due Obligations. Any amount owed by
Tenant to Landlord which is not paid when due shall bear interest at the rate
of fifteen percent (15%) per annum from the due date of such amount. However,
interest shall not be payable on late charges to be paid by Tenant under this
Lease. The payment of interest on such amounts shall not excuse or cure any
default by Tenant under this Lease. If the interest rate specified in this
Lease is higher than the rate permitted by law, the interest rate is hereby
decreased to the maximum legal interest rate permitted by law.
Section 4.08. Impounds for Insurance Premiums and Real Property
Taxes. If requested by any ground lessor or lender to whom Landlord has
granted a security interest in the Property, or if Tenant is more than ten (10)
days late in the payment of rent more than once in any consecutive twelve
(12)-month period, Tenant shall pay Landlord a sum equal to one-twelfth (1/12)
of the annual real property taxes and insurance premiums payable by Tenant
under this Lease, together with each payment of Base Rent. Landlord shall hold
such payments in a non- interest bearing impound account. If unknown, Landlord
shall reasonably
<PAGE> 10
estimate the amount of real property taxes and insurance premiums when due.
Tenant shall pay any deficiency of funds in the impound account to Landlord
upon written request. If Tenant defaults under this Lease, Landlord may apply
any funds in the impound account to any obligation then due under this Lease.
ARTICLE FIVE: USE OF PROPERTY
Section 5.01. Permitted Uses. Tenant may use the Property only for
the Permitted Uses set forth in Section 1.06 above.
Section 5.02. Manner of Use. Tenant shall not cause or permit the
Property to be used in any way which constitutes a violation of any law,
ordinance, or governmental regulation or order, which annoys or interferes with
the rights of tenants of the Project, or which constitutes a nuisance or waste.
Tenant shall obtain and pay for all permits, including a Certificate of
Occupancy, required for Tenant's occupancy of the Property and shall promptly
take all actions necessary to comply with all applicable statutes, ordinances,
rules, regulations, orders and requirements regulating the use by Tenant of the
Property, including the Occupational Safety and Health Act.
Section 5.03. Hazardous Materials. As used in this Lease, the term
"Hazardous Material" means any flammable items, explosives, radioactive
materials, hazardous or toxic substances, material or waste or related
materials, including any substances defined as or included in the definition of
"hazardous substances", "hazardous wastes", "hazardous materials" or "toxic
substances" now or subsequently regulated under any applicable federal, state
or local laws of regulations, including without limitation petroleum-based
products, paints, solvents, lead, cyanide, DDT, printing inks, acids,
pesticides, ammonia compounds and other chemical products, asbestos, PCBs and
similar compounds, and including any different products and materials which are
subsequently found to have adverse effects on the environment or the health and
safety of persons. Tenant shall not cause or permit any Hazardous Material to
be generated, produced, brought upon, used, stored, treated or disposed of in
or about the Property by Tenant, its agents, employees, contractors, sublessees
or invitees without the prior written consent of Landlord. Landlord shall be
entitled to take into account such other factors or facts as Landlord may
reasonably determine to be relevant in determining whether to grant or withhold
consent to Tenant's proposed activity with respect to Hazardous Material. In
no event, however, shall Landlord be required to consent to the installation or
use of any storage tanks on the Property.
Section 5.04. Signs and Auctions. Tenant shall not place any signs
on the Property without Landlord's prior written consent. Tenant shall not
conduct or permit any auctions or sheriff's sales at the Property.
<PAGE> 11
Section 5.05. Indemnity. Tenant shall indemnify Landlord against and
hold Landlord harmless from any and all costs, claims or liability arising
from: (a) Tenant's use of the Property; (b) the conduct of Tenant's business
or anything else done or permitted by Tenant to be done in or about the
Property, including any contamination of the Tenant; (c) any breach or default
in the performance of Tenant's obligations under this Lease; (d) any
misrepresentation or breach of warranty by Tenant under this Lease; or (e)
other acts or omissions of Tenant. Tenant shall defend Landlord against any
such cost, claim or liability at Tenant's expense with counsel reasonably
acceptable to Landlord or, at Landlord's election, Tenant shall reimburse
Landlord for any legal fees or costs incurred by Landlord in connection with
any such claim. As a material part of the consideration to Landlord, Tenant
assumes all risk of damage to property or injury to persons in or about the
Property arising from any cause, and Tenant hereby waives all claims in respect
thereof against Landlord, except for any claim arising out of Landlord's gross
negligence or willful misconduct. As used in this Section, the term "Tenant"
shall include Tenant's employees, agents, contractors and invitees, if
applicable.
Section 5.06. Landlord's Access. Landlord or its agents may enter
the Property at all reasonable times to show the Property to potential buyers,
investors or tenants or other parties; to do any other act or to inspect and
conduct tests in order to monitor Tenant's compliance with all applicable
environmental laws and all laws governing the presence and use of Hazardous
Material; or for any other purpose Landlord deems necessary. Landlord shall
give Tenant prior notice of such entry, except in the case of an emergency,
Landlord may place customary "For Sale" or "For Lease" signs on the Property.
Section 5.07. Quiet Possession. If Tenant pays the rent and complies
with all other terms of this Lease Tenant may occupy and enjoy the Property for
the full Lease Term, subject to the provisions of this Lease.
ARTICLE SIX: CONDITION OF PROPERTY; MAINTENANCE, REPAIRS AND ALTERATIONS
Section 6.01. Existing Conditions. Tenant accepts the Property in
its condition as of the execution of the Lease, subject to all recorded
matters, laws, ordinances, and governmental regulations and orders. Except as
provided herein, Tenant acknowledges that neither Landlord nor any agent of
Landlord has made any representation as to the condition of the Property or the
suitability of the Property for Tenant's intended use. Tenant represents and
warrants that Tenant has made its own inspection of and inquiry regarding the
condition of the Property and is not relying on any representations of Landlord
or any Broker with respect thereto. If Landlord or Landlord's Broker has
provided a Property Information Sheet or
<PAGE> 12
other Disclosure Statement regarding the Property, a copy is attached as an
exhibit to the Lease.
Section 6.02. Exemption of Landlord from Liability. Landlord shall
not be liable for any damage or injury to the person, business (or any loss of
income therefrom), goods, wares, merchandise or other property of Tenant,
Tenant's employees, invitees, customers or any other person in or about the
Property, whether such damage or injury is caused by or results from: (a)
fire, steam, electricity, water, gas or rain; (b) the breakage, leakage,
obstruction or other defects of pipes, sprinklers, wires, appliances, plumbing,
air conditioning or lighting fixtures or any other cause; (c) conditions
arising in or about the Property or upon other portions of the Project, or from
other sources or places; or (d) any act or omission of any other tenant of the
Project. Landlord shall not be liable for any such damage or injury even
though the cause of or the means of repairing such damage or injury are not
accessible to Tenant. The provisions of this Section 6.02 shall not, however,
exempt Landlord from liability for Landlord's gross negligence or willful
misconduct.
Section 6.03. Landlord's Obligations. Subject to the provisions of
Article Seven (Damage or Destruction), and Article Eight (Condemnation), and
except for damage caused by any act or omission of Tenant, or Tenant's
employees, agents, contractors or invitees, Landlord shall keep the foundation,
roof and structural portions of exterior walls of the improvements on the
Property in good order, condition and repair. However, Landlord shall not be
obligated to maintain or repair windows, doors, plate glass or the surfaces of
walls. Landlord shall not be obligated to make any repairs under this Section
6.03 until a reasonable time after receipt of a written notice from Tenant of
the need for such repairs. Tenant waives the benefit of any present or future
law which might give Tenant the right to repair the Property at Landlord's
expense or to terminate the Lease because of the condition of the Property.
Section 6.04. Tenant's Obligations.
(a) Except as provided in Article Seven (Damage or Destruction)
and Article Eight (Condemnation), Tenant shall keep all portions of the
Property (including structural, nonstructural, interior, systems and equipment)
in good order, condition and repair (including interior repainting and
refinishing, as needed). If any portion of the Property or any system or
equipment in the Property which Tenant is obligated to repair cannot be fully
repaired or restored, Tenant shall promptly replace such portion of the
Property or system or equipment in the Property, regardless of whether the
benefit of such replacement extends beyond the Lease Term; but if the benefit
or useful life of such replacement extends beyond the Lease Term (as such term
may be extended by exercise of any options), the useful life of such
replacement shall be prorated
<PAGE> 13
over the remaining portion of the Lease Term (as extended), and Tenant shall be
liable only for that portion of the cost which is applicable to the Lease Term
(as extended). Tenant shall maintain a preventive maintenance contract
providing for the regular inspection and maintenance of the heating and air
conditioning system by a licensed heating and air conditioning contractor.
Landlord, at Landlord's sole cost and expense, shall pay for any repairs or
replacement of the HVAC system. Landlord shall have the right, upon written
notice to Tenant, to undertake the responsibility for preventative maintenance
of the heating and air conditioning system at Tenant's expense. In addition,
Tenant shall, at Tenant's expense, repair any damage to the roof, foundation or
structural portions of walls caused by Tenant's acts or omissions. It is the
intention of Landlord and Tenant that, at all times during the Lease Term,
Tenant shall maintain the Property in an attractive, first-class and fully
operative condition.
(b) Tenant shall fulfill all of Tenant's obligations under this
Section 6.04 at Tenant's sole expense. If Tenant fails to maintain, repair or
replace the Property as required by this Section 6.04, Landlord may, upon ten
(10) days' prior notice to Tenant (except that no notice shall be required in
the case of an emergency), enter the Property and perform such maintenance or
repair (including replacement, as needed) on behalf of Tenant. In such case,
Tenant shall reimburse Landlord for all costs incurred in performing such
maintenance or repair immediately upon demand.
Section 6.05. Alterations, Additions, and Improvements.
(a) Tenant shall not make any alterations, additions, or
improvements to the Property without Landlord's prior written consent, except
for non-structural alterations which do not exceed Ten Thousand Dollars
($10,000) in cost cumulatively over the Lease Term and which are not visible
from the outside of any building of which the Property is part. Landlord may
require Tenant to provide demolition and/or lien and completion bonds in form
and amount satisfactory to Landlord. Tenant shall promptly remove any
alterations, additions, or improvements constructed in violation of this
Paragraph 6.05(a) upon Landlord's written request. All alterations, additions,
and improvements shall be done in a good and workmanlike manner, in conformity
with all applicable laws and regulations, and by a contractor approved by
Landlord. Upon completion of any such work, Tenant shall provide Landlord with
"as built" plans, copies of all construction contracts, and proof of payment
for all labor and materials.
(b) Tenant shall pay when due all claims for labor and material
furnished to the Property. Tenant shall give Landlord at least twenty (20)
days' prior written notice of the commencement of any work on the Property,
regardless of whether Landlord's consent to such work is required. Landlord
may elect
<PAGE> 14
to record and post notices of non-responsibility on the Property.
Section 6.06. Condition upon Termination. Upon the termination of
the Lease, Tenant shall surrender the Property to Landlord, broom clean and in
the same condition as received except for ordinary wear and tear which Tenant
was not otherwise obligated to remedy under any provision of this Lease.
However, Tenant shall not be obligated to repair any damage which Landlord is
required to repair under Article Seven (Damage or Destruction). In addition,
Landlord may require Tenant to remove any alterations, additions or
improvements (whether or not made with Landlord's consent) prior to the
expiration of the Lease and to restore the Property to its prior condition, all
at Tenant's expense. Al alterations, additions and improvements which Landlord
has not required Tenant to remove shall become Landlord's property and shall be
surrendered to Landlord upon the expiration or earlier termination of the
Lease, except that Tenant may remove any of Tenant's machinery or equipment
which can be removed without material damage to the Property. Tenant shall
repair, at Tenant's expense, any damage to the Property caused by the removal
of any such machinery or equipment. In no event, however, shall Tenant remove
any of the following materials or equipment (which shall be deemed Landlord's
property) without Landlord's prior written consent: any power wiring or power
panels; lighting or lighting fixtures; wall coverings; drapes, blinds or other
window coverings; carpets or other floor coverings; heaters, air conditioners
or any other heating or air conditioning equipment: fencing or security; or
other similar building operating equipment and decorations.
ARTICLE SEVEN: DAMAGE OR DESTRUCTION
Section 7.01. Partial Damage to Property.
(a) Tenant shall notify Landlord in writing immediately upon the
occurrence of any damage to the Property. If the Property is only partially
damaged (i.e., less than fifty percent (50%) of the Property is untenantable as
a result of such damage or less than fifty percent (50%) of Tenant's operations
are materially impaired) and if the proceeds received by Landlord from the
insurance policies described in Paragraph 4.04(b) are sufficient to pay for the
necessary repairs, this Lease shall remain in effect and Landlord shall repair
the damage as soon as reasonably possible. Landlord may elect (but is not
required) to repair any damage to Tenant's fixtures, equipment, or
improvements.
(b) If the insurance proceeds received by Landlord are not
sufficient to pay the entire cost of repair, or if the cause of the damage is
not covered by the insurance policies which Landlord maintains under Paragraph
4.04(b), Landlord may elect either to (i) repair the damage as soon as
reasonably possible, in which case this Lease shall remain in full force and
effect,
<PAGE> 15
or (ii) terminate this Lease as of the date the damage occurred. Landlord
shall notify Tenant within thirty (30) days after receipt of notice of the
occurrence of the damage whether Landlord elects to repair the damage or
terminate the Lease. If Landlord elects to repair the damage, Tenant shall pay
Landlord the "deductible amount" (if any) under Landlord's insurance policies
and, if the damage was due to an act or omission of Tenant, or Tenant's
employees, agents, contractors or invitees, the difference between the actual
cost of repair and any insurance proceeds received by Landlord. If Landlord
elects to terminate this Lease, Tenant may elect to continue this Lease in full
force and effect, in which case Tenant shall repair any damage to the Property
and any building in which the property is located. Tenant shall pay the cost
of such repairs, except that upon satisfactory completion of such repairs,
Landlord shall deliver to Tenant any insurance proceeds received by Landlord
for he damage repaired by Tenant. Tenant shall give Landlord written notice of
such election within ten (10) days after receiving Landlord's termination
notice.
(c) If the damage to the Property occurs during the last six (6)
months of the Lease Term and such damage will require more than thirty (30)
days to repair, either Landlord or Tenant may elect to terminate this Lease as
of the date the damage occurred, regardless of the sufficiency of any insurance
proceeds. The party electing to terminate this Lease shall give written
notification to the other party of such election within thirty (30) days after
Tenant's notice to Landlord of the occurrence of the damage.
Section 7.02. Substantial or Total Destruction. If the Property is
substantially or totally destroyed by any cause whatsoever (i.e., the damage to
the Property is greater than partial damage as described in Section 7.01), and
regardless of whether Landlord receives any insurance proceeds, this Lease
shall terminate as of the date the destruction occurred. Notwithstanding the
preceding sentence, if the Property can be rebuilt within six (6) months after
the date of destruction, Landlord may elect to rebuild the Property at
Landlord's own expense, in which case this Lease shall remain in full force and
effect. Landlord shall notify Tenant of such election within thirty (30) days
after Tenant's notice of the occurrence of total or substantial destruction.
If Landlord so elects, Landlord shall rebuild the Property at Landlord's sole
expense, except that if the destruction was caused by an act or omission of
Tenant, Tenant shall pay Landlord the difference between the actual cost of
rebuilding and any insurance proceeds received by Landlord.
Section 7.03. Temporary Reduction of Rent. If the Property is
destroyed or damaged and Landlord or Tenant repairs or restores the Property
pursuant to the provisions of this Article Seven, any rent payable during the
period of such damage, repair and/or restoration shall be reduced according to
<PAGE> 16
the degree, if any, to which Tenant's use of the Property is impaired.
However, the reduction shall not exceed the sum of one year's payment of the
Base Rent, insurance premiums and real property taxes. Except for such
possible reduction in Base Rent, insurance premiums and real property taxes,
Tenant shall not be entitled to any compensation, reduction, or reimbursement
from Landlord as a result of any damage, destruction, repair, or restoration of
or to the Property.
Section 7.04 Waiver. Tenant waives the protection of any statute,
code or judicial decision which grants a tenant the right to terminate a lease
in the event of the substantial or total destruction of the leased property.
Tenant agrees that the provisions of Section 7.02 above shall govern the rights
and obligations of Landlord and Tenant in the event of any substantial or total
destruction to the Property.
ARTICLE EIGHT: CONDEMNATION
If all or any portion of the Property is taken under the power of
eminent domain or sold under the threat of that power (all of which are called
"Condemnation"), this Lease shall terminate as to the part taken or sold on the
date the condemning authority takes title or possession, whichever occurs
first. If more than twenty percent (20%) of the floor area of the building in
which the Property is located, or which is located on the Property, is taken,
either Landlord or Tenant may terminate this Lease as of the date the
condemning authority takes title or possession, by delivering written notice to
the other within ten (10) days after receipt of written notice of such taking
(or in the absence of such notice, within ten (10) days after the condemning
authority takes title or possession). If neither Landlord nor Tenant
terminates this Lease, this Lease shall remain in effect as to the portion of
the Property not taken, except that the Base Rent and Additional Rent shall be
reduced in proportion to the reduction in the floor area of the Property. Any
Condemnation award or payment shall be distributed in the following order: (a)
first, to any ground lessor, mortgagee or beneficiary under a deed of trust
encumbering the Property, the amount of its interest in the Property; (b)
second, to Tenant, only the amount of any award specifically designated for
loss of or damage to Tenant's trade fixtures or removable personal property,
and (c) third, to Landlord, the remainder of such award, whether as
compensation for reduction in the value of the leasehold, the taking of the
fee, or otherwise. If this Lease is not terminated, Landlord shall repair any
damage to the Property caused by the Condemnation, except that Landlord shall
not be obligated to repair any damage for which Tenant has been reimbursed by
the condemning authority. If the severance damages received by Landlord are
not sufficient to pay for such repair, Landlord shall have the right to either
terminate this Lease or make such repair at Landlord's expense.
<PAGE> 17
ARTICLE NINE: ASSIGNMENT AND SUBLETTING
Section 9.01. Landlord's Consent Required. No portion of the
Property or of Tenant's interest in this Lease may be acquired by any other
person or entity, whether by sale, assignment, mortgage, sublease, transfer,
operation of law, or act of Tenant, without Landlord's prior written consent,
except as provided in Section 9.02 below. Landlord has the right to grant or
withhold its consent as provided in Section 9.05 below. Any attempted transfer
without consent shall be void and shall constitute a non-curable breach of this
Lease. If Tenant is a partnership, any cumulative transfer of more than twenty
percent (20%) of the partnership interests shall require Landlord's consent.
If Tenant is a corporation, any change in the ownership of a controlling
interest of the voting stock of the corporation shall require Landlord's
consent.
Section 9.02. Tenant Affiliate. Tenant may assign this Lease or
sublease the Property, without Landlord's consent, to any corporation which
controls, is controlled by or is under common control with Tenant, or to any
corporation resulting from the merger of or consolidation with Tenant
("Tenant's Affiliate"). In such case, any Tenant's Affiliate shall assume in
writing all of Tenant's obligations under this Lease.
Section 9.03 No Release of Tenant. No transfer permitted by this
Article Nine, whether with or without Landlord's consent, shall release Tenant
or change Tenant's primary liability to pay the rent and to perform all other
obligations of Tenant under this Lease. Landlord's acceptance of rent from any
other person is not a waiver of any provision of this Article Nine. Consent to
one transfer is not a consent to any subsequent transfer. If Tenant's
transferee defaults under this Lease, Landlord may proceed directly against
Tenant without pursuing remedies against the transferee. Landlord may consent
to subsequent assignments or modifications of this Lease by Tenant's
transferee, without notifying Tenant or obtaining its consent. Such action
shall not relieve Tenant's liability under this Lease.
Section 9.04. Offer to Terminate. If Tenant desires to assign the
Lease or sublease the Property, Tenant shall have the right to offer, in
writing, to terminate the Lease as of a date specified in the offer. If
Landlord elects in writing to accept the offer to terminate within twenty (20
days after notice of the offer, the Lease shall terminate as of the date
specified and all the terms and provision of the Lease governing termination
shall apply. If Landlord does not so elect, the Lease shall continue in effect
until otherwise terminated and the provisions of Section 9.05 with respect to
any proposed transfer shall continue to apply.
Section 9.05. Landlord's Consent.
<PAGE> 18
(a) Tenant's request for consent to any transfer described in Section
9.01 shall set forth in writing the details of the proposed transfer, including
the name, business and financial condition of the prospective transferee,
financial details of the proposed transfer (e.g., the term of and the rent and
security deposit payable under any proposed assignment or sublease), and any
other information Landlord deems relevant. Landlord shall have the right to
withhold consent, if reasonable, or to grant consent, based on the following
factors: (i) the business of the proposed assignee or subtenant and the
proposed use of the Property; (ii) the net worth and financial reputation of
the proposed assignee or subtenant; (iii) Tenant's compliance with all of its
obligations under the Lease; and (iv) such other factors as Landlord may
reasonably deem relevant. If Landlord objects to a proposed assignment solely
because of the net worth and/or financial reputation of the proposed assignee,
Tenant may nonetheless sublease (but not assign), all or a portion of the
property to the proposed transferee, but only on the other terms of the
proposed transfer.
(b) If Tenant assigns or subleases, the following shall apply:
(i) Tenant shall pay to Landlord as Additional Rent under the
Lease the Landlord's Share (state in Section 1.14) of the Profit (defined
below) on such transaction as and when received by Tenant, unless Landlord
gives written notice to Tenant and the assignee or subtenant that Landlord's
Share shall be paid by the assignee or subtenant to Landlord directly. The
"Profit" means (A) all amounts paid to Tenant for such assignment or sublease,
including "key" money, monthly rent in excess of the monthly rent payable under
the Lease, and all fees and other consideration paid for the assignment or
sublease, including fees under any collateral agreements, less (B) costs and
expenses directly incurred by Tenant in connection with the execution and
performance of such assignment or sublease for real estate broker's commissions
and costs of renovation or construction of tenant improvements required under
such assignment or sublease. Tenant is entitled to recover such costs and
expenses before Tenant is obligated to pay the Landlord's Share to Landlord.
The Profit in the case of a sublease of less than all the Property is the rent
allocable to the subleased space as a percentage on a square footage basis.
(ii) Tenant shall provide Landlord a written statement certifying all
amounts to be paid from any assignment or sublease of the Property within
thirty (30) days after the transaction documentation is signed, and Landlord
may inspect Tenant's books and records to verify the accuracy of such
statement. On written request, Tenant shall promptly furnish to Landlord
copies of all the transaction documentation, all of which shall be certified by
Tenant to be complete, true and correct. Landlord's receipt of Landlord's
Share shall not be a
<PAGE> 19
consent to any further assignment of subletting. The breach of Tenant's
obligation under this paragraph 9.05(b) shall be a material default of the
Lease.
Section 9.06. No Merger. No merger shall result from tenant's
sublease of the Property under this Article Nine, Tenant's surrender of this
Lease or the termination of this Lease in any other manner. In any such event,
Landlord may terminate any or all subtenancies or succeed to the interest of
Tenant as sublandlord under any or all subtenancies.
ARTICLE TEN: DEFAULTS; REMEDIES
Section 10.01. Covenants and Conditions. Tenant's performance of
each of Tenant's obligations under this Lease is a condition as well as a
covenant. Tenant's right to continue in possession of the Property is
conditioned upon such performance. Time is of the essence in the performance
of all covenants and conditions.
Section 10.02. Defaults. Tenant shall be in material default under
this lease:
(a) If Tenant abandons the Property or if Tenant's vacation of the
Property results in the cancellation of any insurance described in Section
4.04;
(b) If Tenant fails to pay rent or any other charge when due;
(c) If Tenant fails to perform any of Tenant's non-monetary
obligations under this Lease for a period of thirty (30) days after written
notice from Landlords; provided that if more than thirty (30) days are required
to complete such performance, Tenant shall not be in default if Tenant
commences such performance with the thirty (30) -day period and thereafter
diligently pursues its completion. However, Landlord shall not be required to
give such notice if Tenant's failure to perform constitutes a non-curable
breach of this Lease. The notice required by this Paragraph is intended to
satisfy any and all notice requirements imposed by law on Landlord and is not
in addition to any such requirement.
(d)(i) If Tenant makes a general assignment or general arrangement
for the benefit of creditors; (ii) if a petition for adjudication of bankruptcy
or for reorganization or rearrangement is filed by or against Tenant and is not
dismissed within thirty (30) days; (iii) if a trustee or receiver is appointed
to take possession of substantially all of Tenant's assets located at the
Property or of Tenant's interest in this Lease and possession is not restored
to Tenant within thirty (30) days; or (iv) if substantially all of Tenant's
assets located at the Property or of Tenant's interest in this Lease is
subjected to attachment, execution or other judicial seizure
<PAGE> 20
which is not discharged within thirty (30) days. If a court of competent
jurisdiction determines that any of the acts described in this subparagraph (d)
is not a default under this Lease, and a trustee is appointed to take
possession (or if Tenant remains a debtor in possession) and such trustee or
Tenant transfers Tenant's interest hereunder, then Landlord shall receive, as
Additional Rent, the excess, if any, of the rent (or any other consideration)
paid in connection with such assignment or sublease over the rent payable by
Tenant under this Lease.
(e) If any guarantor of the Lease revokes or otherwise terminates, or
purports to revoke or otherwise terminate, any guaranty of all or any portion
of Tenant's obligations under the Lease. Unless otherwise expressly provided,
no guaranty of the Lease is revocable.
Section 10.03 Remedies. On the occurrence of an material default by
Tenant, Landlord may, at any time thereafter, with or without notice or demand
and without limiting Landlord in the exercise of any right or remedy which
Landlord may have:
(a) Terminate Tenant's right to possession of the Property by any
lawful means, in which case this Lease shall terminate and Tenant shall
immediately surrender possession of the Property to Landlord. In such event,
Landlord shall be entitled to recover from Tenant all damages incurred by
Landlord by reason of Tenant's default, including (i) the worth at the time of
the award of the unpaid Base Rent, Additional Rent and other charges which
Tenant would have paid for the balance of the Lease term after the time of
award exceeds the amount of such rental loss that Tenant proves Landlord could
have reasonably avoided; and (iv) any other amount necessary to compensate
Landlord for all the detriment proximately caused by Tenant's failure to
perform its obligations under the Lease or which in the ordinary course of
things would be likely to result therefrom, including, but not limited to, any
costs or expenses Landlord incurs in maintaining or preserving the Property
after such default, the cost of recovering possession of the Property, expenses
of reletting, including necessary renovation or alteration of the Property,
Landlord's reasonable attorneys' fees incurred in connection therewith, and any
real estate commission paid or payable. As used in subparts (i) and (ii)
above, the "worth at the time of the award" is computed by allowing interest on
unpaid amounts at the rate of fifteen percent (15%) per annum, or such lesser
amount as may then be the maximum lawful rate. As used in subpart (iii) above,
the "worth at the time of the award" is computed by discounting such amount at
the discount rate of the Federal reserve Bank of San Francisco at the time of
the award, plus one percent (1%). If Tenant has abandoned the Property,
Landlord shall have the option of (1) retaking possession of the Property and
recovering from Tenant the amount specified in this Paragraph 10.03(a), or (ii)
proceeding under paragraph 10.03(b);
<PAGE> 21
(b) Maintain Tenant's right to possession, in which case this Lease
shall continue in effect whether or not Tenant has abandoned the Property. In
such event, Landlord shall be entitled to enforce all of Landlord's rights and
remedies under this Lease, including the right to recover the rent as it
becomes due;
(c) Pursue any other remedy now or hereafter available to Landlord
under the laws or judicial decisions of the state in which the Property is
located.
Section 10.04. Repayment of "Free" Rent. If this Lease provides for
a postponement of any monthly rental payments, a period of "free" rent or other
rent concession, such postponed rent or "free" rent is called the "Abated
Rent". Tenant shall be credited with having paid all of the Abated Rent on the
expiration of the Lease Term only if Tenant has fully, faithfully, and
punctually performed all of Tenant's obligations and the surrender of the
Property in the physical condition required by this Lease. Tenant acknowledges
that its right to receive credit for the Abated Rent is absolutely conditional
upon Tenant's full, faithful and punctual performance of its obligations under
this Lease. If Tenant defaults and does not cure within any applicable grace
period, the Abated Rent shall immediately become due and payable in full and
this Lease shall be enforced as if there were no such rent abatement or other
rent concession. In such case Abated Rent shall be calculated based on the
full initial rent payable under this Lease.
Section 10.05. Automatic Termination. Notwithstanding any other term
or provision hereof to the contrary, the Lease shall terminate on the
occurrence of any act which affirms the Landlord's intention to terminate the
Lease as provided in Section 10.03 hereof, including the filing of an unlawful
detainee action against Tenant. On such termination, Landlord's damages for
default shall include all costs and fees, including reasonable attorneys' fees
that Landlord incurs in connection with the filing, commencement, pursuing
and/or defending of any action in any bankruptcy court of other court with
respect to the Lease; the obtaining of relief from any stay in bankruptcy
restraining any action to evict Tenant; or the pursuing of any action with
respect to Landlord's right to possession of the Property. All such damages
suffered (apart from Base Rent and other rent payable hereunder) shall
constitute pecuniary damages which must be reimbursed to Landlord prior to
assumption of the Lease by Tenant or any successor to Tenant in any bankruptcy
or other proceeding.
Section 10.06. Cumulative Remedies. Landlord's exercise of any right
or remedy shall not prevent if from exercising any other right or remedy.
ARTICLE ELEVEN: PROTECTION OF LENDERS
<PAGE> 22
Section 11.05. Subordination. Landlord shall have the right to
subordinate this Lease to any ground lease, deed of trust or mortgage
encumbering the Property, any advances made on the security thereof and any
renewals, modifications, consolidations, replacements or extensions thereof,
whenever made or recorded. Tenant shall cooperate with Landlord and any lender
which is acquiring a security interest in the Property or the Lease. Tenant
shall execute such further documents and assurances as such lender may require,
provided that Tenant's obligations under this Lease shall not be increased in
any material way (the performance of ministerial acts shall not be deemed
material), and Tenant shall not be deprived of its rights under this Lease.
Tenant's right to quiet possession of the Property during the Lease Term shall
not be disturbed if Tenant pays the rent and performs all of Tenant's
obligations under this lease and is not otherwise in default. If any ground
lessor, beneficiary or mortgagee elects to have this Lease prior to the lien of
its ground lease, deed of rust or mortgage and gives written notice thereof to
Tenant, this Lease shall be deemed prior to such ground lease, deed of trust or
mortgage whether this Lease is dated prior or subsequent to the date of said
ground lease, deed of trust or mortgage or the date of recording thereof.
Section 11.02 Attornment. If Landlord's interest in the Property is
acquired by any ground lessor, beneficiary under a deed of trust, mortgagee, or
purchaser at a foreclosure sale, Tenant shall attorn to the transferee of or
successor to Landlord's interest in the Property and recognize such transferee
or successor as Landlord under this Lease. Tenant waives the protection of any
statute or rule of law which gives or purports to give Tenant any right to
terminate this Lease or surrender possession of the Property upon the transfer
of Landlord's interest.
Section 11.03. Signing of Documents. Tenant shall sign and deliver
any instrument or documents necessary or appropriate to evidence any such
attornment or subordination or agreement to do so. If Tenant fails to do so
within ten (10) days after written request, Tenant hereby makes, constitutes
and irrevocably appoints Landlord, or any transferee or successor of Landlord,
the attorney-in-fact of Tenant to execute and deliver any such instrument or
document.
Section 11.04. Estoppel Certificates.
(a) Upon Landlord's written request, Tenant shall execute,
acknowledge and deliver to Landlord a written statement certifying: (i) that
none of the terms or provisions of this Lease have been changed (or if they
have been changed, stating how they have been changed); (ii) that this Lease
has not been cancelled or terminated; (iii) the last date of payment of the
Base Rent and other charges and the time period covered by such payment; (iv)
that Landlord is not in default under this Lease
<PAGE> 23
(or, if Landlord is claimed to be in default, stating why); and (v) such other
representations or information with respect to Tenant or the Lease as Landlord
may reasonably request or which any prospective purchaser or encumbrancer of
the Property may require. Tenant shall deliver such statement to Landlord
within ten (10) days after Landlord's request. Landlord may give any such
statement by Tenant to any prospective purchaser or encumbrancer of the
Property. Such purchaser or encumbrancer may rely conclusively upon such
statement as true and correct.
(b) If Tenant does not deliver such statement to Landlord within such
ten (10) -day period, Landlord, and any prospective purchaser or encumbrancer,
may conclusively resume and rely upon the following facts: (i) that the terms
and provisions of this Lease have not been changed except as otherwise
represented by Landlord; (ii) that this Lease has not been cancelled or
terminated except as otherwise represented by Landlord; (iii) that not more
than one month's Base Rent or other charges have been paid in advance; and (iv)
that Landlord is not in default under the Lease. In such event, Tenant shall
be estopped from denying the truth of such facts.
Section 11.05 Tenant's Financial Condition. Within ten (10) days
after written request from Landlord, Tenant shall deliver to Landlord such
financial statements as Landlord reasonably requires to verify the net worth of
Tenant or any assignee, subtenant, or guarantor of Tenant. In addition, Tenant
shall deliver to any lender designated by Landlord any financial statements
required by such lender to facilitate the financing or refinancing of the
Property. Tenant represents and warrants to Landlord that each such financial
statement is a true and accurate statement as of the date of such statement.
All financial statements shall be confidential and shall be used only for the
purposes set forth in this Lease.
ARTICLE TWELVE: LEGAL COSTS
Section 12.01 Legal Proceedings. If Tenant or Landlord shall be in
breach or default under this Lease, such party (the "Defaulting Party") shall
reimburse the other party (the "Nondefaulting Party") upon demand for any costs
or expenses that the Nondefaulting Party incurs in connection with any breach
or default of the Defaulting Party under this Lease, whether or not suit is
commenced or judgment entered. Such costs shall include legal fees and costs
incurred for the negotiation of a settlement, enforcement of rights or
otherwise. Furthermore, if any action for breach of or to enforce the
provisions of this Lease is commenced, the court in such action shall award to
the party in whose favor a judgment is entered, a reasonable sum as attorneys'
fees and costs. The losing party in such action shall pay such attorneys' fees
and costs. Tenant shall also indemnify Landlord against and hold Landlord
harmless from all costs, expenses, demands and liability Landlord may incur if
Landlord becomes or is made a party to any claim or
<PAGE> 24
action (a) instituted by Tenant against any third party, or by any third party
against Tenant, or by or against any person holding any interest under or using
the Property by license of or agreement with Tenant; (b) for foreclosure of any
lien for labor or material furnished to or for Tenant or such other person; (c)
otherwise arising out of or resulting from any act or transaction of Tenant or
such other person; or (d) necessary to protect Landlord's interest under this
Lease in a bankruptcy proceeding, or other proceeding under Title 11 of the
United States Code, as amended. Tenant shall defend Landlord against any such
claim or action at Tenant's expense with counsel reasonably acceptable to
Landlord or, at Landlord's election, Tenant shall reimburse Landlord for any
legal fees or costs Landlord incurs in any such claim or action.
Section 12.02. Landlord's Consent. Tenant shall pay Landlord's
reasonable attorneys' fees incurred in connection with Tenant's request for
Landlord's consent under Article Nine (Assignment and Subletting), or in
connection with any other act which Tenant proposes to do and which requires
Landlord's consent.
ARTICLE THIRTEEN: MISCELLANEOUS PROVISIONS
Section 13.01. Non-Discrimination. Tenant promises, and it is a
condition to the continuance of this Lease, that there will be no
discrimination against, or segregation of, any person or group of persons on
the basis of race, color, sex, creed, national origin or ancestry in the
leasing, subleasing, transferring, occupancy, tenure or use of the Property or
any portion thereof.
Section 13.02. Landlord's Liability; Certain Duties.
(a) As used in this Lease, the term "Landlord" means only the current
owner or owners of the fee title to the Property or Project or the leasehold
estate under a ground lease of the Property or Project at the time in question.
Each Landlord is obligated to perform the obligations of Landlord under this
Lease only during the time such Landlord owns such interest or title. Any
Landlord who transfers its title or interest is relieved of all liability with
respect to the obligations of Landlord under this Lease to be performed on or
after the date of transfer. However, each Landlord shall deliver to its
transferee all funds that Tenant previously paid if such funds have not yet
been applied under the terms of this Lease.
(b) Tenant shall give written notice of any failure by Landlord to
perform any of its obligations under this Lease to Landlord and to any ground
lessor, mortgagee or beneficiary under any deed of trust encumbering the
Property whose name and address have been furnished to Tenant in writing.
Landlord shall not be in default under this Lease unless Landlord (or such
ground lessor, mortgagee or beneficiary) fails to cure such
<PAGE> 25
non-performance within thirty (30) days after receipt of Tenant's notice.
However, if such non-performance reasonably requires more than thirty (30) days
to cure, Landlord shall not be in default if such cure is commenced within such
thirty (30) day period and thereafter diligently pursued to completion.
(c) Notwithstanding any term or provision herein to the contrary, the
liability of Landlord for the performance of its duties and obligations under
this Lease is limited to Landlord's interest in the Property and the Project,
and neither the Landlord nor its partners, shareholders, officers or other
principals shall have any person liability under this Lease.
Section 13.03. Severability. A determination by a court of competent
jurisdiction that any provision of this Lease or any part thereof is illegal or
unenforceable shall not cancel or invalidate the remainder of such provision or
this Lease, which shall remain in full force and effect.
Section 13.04. Interpretation. The captions of the Articles or
Sections of this Lease are to assist the parties in reading this Lease and are
not a part of the terms or provisions of this Lease. Whenever required by the
context of this Lease, the singular shall include the plural and the plural
shall include the singular. The masculine, feminine and neuter genders shall
each include the other. In any provision relating to the conduct, acts or
omissions of Tenant, the term "Tenant" shall include Tenant's agents,
employees, contractors, invitees, successors or others using the Property with
Tenant's expressed or implied permission.
Section 13.05. Incorporation of Prior Agreements; Modifications.
This Lease is the only agreement between the parties pertaining to the lease of
the Property and no other agreements are effective. All amendments to this
Lease shall be in writing and signed by all parties. Any other attempted
amendment shall be void.
Section 13.06. Notices. All notices required or permitted under this
Lease shall be in writing and shall be personally delivered or sent by
certified mail, return receipt requested, postage prepaid. Notices to Tenant
shall be delivered to the address specified in Section 1.03 above, except that
upon Tenant's taking possession of the Property, the Property shall be Tenant's
address for notice purposes. Notices to Landlord shall be delivered to the
address specified in Section 1.02 above. All notices shall be effective upon
delivery. Either party may change its notice address upon written notice to
the other party.
Section 13.07. Waivers. All waivers must be in writing and signed by
the waiving party. Landlord's failure to enforce any provision of this Lease
or its acceptance of rent shall not be a waiver and shall not prevent Landlord
from enforcing that
<PAGE> 26
provision or any other provision of this Lease in the future. No statement on
a payment check from Tenant or in a letter accompanying a payment check shall
be binding on Landlord. Landlord may, with or without notice to Tenant,
negotiate such check without being bound to the conditions of such statement.
Section 13.08. No Recordation. Tenant shall not record this Lease
without prior written consent from Landlord. However, either Landlord or
Tenant may require that a "Short Form" memorandum of this Lease executed by
both parties be recorded. The party requiring such recording shall pay all
transfer taxes and recording fees.
Section 13.09. Binding Effect; Choice of Law. This Lease binds any
party who legally acquires any rights or interest in this Lease from Landlord
or Tenant. However, Landlord shall have no obligation to Tenant's successor
unless the rights or interests of Tenant's successor are acquired in accordance
with the terms of this Lease. The laws of the state in which the Property is
located shall govern this Lease.
Section 13.10. Corporate Authority; Partnership Authority. If Tenant
is a corporation, each person signing this Lease on behalf of Tenant represents
and warrants that he has full authority to do so and that this Lease binds the
corporation. Within thirty (30) days after this Lease is signed, Tenant shall
deliver to Landlord a certified copy of a resolution of Tenant's Board of
Directors authorizing the execution of this Lease or other evidence of such
authority reasonably acceptable to Landlord. If Tenant is a partnership, each
person or entity signing this Lease for Tenant represents and warrants that he
or it is a general partner of the partnership, that he or it has full authority
to sign for the partnership and that this Lease binds the partnership and all
general partners of the partnership. Tenant shall given written notice to
Landlord of any general partner's withdrawal or addition. Within thirty (30)
days after this Lease is signed, Tenant shall deliver to Landlord a copy of
Tenant's recorded statement of partnership or certificate of limited
partnership.
Section 13.11. Joint and Several Liability. All parties signing this
Lease as Tenant shall be jointly and severally liable for all obligations of
Tenant.
Section 13.12. Force Majeure. If Landlord cannot perform any of its
obligations due to events beyond Landlord's control, the time provided for
performing such obligations shall be extended by a period of time equal to the
duration of such events. Events beyond Landlord's control include, but are not
limited to, acts of God, war, civil commotion, labor disputes, strikes, fire,
floods or other casualty, shortages of labor or material, government regulation
or restriction and weather conditions.
<PAGE> 27
Section 13.13. Execution of Lease. This Lease may be executed in
counterparts and, when all counterpart documents are executed, the counterparts
shall constitute a single binding instrument. Landlord's delivery of this
Lease to Tenant shall not be deemed to be an offer to lease and shall not be
binding upon either party until executed and delivered by both parties.
Section 13.14. Survival. All representations and warranties of
Landlord and Tenant shall survive the termination of this Lease.
ARTICLE FOURTEEN: BROKERS
Section 14.01. Broker's Fee. When this Lease is signed by and
delivered to both Landlord and Tenant, Landlord shall pay a real estate
commission to Landlord's Broker named in Section 1.08 above, if any, as
provided in the written agreement between Landlord and Landlord's Broker, or
the sum stated in Section 1.09 above for services rendered to Landlord by
Landlord's Broker in this transaction. Landlord shall pay Landlord's Broker a
commission if Tenant exercises any option to extend the Lease Term or to buy
the Property, or any similar option or right which Landlord may grant to
Tenant, or if Landlord's Broker is the procuring cause of any other lease or
sale entered into between Landlord and Tenant covering the Property. Such
commission shall be in the amount set forth in Landlord's Broker's commission
schedule in effect as of the execution of this Lease. If a Tenant's Broker is
named in Section 1.08 above, Landlord's Broker shall pay an appropriate portion
of its commission to Tenant's Broker if so provided in any agreement between
Landlord's Broker and Tenant's Broker. Nothing contained in this Lease shall
impose any obligation to Landlord to pay a commission or fee to any party other
than Landlord's Broker.
Section 14.02. Protection of Brokers. If Landlord sells the
Property, or assigns Landlord's interest in this Lease, the buyer or assignee
shall, by accepting such conveyance of the Property or assignment of the Lease,
be conclusively deemed to have agreed to make all payments to Landlord's Broker
thereafter required of Landlord under this Article Fourteen. Landlord's Broker
shall have the right to bring a legal action to enforce or declare rights under
this provision. The prevailing party in such action shall be entitled to
reasonable attorneys' fees to be paid by the losing party. Such attorneys'
fees shall be fixed by the court in such action. This Paragraph is included in
this Lease for the benefit of Landlord's Broker.
Section 14.03. Broker's Disclosure of Agency. Landlord's Broker
discloses to Landlord and Tenant and Landlord and Tenant hereby consent to
Landlord's Broker acting in this transaction as the agent of (check one):
/x/ Landlord exclusively; or
<PAGE> 28
both Landlord and Tenant.
Section 14.04. No Other Brokers. Tenant represents and warrants to
Landlord that the brokers named in Section 1.08 above are the only agents,
brokers, finders or other parties with whom Tenant has dealt who are or may be
entitled to any commission or fee with respect to this Lease or the Property.
ADDITIONAL PROVISIONS MAY BE SET FORTH IN A RIDER OR RIDERS ATTACHED
HERETO OR IN THE BLANK SPACE BELOW. IF NO ADDITIONAL PROVISIONS ARE INSERTED,
PLEASE DRAW A LINE THROUGH THE SPACE BELOW.
See Addendum 1.
Landlord and Tenant have signed this Lease at the place and on the
dates specified adjacent to their signatures below and have initialled all
Riders which are attached to or incorporated by reference in this Lease.
"LANDLORD"
Signed on ________________, 19__ BMB INVESTMENT GROUP
at _____________________________ ______________________________
By: __________________________
Its: _________________________
By: --------------------------
Its: -------------------------
"TENANT"
Signed on 3/16/1995 HORIZON HIGH REACH, a Delaware
corporation
at Fresno, CA /s/ Shaun Flanagan
-------------------------------
By: Shawn Flanagan
--------------------------
Its: Vice President
-------------------------
<PAGE> 29
By:
--------------------------
Its:
-------------------------
IN ANY REAL ESTATE TRANSACTION IT IS RECOMMENDED THAT YOU CONSULT WITH
A PROFESSIONAL, SUCH AS A CIVIL ENGINEER, INDUSTRIAL HYGIENIST OR OTHER PERSON
WITH EXPERIENCE IN EVALUATING THE CONDITION OF THE PROPERTY, INCLUDING THE
POSSIBLE PRESENCE OF ASBESTOS, HAZARDOUS MATERIALS AND UNDERGROUND STORAGE
TANKS.
THIS PRINTED FORM LEASE HAS BEEN DRAFTED BY LEGAL COUNSEL AT THE
DIRECTION OF THE SOUTHERN CALIFORNIA CHAPTER OF THE SOCIETY OF INDUSTRIAL AND
OFFICE REALTORS,(C) INC. NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE
SOUTHERN CALIFORNIA CHAPTER OF THE SOCIETY OF INDUSTRIAL AND OFFICE
REALTORS,(C) INC., ITS LEGAL COUNSEL, THE REAL ESTATE BROKERS NAMED HEREIN, OR
THEIR EMPLOYEES OR AGENTS, AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT OR TAX
CONSEQUENCES OF THIS LEASE OR OF THIS TRANSACTION. LANDLORD AND TENANT SHOULD
RETAIN LEGAL COUNSEL TO ADVISE THEM ON SUCH MATTERS AND SHOULD RELY UPON THE
ADVICE OF SUCH LEGAL COUNSEL.
<PAGE> 30
ADDENDUM #1
LEASE DATE: March 7, 1995
ADDENDUM DATE: March 7, 1995
LANDLORD: BMB INVESTMENT GROUP
TENANT: HORIZON HIGH REACH, a Delaware corporation
PREMISES: Approximately 12,800 square feet of warehouse/office
space and the adjacent yard
ADDRESSES: 4119 So. Market Court
Sacramento, California
15. Form Disclosure.
This Lease and Addendum forms are provided by Sylva-Kirk and Company
for convenience only for the use of the parties hereto. These forms
are not mandatory, and no recommendation is made regarding their use
by Sylva-Kirk and Company. All parties to this Agreement understand
and acknowledge that no representation, warranty or recommendation has
been made by Sylva-Kirk and Company or its brokers, realtor
associates, employees or attorneys regarding the legal sufficiency,
legal effect or tax consequences of the provided forms, and each party
is advised to submit the provided forms to his or her respective
attorney and accountant prior to signature on any agreement that
utilizes forms provided by Sylva-Kirk and Company.
Initials:
/s/ SCF
16. Occupancy.
Should any governmental authority require any additional improvements
other than those which are stated in this Lease, because of the
Tenant's occupancy, those improvements shall be at the Tenant's own
expense.
17. Americans With Disabilities Act.
Please be advised that an owner or tenant of real property may be
subject to the Americans With Disabilities Act (the ADA), a Federal
law codified at 42 USC Section 12101 et seq. Among other requirements
of the ADA that could apply to your property, Title III of the ADA
requires owners and tenants of "public accommodations" to remove
barriers to access by disabled persons and provide auxiliary aids and
<PAGE> 31
services for hearing, vision or speech impaired persons by January 26,
1992. The regulations under Title III of the ADA are codified at 28
CFR Part 36.
We recommend that you and your attorney review the ADA and the
regulations, and, if appropriate, your proposed Lease or Purchase
Agreement, to determine if this law would apply to you and the nature
of the requirements. These are legal issues. You are responsible for
conducting your own independent investigation of these issues.
Sylva-Kirk and Company cannot give you legal advice on these issues.
18. Tenant Improvements.
The Tenant agrees to accept the premises in an "As Is" condition, with
all warranties in Paragraph 6.03 in effect, with the exception of the
electrical systems, doors, plumbing and HVAC systems, which will be
delivered in good working order. per Paragraph 6.03 there are
currently several roof leaks in the Suite.
Tenant, at Tenant's sole cost and expense, shall be allowed to enlarge
the yard area extending approximately 50' into the parking area and
running the width of the existing yard. It shall be the Tenant's
responsibility to comply with all existing government codes and
regulations regarding this yard. It shall be the Tenant's
responsibility to determine if enlarging the yard is permissible and
to obtain the proper permits before construction.
19. Option to Renew.
If the Tenant is not in default of any of the terms and conditions of
the existing Lease, it shall have the option to renew for one (1)
additional five (5) year period. The Tenant shall give written notice
to Landlord ninety (90) days prior to the expiration of this Lease of
its intention to extend for that time. All the terms and conditions
shall remain the same with the exception of rent. The rent shall be
as follows:
Year 1 $3,380 per month
Year 2 $3,515 per month
Year 3 $3,656 per month
Year 4 $3,802 per month
Year 5 $3,954 per month
<PAGE> 32
C&C
________________________________________________________________________________
CORNISH & CAREY COMMERCIAL REAL ESTATE
ADDENDUM TO INDUSTRIAL REAL ESTATE LEASE
(MULTI TENANT FACILITY) DATED MARCH 7, 1995
BY AND BETWEEN BMB INVESTMENT GROUP, AS LANDLORD AND
HORIZON HIGH REACH, A DELAWARE CORPORATION, AS TENANT
20. ON SITE HAZARDOUS MATERIALS:
In reference to Section 5.03 dealing with Hazardous Materials
it is hereby acknowledged and understood that Tenant does work
with, store and use the following items that can be termed
"Hazardous". They are: propane, motor oil, hydraulic oils,
and solvents. It is further understood that Tenant uses and
stores said items in accordance will all applicable statutes
and shall indemnify Landlord as referenced in Paragraph 5.05
against any and all claims arising from Tenant's use of said
items.
Conversely, Landlord shall indemnify and hold Tenant harmless
from any and all claims, judgment, damages, penalties, fines,
costs, liabilities and losses arising from or in connection
with hazardous substances present at or migrating to or from
the premises resulting or arising from or due directly or
indirectly to an occurrance that has not been caused by
Lessee, his employee, agents, or contractors.
21. EARLY OCCUPANCY:
Tenant shall occupy the space upon mutual execution the this
Lease document for the purpose of completing Tenant
Improvements. Tenant's occupancy of the property shall be
subject to all of the provisions of this Lease with the
exception of rent, which will not be charged during this
period.
Agreed and Acknowledged:
Landlord: BMB INVESTMENT GROUP
By: ______________________________________ Date: ___________
Tenant: HORIZON HIGH REACH, A DELAWARE CORPORATION
By: /s/ Shaun Flanagan Date: 3/16/95
-------------------------
Shawn Flanagan
<PAGE> 1
Exhibit 21.1
SUBSIDIARIES OF THE REGISTRANT
UpRight, Inc., a California corporation.
Horizon High Reach, Inc., a Delaware corporation.
UpRight Foreign Sales Corporation, a U.S. Virgin Islands corporation.
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the inclusion in the Registration Statement on Form S-4 of
W.R. Carpenter North America, Inc. of our report, dated April 18, 1997, except
Note 18 for which the date is May 12, 1997, on our audits of the consolidated
balance sheets of W.R. Carpenter North America, Inc. as of June 30, 1996 and
July 2, 1995, and the related consolidated statements of operations,
stockholder's equity and cash flows for each of the three years in the period
ended June 30, 1996. We also hereby consent to the reference to our firm under
the captions "Summary Historical and Pro Forma Consolidated Financial Data",
"Selected Historical and Pro Forma Consolidated Financial Data" and "Experts" in
the Registration Statement.
/s/ Pannell Kerr Forster
PANNELL KERR FORSTER
Certified Public Accountants
A Professional Corporation
Los Angeles, California
July 11, 1997
<PAGE> 1
EXHIBIT 25.1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________________
FORM T-1
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)_
___________________________
U.S. TRUST COMPANY OF CALIFORNIA, N.A.
(Exact name of trustee as specified in its charter)
95-4311476
(I.R.S. Employer
Identification No.)
515 South Flower Street, Suite 2700
Los Angeles, CA 90071
(Address of principal (Zip Code)
executive offices)
DWIGHT LIU
515 South Flower Street, Suite 2700
Los Angeles, California 90071
(213) 861-5000
(Name, address, including zip code and telephone number of agent for service)
________________________________________
W.R. CARPENTER NORTH AMERICA, INC.
(Exact name of obligor as specified in its charter)
DELAWARE 52-1049647
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
<PAGE> 2
1775 Park Street
Selma, CA 93662
(Address of principal chief executive offices)
10 5/8% Senior Subordinated Notes Due 2007
(Title of indenture securities)
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.
Comptroller of the Currency
490 L'Enfant Plaza East, S.W.
Washington, D.C. 20219
Federal Deposit Insurance Corporation
550 17th Street, N.W.
Washington, D.C. 20429
Federal Reserve Bank (12th District)
San Francisco, California
(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.
The obligor currently is not in default under any of its outstanding securities
for which U.S. Trust Company of California, N.A. 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.
-1-
<PAGE> 3
16. List of Exhibits
T-1.1 - A copy of the Articles of Association of U.S. Trust Company
of California, N.A. currently in effect; incorporated herein by reference to
Exhibit T-1.1 filed with Form T-1 Statement, Registration No. 33-33031.
T-1.2 - Included in Exhibit T-1.1.
T-1.3 - Included in Exhibit T-1.1.
T-1.4 - A copy of the By-Laws of U.S. Trust Company of California,
N.A., as amended to date; incorporated by reference to Exhibit T-1.4 filed with
Form T-1 Statement, Registration No. 33-54136.
T-1.6 - The consent of the trustee required by Section 321(b) of the
Trust Indenture Act of 1939; incorporated herein by reference to Exhibit T-1.6
filed with Form T-1 Statement, Registration No. 33-33031.
T-1.7 - A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its supervising or examining
authority.
NOTE
As of June 24, 1997, the Trustee had 20,000 shares of Capital Stock
outstanding, all of which are owned by U.S. Trust Corporation.
The responses to Items 2, 5, 6, 7, 8, 9, 10, 11 and 14 set forth the
information requested as though U.S. Trust Company of California, N.A. and U.S.
Trust Corporation were the "trustee."
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 of Act of 1939, the
trustee, U.S. Trust Company of California, N.A., a corporation organized and
existing under the laws of the State of California, has duly caused this
statement of eligibility and
-2-
<PAGE> 4
qualification to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Los Angeles, and State of California, on the
25th day of June, 1997.
U.S. TRUST COMPANY OF CALIFORNIA, N.A.
Trustee
By: /s/ Sandee Parks
------------------------------------
Sandee Parks
Authorized Signatory
-3-
<PAGE> 5
<TABLE>
<S> <C> <C> <C>
TRUST COMPANY OF CALIFORNIA Call Date: 03/31/97 ST-BK: 06-0784 FFIEC 033
515 S. FLOWER STREET SUITE 2700 Page RI - 1
LOS ANGELES, CA 90071-2291 Vendor ID: D CERT: 33332
Transit Number: 12204024 Transmitted to EDS as 0038837 on 04/28/97 at 15:26:30 CST 3
</TABLE>
CONSOLIDATED REPORT OF INCOME
FOR THE PERIOD JANUARY 1, 1997 - MARCH 31, 1997
[illegible] REPORT OF INCOME SCHEDULES ARE TO BE REPORTED ON A CALENDAR
YEAR-TO-DATE BASIS
IN THOUSANDS OF DOLLARS.
SCHEDULE RI - INCOME STATEMENT
I280 <-
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Interest Income:
a. Interest and fee income on loans (1): RIAD
----
(1) Real estate loans 4246.. 1,810 1.a.1
(2) Installment loans 4247.. 0 1.a.2
(3) Credit cards and related plans 4248.. 0 1.a.3
(4) Commercial (time and demand) and all other loans 4249.. 824 1.a.4
b. Income from lease financing receivables:
(1) Taxable leases 4505.. 0 1.b.1
(2) Tax-exempt leases 4307.. 0 1.b.2
c. Interest income on balances due from depository institutions (2) 4115.. 2 1.c
d. Interest and dividend income on securities:
(1) U.S. Treasury securities and U.S. Government agency obligations 4027.. 1,184 1.d.1
(2) Securities issued by states and political subdivisions in the U.S.:
(a) Taxable securities 4506.. 0 1.d.2a
(b) Tax-exempt securities 4507.. 0 1.d.2b
(3) Other domestic debt securities 3657.. 0 1.d.3
(4) Foreign debt securities 3658.. 0 1.d.4
(5) Equity securities (including investments in mutual funds) 3659.. 380 1.d.5
e. Interest income from trading assets 4069.. 0 1.e
f. Interest income on federal funds sold and securities purchased under agreements to
resell 4020.. 101 1.f
g. Total interest income (sum of items 1.a through 1.f) 4107.. 4,301 1.g
</TABLE>
___________________
1) See instructions for loan classifications used in this schedule.
2) Includes interest income on time certificates of deposit not held for
trading.
<PAGE> 6
<TABLE>
<S> <C> <C> <C>
TRUST COMPANY OF CALIFORNIA Call Date: 03/31/97 ST-BK: 06-0784 FFIEC 033
515 S. FLOWER STREET SUITE 2700 Page RI - 2
LOS ANGELES, CA 90071-2291 Vendor ID: D CERT: 33332
Transit Number: 12204024 Transmitted to EDS as 0038837 on 04/28/97 at 15:26:30 CST 4
</TABLE>
SCHEDULE RI - CONTINUED
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
2. Interest expense:
a. Interest on deposits:
RIAD Year-to-date
----
(1) Transaction accounts (NOW accounts, ATS accounts, and telephone and preauthorized
transfer accounts) 4508.. 229 ..... 2.a.1
(2) Nontransaction accounts:
(a) Money market deposit accounts (MMDAs) 4509.. 2,303 ..... 2.a.2a
(b) Other savings deposits 4511.. 0 ..... 2.a.2b
(c) Time deposits of $100,000 or more A517.. 51 ..... 2.a.2c
(d) Time deposits of less than $100,000 A518.. 11 ..... 2.a.2d
b. Expense of federal funds purchased and securities sold under agreements to repurchase 4180.. 0 ..... 2.b
c. Interest on demand notes issued to the U.S. Treasury, trading liabilities, and on
other borrowed money 4185.. 83 ..... 2.c
d. Not applicable.
e. Interest on subordinated notes and debentures 4200.. 0 ..... 2.e
f. Total interest expense (sum of items 2.a through 2.e) 4073.. 2,677 ..... 2.f
3. Net interest income (item 1.g minus 2.f) 4074.. ........ 1,624 3.
4. Provisions:
a. Provision for loan and lease losses 4230.. ........ 48 4.a
b. Provision for allocated transfer risk 4243.. ........ 0 4.b
5. Noninterest income:
a. Income from fiduciary activities 4070.. 0 ..... 5.a
b. Service charges on deposit accounts 4080.. 2 ..... 5.b
c. Trading revenue (must equal Schedule RI, sum of Memorandum items 8.a through 8.d) A220.. 0 ..... 5.c
d. Not applicable.
e. Not applicable.
f. Other noninterest income:
(1) Other fee income 5407.. 6,872 ..... 5.f.1
(2) All other noninterest income* 5408.. 370 ..... 5.f.2
g. Total noninterest income (sum of items 5.a through 5.f.(2)) 4079.. ........ 7,244 5.g
6. a. Realized gains (losses) on held-to-maturity securities 3521.. ........ 0 6.a
b. Realized gains (losses) on available-for-sale securities 3196.. ........ 0 6.b
7. Noninterest expense:
a. Salaries and employee benefits 4135.. 4,432 ..... 7.a
b. Expenses of premises and fixed assets (net of rental income) (excluding salaries and
employee benefits and mortgage interest) 4217.. 535 ..... 7.b
c. Other noninterest expense* 4092.. 1,213 ..... 7.c
d. Total noninterest expense (sum of items 7.a through 7.c) 4093.. ........ 6,180 7.d
8. Income (loss) before income taxes and extraordinary items and other adjustments (item
3 plus or minus items 4.a, 4.b, 5.g, 6.a, 6.b, and 7.d) 4301.. ........ 2,640 8.
9. Applicable income taxes (on item 8) 4302.. ........ 1,014 9.
10. Income (loss) before extraordinary items and other adjustments (item 8 minus 9) 4300.. ........ 1,626 10.
11. Extraordinary items and other adjustments, net of income taxes* 4320.. ........ 0 11.
12. Net income (loss) (sum of items 10 and 11) 4340.. ........ 1,626 12.
</TABLE>
___________________
* Describe on Schedule RI-E - Explanations
<PAGE> 7
<TABLE>
<S> <C> <C> <C>
TRUST COMPANY OF CALIFORNIA Call Date: 03/31/97 ST-BK: 06-0784 FFIEC 033
515 S. FLOWER STREET SUITE 2700 Page RI - 3
LOS ANGELES, CA 90071-2291 Vendor ID: D CERT: 33332
Transit Number: 12204024 Transmitted to EDS as 0038837 on 04/28/97 at 15:26:30 CST 5
</TABLE>
SCHEDULE RI - CONTINUED
I281 <-
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MEMORANDA
RIAD Year-to-date
----
1. Interest expense incurred to carry tax-exempt securities, loans, and leases
acquired after August 7, 1986, that is not deductible for federal income tax
purposes 4513.. 0 M.1
2. Income from the sale and servicing of mutual funds and annuities (included in
Schedule RI, item 8) 8431.. 0 M.2
3. Not applicable Number
------
4. Number of full-time equivalent employees at end of current period (round to 4150. 134 M.4
nearest whole number)
5. Interest and fee income on tax-exempt obligations (other than securities and
leases) of states and political subdivisions in the U.S. (reportable in
Schedule RC-C, part I, item 8) included in Schedule RI, item 1.a above 4504.. 0 M.5
To be completed by banks with loans to finance agricultural production and other
loans to farmers (Schedule RC-C, part I, item 3) exceeding five percent of total
loans.
6. Interest and fee income on agricultural loans included in item 1.a above 4251.. N/A M.6
7. If the reporting bank has restated its balance sheet as a result of applying MM DD YY
push down accounting this calendar year, report the date of the bank's
acquisition 9106.. N/A M.7
8. Trading revenue (from cash instruments and off-balance sheet derivative RIAD Year-to-date
instruments) (sum of Memorandum items 8.a through 8.d must equal Schedule RI, ----
item 5.c):
a. Interest rate exposures 8757.. 0 M.8.a
b. Foreign exchange exposures 8758.. 0 M.8.b
c. Equity security and index exposures 8759.. 0 M.8.c
d. Commodity and other exposures 8760.. 0 M.8.d
9. Impact on income of off-balance sheet derivatives held for purposes other than
trading:
a. Net increase (decrease) to interest income 8761.. 0 M.9.a
b. Net (increase) decrease to interest expense 8762.. 0 M.9.b
c. Other (noninterest) allocations 8763.. 0 M.9.c
10. Not applicable.
11. DOES THE REPORTING BANK HAVE A SUBCHAPTER S ELECTION IN EFFECT FOR FEDERAL A530.. Yes NO M.11
INCOME TAX PURPOSES FOR THE CURRENT TAX YEAR? NO
12. DEFERRED PORTION OF TOTAL APPLICABLE INCOME TAXES INCLUDED IN SCHEDULE RI, 4772.. N/A M.12
ITEMS 9 AND 11 (TO BE REPORTED WITH THE DECEMBER REPORT OF INCOME)
</TABLE>
SCHEDULE RI-A - CHANGES IN EQUITY CAPITAL
Indicate decreases and losses in parentheses
<TABLE>
<CAPTION>
I283 <-
Dollar Amounts in Thousands
- ------------------------------------------------------------------------------------------------------------------------------------
RIAD
----
<S> <C> <C> <C> <C>
1. Total equity capital originally reported in the December 31, 1996, Reports of
Condition and Income 3215.. 27,816 1.
2. Equity capital adjustments from amended Reports of Income, net* 3216.. 0 2.
3. Amended balance end of previous calendar year (sum of items 1 and 2) 3217.. 27,816 3.
4. Net income (loss) (must equal Schedule RI, item 12) 4340.. 1,626 4.
5. Sale, conversion, acquisition, or retirement of capital stock, net 4346.. 0 5.
6. Changes incident to business combinations, net 4356..
0 6.
7. LESS: Cash dividends declared on preferred stock 4470.. 0 7.
8. LESS: Cash dividends declared on common stock 4460.. 0 8.
9. Cumulative effect of changes in accounting principles from prior years* (see 4411.. 0
instructions for this schedule) 9.
10. Corrections of material accounting errors from prior years* (see instructions 4412.. 0 10.
for this schedule)
11. Change in net unrealized holding gains (losses) on available-for-sale securities 8433.. ( 632) 11.
12. Other transactions with parent holding company* (not included in item 5, 7 or 8 4415.. 0 12.
above)
13. Total equity capital end of current period (sum of items 3 through 12) (must 3210.. 28,810 13.
equal Schedule RC, item 28)
</TABLE>
- ----------
* Describe on Schedule RI-E - Explanations
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-03-1995
<PERIOD-END> JUN-30-1996
<CASH> 11,164
<SECURITIES> 0
<RECEIVABLES> 15,880
<ALLOWANCES> 287
<INVENTORY> 15,301
<CURRENT-ASSETS> 44,932
<PP&E> 52,146
<DEPRECIATION> 21,330
<TOTAL-ASSETS> 75,985
<CURRENT-LIABILITIES> 36,937
<BONDS> 18,341
60
0
<COMMON> 25
<OTHER-SE> 16,984
<TOTAL-LIABILITY-AND-EQUITY> 75,985
<SALES> 97,042
<TOTAL-REVENUES> 117,903
<CGS> 63,920
<TOTAL-COSTS> 78,638
<OTHER-EXPENSES> 21,031
<LOSS-PROVISION> 436
<INTEREST-EXPENSE> 2,983
<INCOME-PRETAX> 14,815
<INCOME-TAX> 6,047
<INCOME-CONTINUING> 6,047
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,768
<EPS-PRIMARY> 146
<EPS-DILUTED> 146
</TABLE>
<PAGE> 1
Exhibit 99.1
FORM OF
LETTER OF TRANSMITTAL
TO TENDER FOR EXCHANGE
10 5/8% SENIOR SUBORDINATED NOTES DUE 2007
OF
W.R. CARPENTER NORTH AMERICA, INC.
PURSUANT TO THE PROSPECTUS DATED _____________, 1997
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON , 1997 (THE "EXPIRATION DATE"), UNLESS THE EXCHANGE OFFER
IS EXTENDED, IN WHICH CASE THE TERM "EXPIRATION DATE" SHALL MEAN THE LATEST DATE
AND TIME TO WHICH THE EXCHANGE OFFER IS EXTENDED. TENDERS MAY BE WITHDRAWN AT
ANY TIME PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
The Exchange Agent is:
U.S. TRUST COMPANY OF CALIFORNIA, N.A.
BY FACSIMILE: BY OVERNIGHT COURIER:
(212) 420-6155 U.S. Trust Company of California, N.A.
(For Eligible Institutions Only) c/o United States Trust Company
of New York
Confirm by Telephone: 111 Broadway, Lower Level
(800) 225-2398 New York, New York 10006
Attention: Corporate Trust and Agency
Services
BY HAND: BY MAIL:
U.S. Trust Company of California, N.A. (insured or registered recommended)
c/o United States Trust Company U.S. Trust Company of California, N.A.
of New York c/o United States Trust Company
111 Broadway, Lower Level of New York
New York, New York 10006 P.O. Box 841, Peter Cooper Station
Attention: Corporate Trust and Agency New York, New York 10276-0841
Services Attention: Corporate Trust and Agency
Services
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 SET FORTH IN THIS
LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL
IS COMPLETED.
The undersigned acknowledges receipt of the Prospectus dated
____________, 1997 (the "Prospectus"), of W.R. Carpenter North America, Inc., a
Delaware corporation (the "Company"), and this Letter of Transmittal (the
"Letter of Transmittal"), which together with the Prospectus constitutes the
Company's offer (the "Exchange Offer") to exchange $1,000 principal amount of
its 10 5/8% Senior Subordinated Notes due 2007 (the "Exchange Notes") for each
$1,000 principal amount of its outstanding 10 5/8% Senior Subordinated Notes due
2007 (the "Original Notes"). Recipients of the Prospectus should read the
requirements described in such Prospectus with respect to eligibility to
participate in the Exchange Offer. Capitalized terms used but not defined herein
have the meaning given to them in the Prospectus.
The undersigned hereby tenders the Original Notes described in the box
entitled "Description of Original Notes" below pursuant to the terms and
conditions described in the Prospectus and this Letter of Transmittal. The
<PAGE> 2
undersigned is the registered owner of all the Original Notes and the
undersigned represents that it has received from each beneficial owner of
Original Notes ("Beneficial Owners") a duly completed and executed form of
"Instruction to Registered Holder from Beneficial Owner" accompanying this
Letter of Transmittal, instructing the undersigned to take the action described
in this Letter of Transmittal.
This Letter of Transmittal is to be used by a holder of Original Notes
(i) if certificates representing Original Notes are to be forwarded herewith,
(ii) if delivery of Original 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 section of the Prospectus entitled "The Exchange
Offer--Procedures for Tendering," or (iii) if a tender is made pursuant to the
guaranteed delivery procedures in the section of the Prospectus entitled "The
Exchange Offer--Guaranteed Delivery Procedures."
The undersigned hereby represents and warrants that the information
received from the beneficial owners is accurately reflected in the boxes
entitled "Beneficial Owner(s)--Purchaser Status" and "Beneficial
Owner(s)--Residence."
Any beneficial owner whose Original Notes are registered in the name of
a broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact such registered holder of Original Notes promptly and
instruct such registered holder of Original Notes to tender on behalf of the
beneficial owner. If such beneficial owner wishes to tender on its own behalf,
such beneficial owner must, prior to completing and executing this Letter of
Transmittal and delivering its Original Notes, either make appropriate
arrangements to register ownership of the Original Notes in such beneficial
owner's name or obtain a properly completed assignment from the registered
holder of Original Notes. The transfer of record ownership may take considerable
time.
In order to properly complete this Letter of Transmittal, a holder of
Original Notes must (i) complete the box entitled "Description of Original
Notes," (ii) complete the boxes entitled "Beneficial Owner(s)--Purchaser Status"
and "Beneficial Owner(s)--Residence," (iii) if appropriate, check and complete
the boxes relating to book-entry transfer, guaranteed delivery, Special Issuance
Instructions and Special Delivery Instructions, (iv) sign the Letter of
Transmittal by completing the box entitled "Sign Here" and (v) complete the
Substitute Form W-9. Each holder of Original Notes should carefully read the
detailed instructions below prior to completing the Letter of Transmittal.
Holders of Original Notes who desire to tender their Original Notes for
exchange and (i) whose Original Notes are not immediately available, (ii) who
cannot deliver their Original Notes and all other documents required hereby to
the Exchange Agent on or prior to the Expiration Date or (iii) who are unable to
complete the procedure for book-entry transfer on a timely basis, must tender
the Original Notes pursuant to the guaranteed delivery procedures set forth in
the section of the Prospectus entitled "The Exchange Offer--Guaranteed Delivery
Procedures." See Instruction 2.
Holders of Original Notes who wish to tender their Original Notes for
exchange must complete columns (1) through (3) in Box 1 below entitled
"Description of Original Notes," complete the applicable boxes below Box 1 and
sign Box 6 below entitled "Sign Here." If only columns (1) through (3) of Box 1
are completed, such holder of Original Notes will have tendered for exchange all
Original Notes listed in column (3) of Box 1. If the holder of Original Notes
wishes to tender for exchange less than all of such Original Notes, column (4)
of Box 1 must be completed in full. In such case, please refer to Instruction 5.
<PAGE> 3
<TABLE>
<CAPTION>
Box 1 DESCRIPTION OF ORIGINAL NOTES
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Name(s) and Address(es) of Registered Holder(s) Original Note Aggregate Principal Principal Amount
of Original Notes(s) Number(s) (Attach Amount Represented by Tendered for Exchange
(Please fill in, if blank, exactly as Name(s) signed additional Certificate(s) (1) (must be in integral
appear(s) on Original Note Certificate(s)) list if necessary) multiples of $1,000) (2)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Unless otherwise indicated in the column "Principal Amount Tendered For
Exchange," any tendering Holder of Original Notes will be deemed to
have tendered the entire aggregate principal amount represented by the
column labeled "Aggregate Principal Amount Represented by
Certificate(s)."
(2) The minimum permitted tender is $1,000 in principal amount of Original
Notes, and all tenders must be integral multiples of $1,000 principal
amount of Original Notes.
[ ] CHECK HERE IF TENDERED ORIGINAL NOTES ARE ENCLOSED HEREWITH.
[ ] CHECK HERE IF TENDERED ORIGINAL NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH DTC
AND COMPLETE THE FOLLOWING (FOR USE BY ELIGIBLE INSTITUTIONS (AS
HEREINAFTER DEFINED) ONLY):
Name of Tendering Institution: __________________________________
Account Number: __________________________________
Transaction Code Number: __________________________________
[ ] CHECK HERE IF TENDERED ORIGINAL NOTES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY ENCLOSED HEREWITH AND COMPLETE THE
FOLLOWING (FOR USE BY ELIGIBLE INSTITUTIONS ONLY):
Name of Registered Holder of Original Note(s) __________________
Date of Execution of Notice of Guaranteed Delivery: __________________
Window Ticket Number (if available): __________________
Name of Institution which Guaranteed Delivery: __________________
Account Number (if delivered by book-entry transfer):__________________
<PAGE> 4
[ ] 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: ________________________________
________________________________
________________________________
Box 2
SPECIAL ISSUANCE INSTRUCTIONS
(See Instructions 1, 6, 7 and 8)
To be completed ONLY (i) if the Exchange Notes issued in exchange for
Original Notes, certificates for Original Notes in a principal amount
not exchanged for Exchange Notes, or Original Notes (if any) not
tendered for exchange, are to be issued in the name of someone other
than the undersigned or (ii) if Original Notes tendered by book-entry
transfer which are not exchanged are to be returned by credit to an
account maintained at DTC.
Issue to:
Name ______________________________________________________
(Please Print)
Address ______________________________________________________
______________________________________________________
______________________________________________________
(Include Zip Code)
______________________________________________________
(Tax Identification or Social Security No.)
Credit Original Notes not exchanged and delivered by book-entry
transfer to DTC account set forth below:
______________________________________________________
(Account Number)
<PAGE> 5
Box 3
SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 1, 6, 7 and 8)
To be completed ONLY if the Exchange Notes issued in exchange for
Original Notes, certificates for Original Notes in a principal amount
not exchanged for Exchange Notes, or Original Notes (if any) not
tendered for exchange, are to be mailed or delivered (i) to someone
other than the undersigned or (ii) to the undersigned at an address
other than the address shown below the undersigned's signature.
Mail or deliver to:
Name ______________________________________________________
(Please Print)
Address ______________________________________________________
______________________________________________________
______________________________________________________
(Include Zip Code)
______________________________________________________
(Tax Identification or Social Security No.)
Box 4
BENEFICIAL OWNER(S) - RESIDENCE
<TABLE>
<CAPTION>
State of Domicile/Principal Place of Business of Principal Amount of Original Notes
Each Beneficial Owner of Original Notes Held for Account of Beneficial Owner(s)
<S> <C>
________________________________________________________________________________________________________
________________________________________________________________________________________________________
________________________________________________________________________________________________________
________________________________________________________________________________________________________
</TABLE>
<PAGE> 6
Box 5
BENEFICIAL OWNER(S) - PURCHASER STATUS
- --------------------------------------------------------------------------------
The beneficial owner of each of the Original Notes described herein is (check
the box that applies):
[ ] A "Qualified Institutional Buyer" (as defined in Rule 144A under the
Securities Act of 1933 (the "Securities Act"))
[ ] An "Institutional Accredited Investor" (as defined in Rule 501(a)(1),
(2), (3) or (7) under the Securities Act)
[ ] A non "U.S. person" (as defined in Regulation S of the Securities Act)
that purchased the Original Notes outside the United States in
accordance with Rule 904 under the Securities Act
[ ] Other (describe) ______________________________________________________
SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Pursuant to the offer by W.R. Carpenter North America, Inc., a Delaware
corporation (the "Company"), upon the terms and subject to the conditions set
forth in the Prospectus dated _________________, 1997 (the "Prospectus") and
this Letter of Transmittal (the "Letter of Transmittal"), which together with
the Prospectus constitutes the Company's offer (the "Exchange Offer") to
exchange $1,000 principal amount of its 10 5/8% Senior Subordinated Notes due
2007 (the "Exchange Notes") for each $1,000 principal amount of its outstanding
10 5/8% Senior Subordinated Notes due 2007 (the "Original Notes"), the
undersigned hereby tenders to the Company for exchange the Original Notes
indicated above.
By executing this Letter of Transmittal and subject to and effective
upon acceptance for exchange of the Original Notes tendered for exchange
herewith, the undersigned will have irrevocably sold, assigned, transferred and
exchanged, to the Company, all right, title and interest in, to and under all of
the Original Notes tendered for exchange hereby, and hereby will have appointed
the Exchange Agent as the true and lawful agent and attorney-in-fact (with full
knowledge that the Exchange Agent also acts as agent of the Company) of such
holder of Original Notes with respect to such Original Notes, with full power of
substitution to (i) deliver certificates representing such Original Notes, or
transfer ownership of such Original Notes on the account books maintained by DTC
(together, in any such case, with all accompanying evidences of transfer and
authenticity), to the Company, (ii) present and deliver such Original Notes for
transfer on the books of the Company and (iii) receive all benefits and
otherwise exercise all rights and incidents of beneficial ownership with respect
to such Original Notes, all in accordance with the terms of the Exchange Offer.
The power of attorney granted in this paragraph shall be deemed to be
irrevocable and coupled with an interest.
The undersigned hereby represents and warrants that (i) the undersigned
is the owner, (ii) has a net long position within the meaning of Rule 14e-4
under the Securities Exchange Act as amended ("Rule 14e-4") equal to or greater
than the principal amount of Original Notes tendered hereby, (iii) the tender of
such Original Notes complies with Rule 14e-4 (to the extent that Rule 14e-4 is
applicable to such exchange), (iv) the undersigned has full power and authority
to tender, exchange, assign and transfer the Original Notes and (v) that when
such Original Notes are accepted for exchange by the Company, the Company will
acquire good and marketable title thereto, free and clear of all liens,
restrictions, charges and encumbrances and not subject to any adverse claims.
<PAGE> 7
The undersigned will, upon receipt, execute and deliver any additional documents
deemed by the Exchange Agent or the Company to be necessary or desirable to
complete the exchange, assignment and transfer of the Original Notes tendered
for exchange hereby.
The undersigned hereby further represents to the Company that (i) the
Exchange Notes to be acquired by the undersigned in exchange for the Original
Notes tendered hereby and any beneficial owner(s) of such Original Notes in
connection with the Exchange Offer will be acquired by the undersigned and such
beneficial owner(s) in the ordinary course of business of the undersigned, (ii)
the undersigned (if not a broker-dealer referred to in the last sentence of this
paragraph) are not participating and do not intend to participate in the
distribution of the Exchange Notes, (iii) the undersigned have no arrangement or
understanding with any person to participate in the distribution of the Exchange
Notes, (iv) the undersigned and each beneficial owner acknowledge and agree that
any person participating in the Exchange Offer for the purpose of distributing
the Exchange Notes must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with a secondary resale
transaction of the Exchange Notes acquired by such person and cannot rely on the
position of the staff of the Commission set forth in certain no-action letters,
(v) the undersigned and each beneficial owner understand that a secondary resale
transaction described in clause (iv) above should be covered by an effective
registration statement containing the selling securityholder information
required by Item 507 or Item 508, as applicable, of Regulation S-K of the
Commission and (vi) neither the undersigned nor any beneficial owner is an
"affiliate" of the Company, as defined under Rule 405 under the Securities Act.
If the undersigned is a broker-dealer that will receive Exchange Notes for its
own account in exchange for Original Notes that were acquired as a result of
market-making activities or other trading activities, it acknowledges that it
will deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such Exchange Notes received in respect of such
Original Notes pursuant to the Exchange Offer; 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.
For purposes of the Exchange Offer, the Company will be deemed to have
accepted for exchange, and to have exchanged, validly tendered Original Notes,
if, as and when the Company gives oral or written notice thereof to the Exchange
Agent. Tenders of Original Notes for exchange may be withdrawn at any time prior
to 5:00 p.m., New York City time, on the Expiration Date. See "The Exchange
Offer--Withdrawal of Tenders" in the Prospectus. Any Original Notes tendered by
the undersigned and not accepted for exchange will be returned to the
undersigned at the address set forth above unless otherwise indicated in Box 3
above entitled "Special Delivery Instructions" as promptly as practicable after
the Expiration Date.
The undersigned acknowledges that the Company's acceptance of Original
Notes validly tendered for exchange pursuant to any one of the procedures
described in the section of the Prospectus entitled "The Exchange Offer" 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 in the box entitled "Special Issuance
Instructions," please return any Original Notes not tendered for exchange in the
name(s) of the undersigned. Similarly, unless otherwise indicated in Box 3 above
entitled "Special Delivery Instructions," please mail any certificates for
Original Notes not tendered or exchanged (and accompanying documents, as
appropriate) to the undersigned at the address shown below the undersigned's
signature(s).
In the event that both Boxes 2 and 3, "Special Issuance Instructions"
and "Special Delivery Instructions," are completed, please issue the
certificates representing the Exchange Notes issued in exchange for the Original
Notes accepted for exchange in the name(s) of, and return any Original Notes not
tendered for exchange or not exchanged to, the person(s) so indicated. The
undersigned recognizes that the Company has no obligation pursuant to the
"Special Issuance Instructions" and "Special Delivery Instructions" to transfer
any Original Notes from the name of the holder of Original Note(s) thereof if
the Company does not accept for exchange any of the Original Notes so tendered
for exchange or if such transfer would not be in compliance with any transfer
restrictions applicable to such Original Note(s).
<PAGE> 8
In order to validly tender Original Notes for exchange, holders of
Original Notes must complete, execute and deliver this Letter of Transmittal.
Except as stated in the Prospectus, all authority herein conferred or
agreed to be conferred shall survive the death, incapacity, or dissolution of
the undersigned, and any obligation of the undersigned hereunder shall be
binding upon the heirs, personal representatives, successors and assigns of the
undersigned. Except as otherwise stated in the Prospectus, this tender for
exchange of Original Notes is irrevocable.
<PAGE> 9
Box 6
SIGN HERE
- --------------------------------------------------------------------------------
(Signature(s) of Owner(s))
Dated: , 1997
Must be signed by the registered holder(s) of Original Notes exactly as name(s)
appear(s) on certificate(s) representing the Original Notes or on a security
position listing or by person(s) authorized to become registered Original Note
holder(s) by certificates and documents transmitted herewith. If signature is by
trustees, executors, administrators, guardians, attorneys-in- fact, officers of
corporations or other acting in a fiduciary or representative capacity, please
provide the following information. (See Instruction 6).
Name(s):________________________________________________________________________
(Please Print)
Capacity (full title):__________________________________________________________
________________________________________________________________________
Address:________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
(Include Zip Code)
Principal place of business (if different from address listed above):___________
________________________________________________________________________
________________________________________________________________________
(Include Zip Code)
Area Code and Telephone No. ( )______________________________________________
Tax Identification or Social Security Nos.:_____________________________________
(Please complete Substitute Form W-9)
GUARANTEE OF SIGNATURE(S)
(Signature(s) must be guaranteed if required by Instruction 1)
Authorized Signature:___________________________________________________________
Dated:__________________________________________________________________________
Name and Title:_________________________________________________________________
(Please Print)
Name of Firm:___________________________________________________________________
<PAGE> 10
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. Guarantee of Signatures. Except as otherwise provided below,
all signatures on this Letter of Transmittal must be guaranteed by an
institution which is (1) a member firm of a registered national securities
exchange or of the National Association of Securities Dealers, Inc., (2) a
commercial bank or trust company having an office or correspondent in the Unites
States. or (3) an "eligible guarantor institution" within the meaning of Rule
17Ad-15 under the Securities Exchange Act which is a member of one of the
following recognized Signature Guarantee Programs (an "Eligible Institution"):
a. The Securities Transfer Agents Medallion Program (STAMP)
b. The New York Stock Exchange Medallion Signature Program (MSP)
c. The Stock Exchange Medallion Program (SEMP)
Signatures on this Letter of Transmittal need not be guaranteed (i) if this
Letter of Transmittal is signed by the registered holder(s) of the Original
Notes tendered herewith and such registered holder(s) have not completed the box
entitled "Special Issuance Instructions" or the box entitled "Special Delivery
Instructions" on this Letter of Transmittal or (ii) if such Original Notes are
tendered for the account of an Eligible Institution. IN ALL OTHER CASES, ALL
SIGNATURES MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION.
2. Delivery of this Letter of Transmittal and Original Notes;
Guaranteed Delivery Procedures. This Letter of Transmittal is to be completed by
holders of Original Notes (i) if certificates are to be forwarded herewith or
(ii) if tenders are to be made pursuant to the procedures for tender by book-
entry transfer or guaranteed delivery set forth in the section of the Prospectus
entitled "The Exchange Offer." Certificates for all physically tendered Original
Notes or any confirmation of a book-entry transfer (a "Book-Entry
Confirmation"), as well as a properly completed and duly executed copy of this
Letter of Transmittal or facsimile hereof, and any other documents required by
this Letter of Transmittal, must be received by the Exchange Agent at its
address set forth on the cover of this Letter of Transmittal prior to 5:00 p.m.,
New York City time, on the Expiration Date. Holders of Original Notes who elect
to tender Original Notes and (i) whose Original Notes are not immediately
available or (ii) who cannot deliver the Original Notes or other required
documents to the Exchange Agent prior to 5:00 p.m., New York City time, on the
Expiration Date, must tender their Original Notes according to the guaranteed
delivery procedures set forth in the Prospectus. Holders may have such tender
effected if: (a) such tender is made by or through an Eligible Institution; and
(b) prior to 5:00 p.m., New York City time, on the Expiration Date, the Exchange
Agent has received from such Eligible Institution a properly completed and duly
executed Notice of Guaranteed Delivery, setting forth the name and address of
the holder of such Original Notes, the certificate numbers(s) of such Original
Notes and the principal amount of Original Notes tendered for exchange, stating
that tender is being made thereby and guaranteeing that, within five New York
Stock Exchange trading days after the Expiration Date, the certificate(s)
representing such Original Notes (or a Book-Entry Confirmation), in proper form
for transfer, and any other documents required by this Letter of Transmittal,
will be deposited by such Eligible Institution with the Exchange Agent; and (c)
a properly executed Letter of Transmittal (or a facsimile hereof), as well as
the certificate(s) for all tendered Original Notes in proper form for transfer
or a Book-Entry Confirmation, together with any other documents required by this
Letter of Transmittal, are received by the Exchange Agent within five New York
Stock Exchange trading days after the Expiration Date.
THE METHOD OF DELIVERY OF ORIGINAL NOTES, THIS LETTER OF TRANSMITTAL
AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND
RISK OF THE HOLDER. EXCEPT AS OTHERWISE PROVIDED BELOW, THE DELIVERY WILL BE
DEEMED MADE ONLY WHEN ACTUALLY RECEIVED OR CONFIRMED BY THE EXCHANGE AGENT.
INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN OVERNIGHT OR
HAND
<PAGE> 11
DELIVERY SERVICE, PROPERLY INSURED. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH
RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. NEITHER THIS LETTER
OF TRANSMITTAL NOR ANY ORIGINAL NOTES SHOULD BE SENT TO THE COMPANY.
No alternative, conditional or contingent tenders will be accepted. All
tendering holders of Original Notes, by execution of this Letter of Transmittal
(or facsimile hereof, if applicable), waive any right to receive notice of the
acceptance of their Original Notes for exchange.
3. Inadequate Space. If the space provided in the box entitled
"Description of Original Notes" above is inadequate, the certificate numbers and
principal amounts of the Original Notes being tendered should be listed on a
separate signed schedule affixed hereto.
4. Withdrawals. A tender of Original Notes may be withdrawn at
any time prior to 5:00 p.m., New York City time, on the Expiration Date by
delivery of written or facsimile notice of withdrawal to the Exchange Agent at
the address set forth on the cover of this Letter of Transmittal. To be
effective, a notice of withdrawal of Original Notes must (i) specify the name of
the person who tendered the Original Notes to be withdrawn (the "Depositor"),
(ii) identify the Original Notes to be withdrawn (including the certificate
number or numbers and aggregate principal amount of such Original Notes), and
(iii) be signed by the holder of Original Notes in the same manner as the
original signature on the Letter of Transmittal by which such Original Notes
were tendered (including any required signature guarantees). Any Original Notes
withdrawn will thereafter be deemed not validly tendered for purposes of the
Exchange Offer and no Exchange Notes will be issued with respect thereto unless
the Original Notes so withdrawn are validly retendered. Properly withdrawn
Original Notes may be retendered by following one of the procedures described in
the section of the Prospectus entitled "The Exchange Offer--Procedures for
Tendering" at any time prior to 5:00 p.m., New York City time, on the Expiration
Date.
5. Partial Tenders. Tenders of Original Notes will be accepted
only in integral multiples of $1,000 principal amount. If a tender for exchange
is to be made with respect to less than the entire principal amount of any
Original Notes, fill in the principal amount of Original Notes which are
tendered for exchange in column (4) of the box entitled "Description of Original
Notes," as more fully described in the footnotes thereto. In case of a partial
tender for exchange, a new certificate, in fully registered form, for the
remainder of the principal amount of the Original Notes, will be sent to the
holders of Original Notes unless otherwise indicated in the appropriate box on
this Letter of Transmittal as promptly as practicable after the expiration or
termination of the Exchange Offer.
6. Signatures on this Letter of Transmittal, Assignment and
Endorsements.
(a) The signature(s) of the holder of Original Notes on this
Letter of Transmittal must correspond with the name(s) as written on the face of
the Original Notes without alternation, enlargement or any change whatsoever.
(b) If tendered Original Notes are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
(c) If any tendered Original 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 of Transmittal and any necessary or
required documents as there are different registrations or certificates.
(d) When this Letter of Transmittal is signed by the holder of the
Original Notes listed and transmitted hereby, no endorsements of Original Notes
or assignments are required. If, however, Original Notes not tendered or not
accepted, are to be issued or returned in the name of a person other than the
holder of Original Notes, then the Original Notes transmitted hereby must be
endorsed or accompanied by a properly executed assignment in a form satisfactory
to the Company, in either case signed exactly as the name(s) of the
<PAGE> 12
holder of Original Notes appear(s) on the Original Notes. Signatures on such
Original Notes or assignments must be guaranteed by an Eligible Institution
(unless signed by an Eligible Institution).
(e) If this Letter of Transmittal or Original Notes or assignments
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 proper evidence
satisfactory to the Company of their authority so to act must be submitted with
this Letter of Transmittal.
(f) If this Letter of Transmittal is signed by a person other than
the registered holder of Original Notes listed, the Original Notes must be
endorsed or accompanied by a properly executed assignment, in either case signed
by such registered holder exactly as the name(s) of the registered holder of
Original Notes appear(s) on the certificates. Signatures on such Original Notes
or assignments must be guaranteed by an Eligible Institution (unless signed by
an Eligible Institution).
7. Transfer Taxes. Except as set forth in this Instruction 7, the
Company will pay all transfer taxes, if any, applicable to the transfer and
exchange of Original Notes pursuant to the Exchange Offer. If, however, issuance
of Exchange Notes is to be made to, or Original Notes not tendered for exchange
are to be issued or returned in the name of, any person other than the holder of
Original Notes, and satisfactory evidence of payment of such taxes or exemptions
from taxes therefrom is not submitted with this Letter of Transmittal, the
amount of any transfer taxes payable on account of the transfer to such person
will be imposed on and payable by the holder of Original Notes tendering
Original Notes for exchange prior to the issuance of the Exchange Notes or the
return of Original Notes in another name.
8. Special Issuance and Delivery Instructions. If the Exchange
Notes are to be issued, or if any Original Notes not tendered for exchange are
to be issued or sent to someone other than the holder of Original Notes or to an
address other than that shown above, the appropriate boxes on this Letter of
Transmittal should be completed. Holders of Original Notes tendering Original
Notes by book-entry transfer may request that Original Notes not accepted be
credited to such account maintained at DTC as such holder of Original Notes may
designate.
9. Irregularities. All questions as to the validity, form,
eligibility (including time of receipt), compliance with conditions, acceptance
and withdrawal of tendered Original Notes will be determined by the Company in
its sole discretion, which determination will be final and binding. The Company
reserves the absolute right to reject any and all Original Notes not properly
tendered or any Original Notes the Company's acceptance of which would, in the
opinion of counsel for the Company, be unlawful. The Company also reserves the
right to waive any defects, irregularities or conditions of tender as to
particular Notes. The Company's interpretation of the terms and conditions of
the Exchange Offer (including the instructions in the Letter of Transmittal)
will be final and binding on all parties. Unless waived, any defects or
irregularities in connection with tenders of Original Notes must be cured within
such time as the Company shall determine. Although the Company intends to notify
holders of defects or irregularities with respect to tenders of Original Notes,
neither the Company, the Exchange Agent nor any other person shall incur any
liability for failure to give such notification. Tenders of Original Notes will
not be deemed to have been made until such defects or irregularities have been
cured or waived. Any Original Notes received by the Exchange Agent that are not
properly tendered and as to which the defects or irregularities have not been
cured or waived will be returned by the Exchange Agent to the tendering holders,
unless otherwise provided in this Letter of Transmittal, as soon as practicable
following the Expiration Date.
10. Waiver of Conditions. The Company reserves the absolute right
to waive, amend or modify certain of the specified conditions as described under
"The Exchange Offer--Certain Conditions to the Exchange Offer" in the Prospectus
in the case of any Original Notes tendered (except as otherwise provided in the
Prospectus).
<PAGE> 13
11. Mutilated, Lost, Stolen or Destroyed Original Notes. Any
tendering Holder whose Old Notes have been mutilated, lost, stolen or destroyed
should contact the Exchange Agent at the address listed below for further
instructions:
U.S. Trust Company of California, N.A.
c/o United States Trust Company of New York
P.O. Box 841, Peter Cooper Station
New York, New York 10276-0841
Attention: Corporate Trust and Agency Services
(800) 225-2398
12. Requests for Information or Additional Copies. Requests for
information or for additional copies of the Prospectus and this Letter of
Transmittal may be directed to the Exchange Agent at the address or telephone
number set forth on the cover of this Letter of Transmittal.
IMPORTANT: This Letter of Transmittal (or a facsimile thereof, if
applicable) together with certificates, or confirmation of book-entry or the
Notice of Guaranteed Delivery, and all other required documents must be received
by the Exchange Agent prior to 5:00 p.m., New York City time, on the Expiration
Date.
<PAGE> 14
IMPORTANT TAX INFORMATION
Under current federal income tax law, a holder of Original Notes whose
tendered Original Notes are accepted for exchange may be subject to backup
withholding unless the holder provides the Company (as payor), through the
Exchange Agent, with either (i) such holder's correct taxpayer identification
number ("TIN") on Substitute Form W-9 attached hereto, certifying that the TIN
provided on Substitute Form W-9 is correct (or that such holder of Original
Notes is awaiting a TIN) and that (A) the holder of Original Notes has not been
notified by the Internal Revenue Service that he or she is subject to backup
withholding as a result of a failure to report all interest or dividends or (B)
the Internal Revenue Service has notified the holder of Original Notes that he
or she is no longer subject to backup withholding; or (ii) an adequate basis for
exemption from backup withholding. If such holder of Original Notes is an
individual, the TIN is such holder's social security number. If the Exchange
Agent is not provided with the correct taxpayer identification number, the
holder of Original Notes may be subject to certain penalties imposed by the
Internal Revenue Service.
Certain holders of Original Notes (including, among others, all
corporations and certain foreign individuals) are not subject to these backup
withholding and reporting requirements. Exempt holders of Original Notes should
indicate their exempt status on Substitute Form W-9. A foreign individual may
qualify as an exempt recipient by submitting to the Exchange Agent a properly
completed Internal Revenue Service Form W-8 (which the Exchange Agent will
provide upon request) signed under penalty of perjury, attesting to the holder's
exempt status. See the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 (the "Guidelines") for additional
instructions.
If backup withholding applies, the Company is required to withhold 31%
of any payment made to the holder of Original Notes or other payee. Backup
withholding is not an additional federal income tax. Rather, the federal income
tax liability of persons subject to backup withholding will be reduced by the
amount of tax withheld. If withholding results in an overpayment of taxes, a
refund may be obtained from the Internal Revenue Service.
The holder of Original Notes is required to give the Exchange Agent the
TIN (e.g., social security number or employer identification number) of the
record owner of the Original Notes. If the Original Notes are held in more than
one name or are not held in the name of the actual owner, consult the enclosed
Guidelines for additional guidance regarding which number to report.
<PAGE> 15
INSTRUCTION TO REGISTERED HOLDER
FROM BENEFICIAL OWNER
OF
10 5/8% SENIOR SUBORDINATED NOTES DUE 2007 OF
W.R. CARPENTER NORTH AMERICA, INC.
The undersigned hereby acknowledges receipt of the Prospectus dated
______________, 1997 (the "Prospectus") of W.R. Carpenter North America, Inc., a
Delaware corporation (the "Company"), and the accompanying Letter of Transmittal
(the "Letter of Transmittal"), that together constitute the Company's offer (the
"Exchange Offer"). Capitalized terms used but not defined herein have the
meanings ascribed to them in the Prospectus.
This will instruct you, the registered holder, as to the action to be
taken by you relating to the Exchange Offer with respect to the 10 5/8% Senior
Subordinated Notes due 2007 (the "Original Notes") held by you for the account
of the undersigned.
The aggregate face amount of the Original Notes held by you for the
account of the undersigned is (fill in amount):
$ of the Original Notes.
With respect to the Exchange Offer, the undersigned hereby instructs
you (check appropriate box):
[ ] TO TENDER the following Original Notes held by you for the account of
the undersigned (insert principal amount of Original Notes to be
tendered, if any):
$ of the Original Notes.
[ ] NOT TO TENDER any Original Notes held by you for the account of the
undersigned.
If the undersigned instructs you to tender the Original Notes held
by you for the account of the undersigned, it is understood that you are
authorized (a) to make, on behalf of the undersigned (and the undersigned, by
its signature below, hereby makes to you), the representations and warranties
contained in the Letter of Transmittal that are to be made with respect to the
undersigned as a beneficial owner of the Original Notes, including but not
limited to the representations that (i) the undersigned's principal residence is
in the state of (fill in state) ____________________, (ii) the undersigned is
acquiring the Exchange Notes in the ordinary course of business of the
undersigned, (iii) the undersigned is not participating, does not intend to
participate, and has no arrangement or understanding with any person to
participate, in the distribution of Exchange Notes, (iv) the undersigned
acknowledges that any person participating in the Exchange Offer for the purpose
of distributing the Exchange Notes must comply with the registration and
prospectus delivery requirements of the Securities Act of 1933, as amended, in
connection with any resale transaction of the Exchange Notes acquired by such
person and cannot rely on the position of the Staff of the Securities and
Exchange Commission set forth in certain no-action letters (See the section of
the Prospectus entitled "The Exchange Offer--Purposes and Effects of the
Exchange Offer"), (v) the undersigned understands that a secondary resale
transaction described in clause (iv) above should be covered by an effective
registration statement containing the selling securityholder information
required by Item 507 or Item 508, if applicable, of Regulation S-K of the
Commission, (vi) the undersigned is not an "affiliate," as defined in Rule 405
under the Securities Act, of the Company, (vii) if the undersigned is not a
broker-dealer, that it is not engaged in, and does not intend to engage in, a
distribution of Exchange Notes and (viii) if the undersigned is a broker-dealer
that will receive Exchange Notes for its own account in exchange for Original
Notes that were acquired as a result of market- making activities or other
trading activities, it acknowledges that it will deliver a prospectus meeting
the requirements of the Securities Act in connection with any resale of such
Exchange Notes received in respect of such Original Notes pursuant to the
Exchange Offer;
<PAGE> 16
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; (b) to agree, on behalf of the undersigned, as set forth in
the Letter of Transmittal; and (c) to take such other action as necessary under
the Prospectus or the Letter of Transmittal to effect the valid tender of
Original Notes.
The purchaser status of the undersigned is (check the box that
applies):
[ ] A "Qualified Institutional Buyer" (as defined in Rule 144A under
Securities Act)
[ ] An "Institutional Accredited Investor" (as defined in Rule 501(a)(1),
(2), (3) or (7) under the Securities Act)
[ ] A non "U.S." person" (as defined in Regulation S of the Securities Act)
that purchased the Original Notes outside the United States in
accordance with Rule 904 under the Securities Act
[ ] Other (describe) ______________________________________________________
Box 7
SIGN HERE
Name of Beneficial Owner(s)_____________________________________________________
Signature(s):___________________________________________________________________
Name(s):________________________________________________________________________
(Please Print)
Address:________________________________________________________________________
Principal place of business (if different from address listed above):___________
________________________________________________________________________________
Telephone Number(s):____________________________________________________________
Tax Identification or Social Security Number(s):________________________________
Date:___________________________________________________________________________
<PAGE> 17
TAXPAYER IDENTIFICATION NUMBER
SUBSTITUTE FORM W-9
<TABLE>
<S> <C> <C>
PART I--PLEASE PROVIDE YOUR
SUBSTITUTE TIN IN THE BOX AT RIGHT AND SOCIAL SECURITY NUMBER(S) OR
CERTIFY BY SIGNING AND EMPLOYER IDENTIFICATION NUMBER(S)
Form W-9 DATING BELOW. See the enclosed
Guidelines for Certification of _____________________________
Department of the Treasury Internal Taxpayer Status for instructions.
Revenue Service
PAYER'S REQUEST FOR TAXPAYER PART II--Exempt Payees [ ]
IDENTIFICATION NUMBER (TIN) I am a payee exempt from information and backup withholding (see the
enclosed Guidelines for Certification of Taxpayer Status for a listing
of exempt payees).
PART III--Awaiting TIN [ ] You must also complete the Certificate of
Awaiting Taxpayer Identification Number if you check this box.
CERTIFICATION:
Under penalties of perjury, I certify that:
(1) The number shown on the form is my correct Taxpayer Identification Number (or I am waiting for a number
to be issued to me), and
(2) I am not subject to backup withholding because: (a) I am exempt from backup withholding, or (b) I have not
been notified by the Internal Revenue Service ("IRS") that I am subject to backup withholding tax as a result of a
failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding.
CERTIFICATION INSTRUCTIONS:
You must cross out item (2) above if you have been notified by the IRS that you are currently subject to backup
withholding because of underreporting interest or dividends on your tax return. However, if after being notified by
the IRS that you were subject to backup withholding you received another notification from the IRS that you are no longer
subject to backup withholding, do not cross out item (2). (Also see the enclosed Guidelines for Certification
of Taxpayer Status.)
Signature_________________________________________________________________________ Date______________________
</TABLE>
<PAGE> 18
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF
YOU CHECKED THE BOX IN PART III OF
SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or (b)
I intend to mail or deliver an application in the near future. I understand that
notwithstanding that I have checked the box in Part III (and have completed this
Certificate of Awaiting Taxpayer Identification Number), 31% of all reportable
payments made to me will be withheld until I provide a properly certified
taxpayer identification number to the Exchange Agent.
- --------------------------------------------------------------------------------
Signature Date
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 STATUS FOR ADDITIONAL DETAILS.
<PAGE> 19
GUIDELINES FOR CERTIFICATION OF TAXPAYER STATUS
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>
<CAPTION>
- -------------------------------------------------------------- ---------------------------------------------------------------
Give the EMPLOYER
For this type of account: Give the SOCIAL For this type of account: IDENTIFICATION Number
SECURITY Number of-- of--
- -------------------------------------------------------------- ---------------------------------------------------------------
<S> <C> <C> <C>
1. An individual's account The individual 9. A valid trust, estate, or Legal entity (Do not fur-
pension trust nish the identifying num-
ber of the personal repre-
sentative or trustee unless
the legal entity itself is not
designated in the account
title.)(5)
2. Two or more individuals The actual owner of the 10. Corporate account The corporation
(joint account) account or, if combined
funds, the first individual
on the account(1)
3. Husband and wife (joint The actual owner of the 11. Religious, charitable, or The organization
account) account or, if joint funds, educational organization
either person(1) account
4. Custodian account of a The minor(2) 12. Partnership account held in The partnership
minor (Uniform Transfers to the name of the business
Minors Act)
5. Adult and minor (joint The adult or, if the minor 13. Association, club or other The organization
account) is the only contributor, the tax-exempt organization
minor(1)
6. Account in the name of The ward, minor, or 14. A broker or registered The broker or nominee
guardian or committee for a incompetent person(3) nominee
designated ward, minor, or
incompetent person
7.a. The usual revocable The grantor-trustee(1) 15. Account with the Depart- The public entity
savings trust account ment of Agriculture in the
(grantor is also name of a public entity
trustee) (such as a State or local
government, school district,
or prison) that receives
agricultural program
payments
b. So-called trust account The actual owner(1)
that is not a legal or
valid trust under
State law
8. Sole proprietorship account The owner(4)
- -------------------------------------------------------------- ---------------------------------------------------------------
</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 or 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.
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 exemption 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 entity registered at all times under the Investment Company Act of
1940.
- A foreign central bank of issue.
Exempt payees described above should file Form W-9 or substitute 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 dividends,
interest, or other payments to give taxpayer identification numbers to payers
who must report the 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, 1993, 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 correct 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) 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.
(3) 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
FORM OF
NOTICE OF GUARANTEED DELIVERY
for
Tender of all Outstanding
10 5/8% Senior Subordinated Notes due 2007
in Exchange for
New 10 5/8% Senior Subordinated Notes due 2007
of
W.R. CARPENTER NORTH AMERICA, INC.
Registered holders of outstanding 10 5/8% Senior Subordinated Notes due
2007 (the "Original Notes") who wish to tender their Notes in exchange for a
like principal amount of new 10 5/8% Senior Subordinated Notes due 2007 (the
"Exchange Notes") and whose Original Notes are not immediately available or who
cannot deliver their Original Notes and Letter of Transmittal (and any other
documents required by the Letter of Transmittal) to U.S. Trust Company of
California, N.A. (the "Exchange Agent") prior to the Expiration Date, may use
this Notice of Guaranteed Delivery or one substantially equivalent hereto. This
Notice of Guaranteed Delivery may be delivered by hand or sent by facsimile
transmission (receipt confirmed by telephone and an original delivered by
guaranteed overnight delivery) or mail to the Exchange Agent. See "The Exchange
Offer--Procedures for Tendering" and "The Exchange Offer--Guaranteed Delivery
Procedures" in the Prospectus.
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
U.S. TRUST COMPANY OF CALIFORNIA, N.A.
BY HAND: BY MAIL:
U.S. Trust Company of California, N.A. (insured or registered recommended)
c/o United States Trust Company U.S. Trust Company of California, N.A.
of New York c/o United States Trust Company
111 Broadway, Lower Level of New York
New York, New York 10006 P.O. Box 841, Peter Cooper Station
Attention: Corporate Trust and Agency New York, New York 10276-0841
Services Attention: Corporate Trust and Agency
Services
BY OVERNIGHT EXPRESS: BY FACSIMILE:
U.S. Trust Company of California, N.A. (212) 420-6155
c/o United States Trust Company
of New York (For Eligible Institutions Only)
111 Broadway, Lower Level
New York, New York 10006
Attention: Corporate Trust and Agency
Services
BY TELEPHONE:
(800) 225-2398
Delivery of this Notice of Guaranteed Delivery to an address other than
as set forth above or transmission of instructions via a facsimile transmission
to a number other than as set forth above will not constitute a valid delivery.
-1-
<PAGE> 2
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an Eligible Institution (as defined in the Prospectus), such
signature guarantee must appear in the applicable space provided on the Letter
of Transmittal for Guarantee of Signature.
Ladies and Gentlemen:
The undersigned hereby tenders the principal amount of Original Notes
indicated below, upon the terms and subject to the conditions contained in the
Prospectus dated _______, 1997 of W.R. Carpenter North America, Inc. (the
"Prospectus"), receipt of which is hereby acknowledged.
DESCRIPTION OF SECURITIES TENDERED
<TABLE>
<CAPTION>
Name and address of registered Certificate Number(s) of Notes Principal Amount of Notes
holder as it appears on the 10 5/8% Tendered Tendered
Senior Subordinated Notes due
2007 ("Notes")
(Please Print)
<S> <C> <C>
______________________________ ______________________________ ______________________________
______________________________ ______________________________ ______________________________
______________________________ ______________________________ ______________________________
______________________________ ______________________________ ______________________________
______________________________ ______________________________ ______________________________
</TABLE>
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<PAGE> 3
THE FOLLOWING GUARANTEE MUST BE COMPLETED
GUARANTEE OF DELIVERY
(Not to be used for signature guarantee)
The undersigned, a firm that is a member of a registered national
securities exchange or a member of the National Association of Securities
Dealers, Inc. or a commercial bank or trust company having an office, branch,
agency or correspondent in the United States, hereby guarantees to deliver to
the Exchange Agent at one of its addresses set forth above, the certificates
representing the Original Notes, together with a properly completed and duly
executed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees, and any other documents required by the Letter of
Transmittal within five New York Stock Exchange, Inc. trading days after the
date of execution of this Notice of Guaranteed Delivery.
Name of Firm: _________________________________________________________________
(Authorized Signature)
Address: _________________________________ Title: ___________________________
_________________________________ Name: ____________________________
(Zip Code) (Please type or print)
Area Code and Telephone Number:____________ Date: ____________________________
NOTE: DO NOT SEND NOTES WITH THIS NOTICE OF GUARANTEED DELIVERY. NOTES
SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
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